Most real estate agents get commissions from home buyers and sellers to earn a living. Therefore, these realtors and agents usually do not have a salary at the end of a month after working with home sellers and buyers. Ideally, the expenses they incur may include:
- Gas (fuel) used when traveling from and to the premises
- Licensing fees
- Advertising property for sale in magazines, or any other platform
- Association fees
- Work space needed in real estate agency
The commission these agents get is their only primary way of getting income to cover the cost of doing business. In most cases, when you chose to hire a real estate agent in selling your property, you sign a listing agreement document which acts as a supporting document. There are three types of listing agreement documents:
1. Exclusive right to sell listing
Here, the listing agent acts as your property representative and in the listing, you agree to pay their commission even though your property was sold by them, their efforts or somebody else’s. However, when signing this listing, you can name one individual or entity as an exception of the listing. When you exempt someone from selling your property, you are not liable to paying them any commission even if they are involved in the sale of your property. This kind of an agreement is held for a specific period as agreed between the two parties.
2. Exclusive agency listing
This type of listing makes your real estate agent your representative in selling your property. The agreement in this listing is to pay your commission to the agency through the efforts they make during the sale. This type of listing has an agreement period when the contract is held viable.The only exception of this listing is if the sale of your house is through your efforts. Here, the agency cannot be paid any commission because they did not have any efforts during the sale of the property. The period needed for the contract is agreed between the owner and the agency in writing.
3. Open listing
“In open listing, your real estate agent is your sole representative,” says John, a One Percent Realty expert in Maple Ridge, “and as a result, you agree to pay their commission if the sale of your property is as a result of their direct efforts. One advantage of using this listing is that you can use other agents as well to sell your property. The most competitive, hardworking or the one which has a large networking has the chance of getting a buyer and hence earn the commission. This is a good deal for you if you want to sell your house fast when in need of money because you can just list several agencies while still paying only one after the job is done.”
Selling property is a task which is quite demanding because it entails skills, knowledge, and experience. Hiring a realtor is a good decision because you can quickly sell your property with less hassles because real estate agents are experienced and knowledgeable in this field. Understanding the different types of sales commission is good because you can choose the most appropriate one for you. Exclusive agency listing is the most common listing with exclusive right to sell listing and open sell listing being least common.