Understanding Realtor Fees: A guide to Buyers and Sellers in Austin, Tx
Jul. 11. 2024
Realtor Fees– A Hot Topic Lately–Let’s Dive In!
Real Talk–Before we Dive in–I would just like to mention–that while the life of a Real Estate agent/broker looks very glamorous–Thanks HGTV, Bravo and Netflix! It is far from it. And most of what you see on TV is not even real.
If you are on the gram, I keep it pretty real and show you a lot of behind the scenes footage–@ihearttheatx.
Secondly a big shout out to Jen Berbas, a valued colleague of mine who inspired me to simplify this topic and write a blog on it–hers is much better and can be found–HERE. I have to give credit where credit is due to this Real Estate data guru.
Now, Realtor Commissions and all the Buzz:
The discussion around realtor fee structures has been generating a lot of interest. Here are some predictions of what the realtor fee structures will turn into:
– Some believe that changes in fee structures could lead to lower home prices and cost savings for both buyers and sellers.
– Some believe this will mean the buyers will pay commission or build it into prices,
-Some believe the new agent will disappear and stronger more experienced agents will be taking over business and representing both parties.
However, the reality is more nuanced, particularly in the Austin metro area–and I hate to say it, but “it all depends!”
(above-4103 Alexandria in Maple Run, which just received multiple offers last month!)
The Fundamentals of Realtor Fees:
Firstly, it’s crucial to understand a few things:
1. No one has ever been required to hire a Realtor. An individual has always had the privilege to buy or sell a home themselves.
2. Realtor fees have always been negotiable. I say this quite a bit (and if you have been a buyer touring property with me you have heard me say this many times–) “Everything is negotiable in real estate!”
Many sellers (and buyers) continue to work with realtors for their expertise and assistance in navigating the complexity of the real estate market.
I know how to use scissors, but I am not going to cut my own hair.
I understand my taxes, but I am no expert–so I hire a CPA. I understand how to clean my pool–but that is not my strong suit, so I hire a pool company to take care of my pool…you see where I am going with this….Why would you try to cut corners on one of your biggest life’s assets?!
What’s Changing in Realtor Fee Structures?
Recent changes affect how realtor fees are disclosed in the Multiple Listing Service (MLS) And for further reference the MLS is where brokers list properties that syndicate to so many websites (Zillow, Realtor.com, etc). Listing Agents (aka Agents representing Sellers) can no longer list the amount they are paying for the buyer’s agent fee in the MLS. This change, while seemingly minor, has significant implications for both buyers and sellers. There was a belief that there was not enough transparency prior, but I actually feel it is quite the opposite now….but will get into that later as more rules are implemented.
The Importance of Realtor Fees
Sellers are primarily concerned with their “net” proceeds—the amount they walk away with after the sale. It has always been about the bottom line for sellers–“How much am I walking away with?”
Buyers, on the other hand, are often more sensitive to upfront costs. A buyer struggling to save for a down payment might find it challenging to also cover a realtor fee. Without seller assistance on these fees, buyers may be less inclined to view certain properties, potentially reducing the pool of interested buyers for those homes.
The Austin Real Estate Market Context
In Austin, the real estate market is considered somewhat balanced.
In years past Austin has always been a very strong seller’s market–with people flocking to live and work in the Live Music Capital of the World, creating more demand and less supply.
However, (writing this in 2024) we are post pandemic and during these times of inflation and a significant increases in interest rates (which is subjective, but that is another topic) buyers lately have the upper hand…with one caveat–how desired is the property? I have found this year in listing so many properties price and condition are always important but schools, layout, desirability of location are all a huge factor in how fast it moves.
My recent listings have all scored multiple offers due to the location, and aggressive pricing strategies and prep. While some of my listings that have more competition or are priced too high–tend to sit longer on the market.
I have said it before but I will say it again–I cover some great pricing and seller prep strategies on my YouTube channel–dive in with these tips: HERE.
(This home above also received multiple offers due to: proper prep and correct pricing!)
Seller Strategy for Keeping More In Your Pockets:
There are certain costs to incur to insure you make more at the end of a sale. As a seller, paying for (and doing) the following, can help attract more buyers:
– Price Attractively and Smart (lower than you’d think and below buyer’s max search terms)
– Offer to cover Realtor Fees or Buyer’s Closing costs
– Offer seller financing or fees to buy down the borrower’s interest rate to create a more affordable monthly payment
Even in a hot market where properties may sell quickly–prepping the house to be move in ready and attractive while offering incentives will increase the number of buyers and have buyers move quickly recognizing VALUE.
Buyers Beware:
With these changes–as you are choosing a Real Estate agent, you should be interviewing and understanding what are possible costs that you will incur as well as signing a buyer representation agreement to commit to working with a Realtor and moving forward.
Realtor Fee Models and Their Impact:
There are various models available for real estate transactions, ranging from full-service agents to low-cost or no-cost options (yikes). Some brokers have a revolving door of agents showing properties who have been licensed less than three years. Some brokerages only hire full time, experienced, reputable agents.
The right choice depends on the buyer/seller’s needs and understanding of the market.
I found this old blog I wrote on how to choose the right Realtor–HERE!
A sophisticated seller who invests in staging and marketing their property can see significant returns, making the additional expense worthwhile.
And a buyer who seeks full-service, experienced agents traditionally come out ahead feeling educated, cared for, and sometimes even starting with equity in their property–or walking away from homes that did not suit their needs or with potential issues.
Obviously, as a Realtor my stance is–“You get what you pay for.” Be diligent in who you hire to work with–feel comfortable and informed regardless if you are buying or selling.
A Wrap Up:
Work with a Realtor that can be transparent about their fee structure, value and understand what you will be paying for out of pocket.
For sellers in Austin, understanding the dynamics of realtor fees and the current market conditions is essential. By strategically managing these factors, sellers can maximize their net proceeds and increase the likelihood of a successful sale. Buyers should also be aware of how these fees impact their purchasing power and work with their agents to negotiate the best possible terms.
For more information on navigating the Austin real estate market, feel free to reach out. Your home is one of your most significant investments, and understanding these nuances can make a substantial difference in your financial outcome.
Want to chat about what home buying or selling looks like for you? Email us! Let’s get something on the calendar (we live by them)!
