I have been seeing a lot of commercials where a company advertises that there is “no commission” payable to a real estate agent. How does this work? Does it mean the agent is working for free? – SOUNDS GOOD
DEAR SOUNDS: As far back as I can remember, “House for Sale” signs have been on the rack at the local hardware store. Today the signs have gotten fancier and a whole industry has sprung up around discount and DIY-style real estate services. Recently, one of those companies has come under new ownership and has been advertising heavily that homeowners won’t pay a commission to their agents. But this doesn’t mean the agents are working for free.
Traditional Realtors are paid according to their performance. They incur the costs of listing, advertising, photographing and staging a home and are compensated if the home sells. If the home doesn’t sell, the Realtor doesn’t get paid and must absorb all of those costs.
From what I can tell, the “no commission” companies don’t base their fees on a performance model. Instead, they appear to be selling an à-la-carte listing package that the homeowner pays for upfront, regardless of whether the house sells or not.
If all goes well and the house sells, there’s a good chance the seller will end up paying commission anyway. There are two sides to every transaction: the selling side and the buying side. As I understand it, over 85 percent of these type of sales involve a professional Realtor negotiating for the buyer. When this is the case, the homeowner will probably still need to pay the buyer’s Realtor fee (as vendors are generally responsible for paying both agents). Pro tip: read the fine print. At the end of the day, discount services may not be as cheap as they seem.
I’m the executor of my parents’ estate and the time has come to sell their home. My lawyer has asked that I provide three different opinions in order to establish the value. Why so many? – IT’S COMPLICATED
DEAR COMPLICATED: There’s no rule that you need three opinions, but some lawyers feel this is necessary to cover their bases. Your lawyer will have to provide the approximate value of the home for probate. An opinion of value from an experienced Realtor will generally suffice as it takes current market conditions into account (and can be adjusted after the sale, if necessary). If your parent’s home ends up selling for more or less than was originally estimated, the probate value will be adjusted after the fact. This prevents people from underestimating property values in an effort to minimize probate fees. Pro Tip: always consult with your lawyer regarding your personal circumstances.