The Real Estate Encyclopedia
Does The Amount Of The Commission Increase The Asking Price Of The Property?
Category - Home Selling Questions - General Home Selling FAQ's
The commission a seller agrees to pay to a real estate broker is typically not “added” to the fair market value of the home because, in order to be sold, the home must be competitively priced within the area it is located.  The total fee (including both the seller’s agent and the buyer’s agent side) is negotiated prior to signing the listing agreement and following all research conducted to determine the asking price of the property.


The first consideration in pricing a home should be the comparable market analysis which the agent completes by identifying the active (or presently listed), sold and expired properties in the area.  The active listings indicate the present competition in the market.  The recently sold comparable properties provide an excellent guideline as to the price the market is willing to pay, for this type of home, at this point in time. Expired listings show the range at which a property might be over priced (unless other circumstances make the property undesirable) and ignored by the market.  Naturally, it could be argued that every price considered in the market might historically include the value of a real estate commission, if the property was sold through an agency, which is overwhelmingly the case.  However, it would be an error to assume that the amount of a commission in any way “drives” the value of a property over market demand and market conditions.


A seller having lived in the same home for a long period of time will typically own substantial equity in the home because of its appreciation over the years, unless the seller has consistently refinanced and withdrawn funds from the equity.  On the other side, a home owner selling a property after a short time of having lived in the home, will not have built enough equity in the home and may see his/her proceeds shrink.  The proceeds a seller stands to gain by selling the home often will influence the amount of commission he/she is willing or able to pay.


In addition to the asking price, the commission negotiation is probably the most important aspect a seller enters into when making a decision to list.  But, the service the broker or agent provides, successfully marketing and selling the home, most often makes the difference on whether the home is sold or not.  This fact is driven by the increased exposure a home enjoys when professionally listed.


Because the commission has been negotiated by, the seller prior to listing the home, the buyer’s offer is not affected by the commission paid and such fee is deducted from the proceeds of the seller at the time of closing.
Home Selling Questions - Agent, Offer & Commissions FAQ's
Home Buying Questions - General Home Buying FAQ's
Home Selling Questions - General Home Selling FAQ's
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