How MUCH COMMISSION can I SAVE as a FSBO?

Commission

Commission is payment. Wikipedia says “Commissions are a form of variable-pay remuneration for services rendered or products sold. Commissions are a common way to motivate and reward salespeople.”

Commission is based either on the sale price of the item to be sold, or is a flat dollar figure.

Traditionally, real estate commission is based on a percentage of the sale price of the house or property.

Flat Fee

Lately some brokers have decided they will list a house in a traditional manner, but charging only a flat fee for their services.

Also, For-Sale-By-Owners, when using the multiple listing service, generally pay to a broker a flat fee in advance for that listing, as here.

The amount of commission may vary geographically. Obviously a dollar amount can be whatever the seller decides that it is. Percentage commissions can vary from 5% in some parts of the country to as much as eight and a half percent, as I have heard recently, in other parts of the country.

Commission percentages also seem to vary depending on the type of transaction. Sometimes brand new construction is offered at a different amount or percentage than existing housing. Sometimes that is different from rural farm land or development land.

When a seller enters into an agreement with an agent to list their property “for sale” the commission is negotiated at that time. I can’t really speak to that, or suggest there is a normal listing amount, because of possible violation price-fixing laws.

The Split

The way the commission is split up is interesting as well. When the house sells, the commission is paid to the listing agent’s broker or company. While the house was on the market, the listing agent promised (through the MLS) a certain part of the commission would be paid to any agent who brought a buyer for the property.

That split between the company and the actual agent could be 50/50. In some areas, the listing agent keeps a larger portion of the commission than does the selling agent.

Essentially all commissions goes first to the company or the broker for which either agent works before they get their own share. That split also varies from one company to the other and from one individual to the other depending on a number of other circumstances.

So, hypothetically speaking, assume someone was selling a house for $100,000 and agreed to a 1% commission.

Click image to buy planner at Amazon.

When sold, the seller would pay $1000, which would be split $500 to the company listing it, and the other $500 to the agent’s company who brought the buyer. Internally, the companies would keep their own split, giving the remainder to the actual agent involved.

FSBO Savings

The money-saving thing about being For-Sale-By-Owner is because they are in the MLS and they have to offer some Commission, the seller only offers the amount payable to the selling agent who actually brings a buyer for the property and not a listing agent.

That means that the seller either pays no commission if there are no agents involved, or pays only the buyer’s agent commission if the buyer has an agent. The seller does not pay a listing agent commission at all.

If you enjoyed this post, consider subscribing. Here is a link.

Photo by Pepi Stojanovski on Unsplash

We depend on your support. Please donate here.

Tap or click HERE to join our new start-up YOUTUBE Channel!

84 informative & entertaining videos so far (all short, none long)

and adding more weekly!

Get awesome content straight to your inbox. Click or tap here!

(This post may contain affiliate links, which means if you click, or make a purchase by clicking on them, I may receive a small commission, at no additional cost to you, that will help me continue to bring you valuable content. To that end, not all of the items on this page are affiliate links, as that is not a requirement to be on this page. Thanks for your support!)

We are a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for us to earn fees by linking to Amazon.com and affiliated sites.