Severna Park, MD – Commission Rates Going Up; Prices of Houses Going Down

Double whammy! You list your home in Severna Park, MD for thousands of dollars less than what you thought it was worth because of the market . . . ouch! Then, the agent that just told you that bad news tells you that their commission is 7%! Before you faint there is something you don’t understand. Real estate agents aren’t trying to rip you off, they just know what’s happening in the market and they know what it’s going to take in order to sell your home in such a market.

Times are different. You can’t put you house on the market in Severna Park, MD and expect a contract on it in two days, and you certainly don’t see bidding wars anymore. Houses are sitting on average up to 88 days, and in some cases a lot longer. Agents need to advertise your home, and advertisement costs money.

Here is another misconception about agents who work for big companies. People think that all of the 7% goes to the agent. Well here’s the real breakdown of the 7%. First, half of the commission goes right to the agent who brought the buyer. Second the half that’s left is split between the agent and their broker (aka the company they work for). Then, what’s left of that, somewhere around 1.5% let’s say, goes to your agent and your agent is the one paying for all of the advertisement to get your house sold.

Advertisment needed to sell a home in today’s market can cost anywhere from $100 to $10,000 depending on how much you advertise, where you advertise, and most importantly, how long you have to advertise. If your house doesn’t sell, no one get’s paid, but the agent is the person who ends up losing money.

After learning all of this you may be thinking, “Well, what’s the point of spending any of this money and just sell my house myself.” Many people try being FSBO’s (For Sale By Owner) but only 16% of FSBO’s actually end up selling their homes. The other 84% either withdraw from the market or hire an agent. Especially in a market as we are in right now, the inventory of homes on the market is astronomical compared to the past, so in order to get people to really look at your home, you will have to do a lot of marketing to get your home to stand out, and making your home stand out is a real estate agent’s job.

The reason the commission rate is higher is because in today’s market agents have to advertise in magazines that are costly, websites that are costly, buy and make fliers, and send out the fliers and j’ust listed’ cards and pay for postage. In other cases agents do more as well. The fact of the matter is that the prices of houses are going down, but maybe this will help you swallow the higher commissions.