How to Pay Less on Your Real Estate Commission
Everyone knows that investing in property is almost always a good idea, because there are fewer chances for devaluation and losing money. However when it comes to selling property, owners cringe in the face of so much bureaucracy and so many taxes that sting the pockets. So even if you’ve made the right decision and purchased property, you might wake up some day to realize that it is near impossible to sell back because you can’t afford it. In order to help you with this matter, we have come up with a few ways in which you can reduce costs on the real estate commission.
In the past, a property owner who wanted to sell had one of two options: either sell by themselves and hope they’ll do a good job of it, finding a good buyer and asking for the right price, or hiring a real estate agent and paying them a fat 6% real estate commission on the sell. Things have changed a bit in recent years, and with a little business savvy and intuition you can make a pretty good deal; if you took advantage of the financial crisis and bought property, you might as well take advantage of it now when you want to sell. Because the real estate market was just as affected by the crisis, you now have the option of negotiating your agent’s commission or to pay only for the services you need.
- Negotiating the commission – Earlier we mentioned that an agent’s commission was usually about 6% of the total sum, but today it is recorded at a mere 5.1%. There isn’t too much activity in real estate these days, so agent’s commissions are under pressure. This means that you can substantially save on your real estate commission by knowing how to negotiate with your agent. First of all, you should interview several agents and ask each of them to make a free market report which would estimate how much you could get on your property. If your property is at the upper end of the market, then you have greater chances of convincing one of the agents to lower their commission to a number closer to what you are willing to pay. Generally, if your house presents itself well on the market and there seems to be a demand for it, you have a chance in getting reductions, so don’t hesitate to negotiate.
- Quality services and discounts – Another solution would be to hire a big brand real estate agency; although you may feel that your property won’t receive the same attention, the fact is that these agencies have almost as much interest as you in getting as much money as possible on the property. Moreover, you will be offered their full services, and the real estate commission that their agents receive is rarely bigger than 4-5%.
- Use the programs dedicated to home owners – If you want to get a higher profit, then maybe you should consider renovating the house before listing it on the real estate market. In Canada, there are many products aiming to support house owners, such as the home renovation tax rebate. In case you are planning to renovate a great part of your property, then maybe you should consider applying for such a credit, because this will help you get back a considerable amount of the money you invest. So you will boost the value of your property, while also spending little money.
These two variants are more than safe, and you can try them both before taking a decision about your property. This is a major step in everyone’s life, so you shouldn’t rush into any decisions; always go with the agent that makes you feel trusting and relaxed, but be careful about extra costs as well.