Realtor Commissions Affect the Asking Price of Homes for Sale

When a buyer begins looking at homes for sale, typically on the Internet, they very quickly get the feel of the asking prices in particular neighborhoods for homes with particular features. However, few buyers understand all that affects the asking price of a home, including the connection between realtor fees and asking price.

Here’s a quick look at some of the main components that go into the asking price of a home.

Component #1: What the Seller Needs From the Sale

Although you may not have considered this, the base price of most homes is due to what the seller needs to get out of the home. For instance, if a seller has a mortgage to pay off at $250,000 and would like to walk away with $50,000 in profit, then the house has to be listed in a way that allows for this to happen.

Sometimes, this is not possible. Sometimes, other factors about the house or the market will keep the seller from getting what they want. In those instances, the seller has to decide to stay in the home or take a loss.

Component #2: What the Home Has To Offer

Homes with desirable upgrades, features, and amenities will sell for more money than a home without them. The more desirable a home from the standpoint of a buyer, the higher the price can be.

Upgrades, features, and amenities can include such things as:

  • Updated gourmet kitchen
  • Updated bath
  • Sun room
  • Built-in electronics
  • Inground pool
  • Garage
  • Basement
  • Open/Versatile floor plan
  • Deck
  • New windows, insulation, and roof
  • Fireplace
  • And more

Component #3: Comparable Homes in the Area

The asking price of a home is often determined by conducting a comparable market analysis (CMA). This is a way to look at similar homes in the area that have recently sold to determine the value of the home currently for sale.

The CMA will look at homes within the same area that have a similar number of bedrooms and bath, similar square footage, and similar upgrades. This helps the seller know what buyers are expecting to pay in the area.

Component #4: The Local Real Estate Market

The price of a home can be affected by the local market. When there are more buyers than sellers, this is known as a sellers market. In this case, a home can often be sold for more money because the inventory is low compared to the number of buyers.

Buyer’s markets are just the opposite. In this case, there are far more houses for sale than buyers who want to purchase. In a market like this, seller’s tend to lower the asking price since too much inventory is available.

In a balanced market, there is an even number of homes compared to the number of buyers. In this market, home prices fall to the middle rather than at either extreme.

As a home seller considers their asking price, they will also consider the market.

Component #5: Broker’s Commission

This particular piece of the puzzle is rarely talked about, but influences the asking price of a home by a full 6%. To understand this, let’s consider the following:

  • The home seller wants to walk away with $300,000 to pay off their mortgage and have some left over for the down payment of a new home.
  • The brokers want 6% to sell the home.
  • Therefore, the asking price will need to be at least $300,000 plus the 6% ($18,000), so an asking price $318,000 plus a little extra for negotiating room.

If the brokers asked for less money, the asking price of the house could be less. This means the seller could put the same or more money in their pocket while at the same time creating a scenario where the buyer has to pay less for the home. This creates a win-win situation for both parties making the sale easier and more straightforward.

This is the case with Recadia, a flat, fee full service broker. Instead of asking for $18,000, Recadia asks for a flat fee of only $3,000 to list the house and suggests offering a flat fee to the buyer’s agent as well.

To learn more about Recadia’s flat fee, full service model read How Recadia’s Flat Fee, Full Service Real Estate Model Can Save You Thousands of Dollars on Real Estate Commissions. Feel free to contact us to learn more by calling (214) 281-8500. We would be happy to help you with your home buying and selling needs.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *