Nowadays the payment of realtors services is an integral part of most transactions that are related to real estate. Whether it’s buying and selling real estate or renting it. However, there may be disagreements between the client and the intermediary in determining the amount of the commission. We talk about how much interest the realtors take for their services, what amount is due to the real estate agency. And how to save money in real estate transactions.
Standard size of commission
Naturally, each realtor strives to earn as much as possible. At the same time, the «standard» size of the commission in Ukraine is:
- in the sale and purchase transaction – 3 to 5 percent of the transaction value;
- when renting a real estate – 50 to 100 percent of the monthly value;
- in the case of daily rent, usually the owner pays the commission.
What do realtors do
The work of the realtor is quite simple and monotonous. It should help the client to find the property according to the request. Realtors act solely as intermediaries, advising and assisting clients who do not want to search for an apartment on their own. For their work, mediators usually take up to 5 percent of the commission from the amount of the transaction, which means of appraised value of the real estate.
You should draw your attention that intermediaries do not review documentation and do not evaluate potential risks. Realtors are not notaries, and usually do not have proper qualifications in this field.
That is why realtors should be treated exclusively as entrepreneurs who help the client to find the real estate and its owner to rent or sell it. Intermediaries often say that they scrutinize all documentation, but this is a simple lie. You can read our article about, how to check the documents for the apartment before buying.
Cost of the services of intermediaries
Often a clear amount for the payment of services the realtor does not set. Usually it is from 3 to 6 percent of the amount of sale of the apartment. Everything depends only and exclusively on the agreement between an intermediary and the client.
When approaching intermediaries with the purpose of selling an apartment, realtors often insist that the client sign an exclusive contract with them. The text of this document usually specifies a specific amount that will need to be paid to the realtor for the provision of its services.
It often happens that the realtor takes interest from both the buyer and the seller. In such a case, the total amount of his income can reach 10-12 percent of the amount of the transaction. For example, if the apartment is worth $50,000, the intermediary will receive 5,000.
How much does the realtor takes when buying an apartment
The standard rate of the intermediary is from 3 to 5 percent. Naturally, they initially ask as much as possible. And in case of refusal to pay commission, the transaction can be canceled at the initiative of the realtor. At the very least, it will try to prevent the parties from concluding a contract.
Ordinary buyer usually does not want to cooperate with intermediaries, because it is simply disadvantageous. We wrote about it in the article «How to sell the apartment without intermediaries». However, due to the many tricks used by intermediaries, it is now quite difficult to find an apartment from the owner.
But if you do not want to spend extra money on the payment of interest to an intermediary, you can try to find ads for the sale of the apartment directly from the owner. Although such announcements are now very few, because almost the entire market occupied realtors. Quite often in the ad indicates that the apartment is from the owner. But in the end, the client still falls on the intermediary. Which places hundreds of ads online, trying to attract as many customers as possible. That is why the main task of the mediator is to prevent the meeting of the owner of the apartment and the buyer. Independent real estate search is always more profitable, and its features we wrote in the article «How to choose an apartment on the secondary market».
In case the buyer does not want to pay a large percent to the realtor, the latter can start bargaining. With the right skills and eloquence you can try to reduce the amount of commission and pay the mediator less than he originally asked.
What percent do intermediaries take in renting
If the client wants to rent an apartment, then for his work the intermediary can take from 50 to 100 percent of the monthly rent. For example, if the rental price is 5000 UAH, the realtor will ask from 2.5 thousand and above.
In some situations, the intermediary may require payment of the full cost of the monthly rent as payment for his work. However, this is done either the most dishonest realtors, especially when the cost of rent is relatively low. In any case, the mediator wants to earn as much as possible and will try to convince you to pay him as much as possible.
You can always try to bargain with a realtor, asking him to reduce the amount of commission. But it is much more profitable to hand over the property yourself, be sure to prepare the apartment for rent correctly and profitably beforehand.
How much does the real estate agency get
In the event that the realtor is working for a real estate agency, he receives not the full amount of commission, but only a percentage. Usually from 30 to 60%. It all depends on experience, position in the agency and working conditions. In addition, from the amount received, the agency also calculates the costs of its expenses, including office rent, taxes, advertising, etc.
It means that if the realtor earns $4,000 for the transaction, he is forced to give a percentage to the agency, and his income, depending on the working conditions, will be from $1,200 to $2,400. When renting an apartment, the agency and the realtor most often divide the profit in half.
How not to pay intermediaries
Often people who buy an apartment for the first time are poorly versed in complex real estate issues. More problems are added by the abundance of realtors, which flooded the market. As a result – difficulties in finding an apartment from the owner. Of course, there is nothing bad in seeking the services of a realtor, because not everyone has the time and the desire to look for an apartment on their own.
Not all, however, have sufficient funds to pay for intermediaries. Or a person does not want to spend extra money on the payment of realtors’ commissions. In this case, you can look for an apartment yourself. It should be understood that given the high cost of apartments and the frequent cases of fraud with real estate and different scam schemes, need to worry about the safety of their funds. To make the transaction go smoothly, and there are no problems with the documents, you should contact a specialist lawyer who will accompany the transaction and help to deal with all the nuances.
A real estate lawyer or even an appraiser can advise on any questions that arise, check all documents, protect the buyer from fraud. Contact with a lawyer guarantees transparency of the transaction and no problems.
We should also highlight that many intermediaries are ready to bargain if the buyer does not want to pay commission. The intermediary realizes that it is better to get a smaller amount than to be without money at all.
Comparison of lawyers and realtors
To understand who to turn to, you should compare the cost of services of realtors and lawyers. As well as the level of their responsibility to the client and the necessary skills to work.
To work in this field, the intermediary does not really need any experience and knowledge. The main job of the realtor is to find clients, make deals and get interest for the sale.
It should be understood that intermediaries are not responsible for their actions and the future of the apartment to the client. In the event that the apartment will be with problematic documents, all difficulties after the purchase will be decided by the customer. After all, the mediator provides only information services. No realtors can verify the authenticity of documents, even if they say the opposite. So in these issues, you should not trust the realtors on the word.
Lawyer or real estate appraiser
Specialized lawyers or real estate appraisers are experienced professionals who understand all the intricacies and nuances related to the real estate market. It is quite logical that legal support of the transaction and verification of all documents can be carried out only by a lawyer who guarantees no problems.
Payment for lawyer’s services are usually five times less than a realtor’s fees. That is why, if you found the apartment yourself, then do not rely on the realtor. It is much more profitable and safer to seek help from a real estate lawyer. During the transaction you will also need evaluation of the apartment, which is also easy to order by yourself in liked appraisal company.
The cost of the services of a realtor usually ranges from 3 to 6 percent of the purchase/sale transaction and from 50 to 100 per cent of the real estate rental transactions. In case you do not want to spend extra money on interest for the mediator, who basically only consults and provides information services, you can look for an apartment yourself. This will save significant amounts.
If you require assistance in concluding a transaction, you need to contact a specialized lawyer or real estate appraiser. The cost of the lawyer’s services is disproportionately low compared to commissions realtors. In this case, only a lawyer can guarantee security and peace in the process of real estate transactions.