Real estate agent’s commission – what is the price based on and what does it include?
The real estate agent’s commission is the commission earned by the real estate agent on the sale of the home, of which the real estate agent receives his/her share of the commission as a fee. The property to be sold may be a holiday home or a plot of land, for example, as well as a dwelling. The estate agent’s commission is usually paid by the seller of the property, but there are exceptions. In purchase transactions, the buyer usually pays the estate agent’s commission.
Percentage or predetermined fixed amount
The estate agent’s commission is usually a percentage based on the purchase price of the dwelling. At Kotivaihtoon.com, we have an affordable commission of 1% of the unencumbered purchase price of the home. Some real estate agencies also use a fixed real estate agent’s fee in euros, but more often they talk about percentages. Psychologically, the amount seems smaller in percentage terms, and so brokerage fees become easily very high.
Real estate agency commissions usually include:
– Free price estimate and on-site survey
– Ordering the necessary documents, such as the landlord’s certificate
– Guidance (cleaning etc.) before housing photography
– Photos taken by a professional photographer
– Written sales note
– Portal visibility at Etuovi, Oikotie and Tori
– Contacting prospective buyers
– Receiving takeover bids
– Preparation of the deed of sale and its annexes
– Organizing your transaction digitally or traditionally in a bank
– Making notifications to the landlord and the tax authorities after the transaction
– Showing the property for prospective buyers
Possible additional services included in the real estate agent’s commission
– 3D Virtual Tour
– Styling of the apartment
– Virtual styling of an empty apartment
– Paid advertising of an apartment on social media
Our 1% commission includes all of the above services, except for showing the property for prospective buyers and styling. By opening your doors yourself and using your service, you usually save easily several thousand euros.
Many agencies also charge hidden fees from customers. For example, they may charge extra for documents, photography or “office fees”.
Real estate agent’s commission – negotiations like straight from the oriental bazaar
Many so-called “traditional” estate agencies negotiate the commission on a case-by-case basis. The price is also displayed online and the agent or agency is happy to take it if the seller does not negotiate to lower the commission fee. The public price may also be directly lowered as soon as a discussion is opened. “Our normal commission is 3,6 %, but as we are friends, I can get you a 3 % commission”. In this way, the broker tries to close the sales deal directly and at the same time watches the potential customer’s reaction to the offer.
Quite often, real estate agency services are obtained through contacts. Almost all of us know at least one or more real estate agents and it is easy to go to the first person you know. At least to ask for a free estimate of the price of the property. In this context, getting a “friend discount” can also create a good feeling. In reality, the real estate agent may also offer discounts according to the amount he has estimated someone is prepared to pay. Price negotiation can be compared to an oriental bazaar.
Real estate agent’s objectives in price negotiations
The real estate agent’s negotiating objective is usually to keep the commission as high as possible, while still being able to seal the deal. When negotiating, the traditional agency agent weighs up the amount of work he has to put in to sell the property.
The time taken to research the purchasing price statistics for the region, getting to know the property, visiting the property, writing sales literature and arranging photography is usually quite standard.
Differences in the time taken to sell a property arise from the number of shows on-site. Today, real estate agents do a lot of remote work, and most of the driving is between the real estate agent’s own home and the homes for sale. Naturally, the faster a property sells, the less time the agent spends on it. Therefore, the better the property is for the agent, the lower the commission rate he is likely to be willing to accept.
Real estate agency fees – How much should a home seller pay?
As a home seller, the real estate agent’s commission offered to you will usually drop significantly when you mention that you are arranging a competition between the real estate agents. Assuming that your property is attractive to the agents (it sells quickly).
While negotiation is fun and one of the salts of sales, real estate commissions are something we don’t need to negotiate at all. We know that our price is in line with other agencies, the scope of our service, the quality and so on. Many even say cheap. After all, our service is usually less than 2.5 times and in most cases more than 3 or even more than 4 times cheaper than the real estate commission fees of competing real estate agencies.
There is no unequivocal answer to the question of how much a home seller should or should not pay in commission for selling their home. What is certain, however, is that too much is often paid. Despite the estate agent’s commission, in many cases it is best to leave the sale of a home to a professional who understands how to get the best possible price for the property while keeping the sale time moderate.
A home seller is usually not in a hurry, but the sale of a home should be done fast
Many people might think, “I’m selling an apartment here – I’m in no hurry”. This is certainly true, but the fact that a home is “ageing” on the sales portals is not good for the final price.
The longer a home is on the market, the more leeway buyers have to negotiate the price down. If the price is too high, there is not enough demand and the price has to be reduced. For this reason, setting the right market price at the outset of the sale is crucial. Even a drop in the asking price on portals is visible to prospective buyers who follow recently published properties in their area.
Let’s take an example:
For example, if the market price of a home is 200 000 €, but you would like to get 205 000 € for it. In this case, depending on the property, the target price might be better achieved by setting the asking price at 199 000 €, rather than, say, 220 000 €. many people may be looking for homes worth less than 200 000 € and if priced above that, they might not see the property.
In general, the real estate agent’s view of a realistic asking price may be lower than the seller’s. However, there is often a very reasonable justification for this, probably based on previous actual transaction price statistics. A difference of a few thousand in the final purchase price does not change the real estate agent’s commission drastically. Nevertheless, both the agent and the seller want the highest possible price and that is what results in customer satisfaction.
Moderate selling time usually pays off
A good sale price and a moderate selling time usually go hand in hand, as most attractive homes sell very quickly. Ideally, the initial asking price is set correctly, i.e. not too low, but not too high either. In popular areas, this situation can often result in more people competing to buy a home and the final sale price may well end up significantly above the market price.