Realtors arrange real estate transactions for clients who are purchasing or selling homes. They work on a commission basis, which means they are paid a percentage of the sale price of the property.
Historically, the commissions have averaged 5 to 6 percent of the sale price, with half going to the buyer's agent and half going to the seller's agent. Historically, the seller has covered the full cost of both agents' commissions. However, as part of a federal lawsuit settlement reached in early 2024, the Realtor commission system will shortly alter. As of August 2024, buyers may be required to pay their own agent directly.
Regardless of whether the buyer or seller pays the commission, Realtors may be obliged to pay a portion of their earnings to their brokerage, as well as a variety of additional charges. These can include marketing, organization membership dues, access to the local multiple listing service (MLS), and other company expenses.
Do you need a Realtor?
No. Homebuyers and sellers may not have to engage with a Realtor; here are some typical options.
Use a non-real estate agent or broker.
Many real estate agents and brokers are completely licensed and qualified while not being affiliated with NAR. Any fully accredited agent or broker can provide essential assistance throughout the purchasing or selling process.
Buy and sell on your own.
It is entirely possible to purchase a home without using a Realtor. Some homeowners choose the for sale by owner approach, frequently abbreviated as FSBO. According to the latest recent NAR data, 7% of properties were sold directly by the owners in 2023.
While doing it yourself eliminates the listing agent's commission, it may also reduce some profit possibilities. According to NAR data, FSBO properties sell for less than regular listings.
But if you're considering either route, be prepared for a lot of work. You'll have to do all of the bargaining yourself and deal with a slew of paperwork, including sophisticated legal declarations and contracts. This can be daunting, and with so much money at stake, one error can be catastrophic.
