Kevin McCormally: I am Kevin McCormally of Kiplinger's and I am here with Pat Esswein, the Housing Editor of Kiplinger's Personal Finance Magazine, to talk about Real Estate Commissions. Pat, for as long as I can remember, real estate commissions have been a flat 6% of the home price, no matter how expensive or how cheap the house was. Is that still the case?
Pat Esswein: One industry study suggest that the average rate right now is about 5%.
Kevin McCormally: So that's the average, but these are really negotiable, right?
Pat Esswein: Yes, you absolutely can negotiate the commission rate.
Kevin McCormally: Does it ever make sense really to try the dicker down and maybe pay less to an agent, I mean isn't the agent your friend, don't you want to keep him happy?
Pat Esswein: In a soaring market, yes, you do want to keep your agent happy and if you have a house that has a particular problem, that's going to inhibit the sale or if you need to get this deal done really quickly, you may actually want to offer more than the traditional commission rate.
Kevin McCormally: Any other way to incentivize an agent other than a higher percentage commission?
Pat Esswein: You could offer an incentive bonus that would be paid at closing in reward for a quick sale.
Kevin McCormally: What about trying to sell the house yourself, does that ever make sense anymore?
Pat Esswein: It really depends on the depth of your experience and skills as a home owner. If you can do some of the work yourself, you might want to look into hiring a discount brokerage like Help-U-Sell or you might want to work with a traditional full service brokerage that is unbundling its services and selling packages of services for a flat fee.
Kevin McCormally: So they might just have you pay for settlement concerns rather than actually marketing at home.
Pat Esswein: Exactly.
Kevin McCormally: Thank you Pat.
