Introduction
When you hire a real estate agent, understanding what services you’re paying for is essential to ensure you get the most value. Whether you’re buying, selling, or renting a property, real estate agents provide a range of services in exchange for their commission, typically a percentage of the final sale or rental price. But what exactly is included in that commission?
This article will break down the specific services you can expect depending on the type of transaction. It will also explore the recent regulatory changes, effective 17 August 2024, which introduce greater flexibility in customizing and negotiating the services included in a real estate agent’s commission.
Buying a Home: What Services Are Covered by the Agent’s Commission?
When you’re buying a home, the role of a real estate agent is to guide you through every stage of the process, from finding the right property to closing the deal. Here are the key services that are typically included in the agent’s commission:
1. Property Search and Listings Access
A critical service buyer’s agent offers is helping you find the right property. Agents will use their access to Multiple Listing Services (MLS), a database of properties available for sale, and other off-market listings. This access allows them to provide you with a curated home selection that matches your needs and preferences. They often know of homes not yet on the public market, giving you an advantage in finding hidden gems.
Agents provide a list of potential homes and help you refine your search based on your budget, location preferences, and must-have features.
2. Arranging and Conducting Property Showings
Once you’ve identified properties you’d like to view, your agent will schedule and coordinate showings. They accompany you to these appointments, offering valuable insights about the home, neighbourhood, and potential for future resale. Agents are skilled at identifying issues that may not be apparent to the untrained eye, such as structural problems, legal encumbrances, or concerns about property values in the area.
Additionally, agents can offer guidance on what to look for during showings, helping you focus on properties that best suit your needs while avoiding potential pitfalls.
3. Offer Negotiation and Handling Counteroffers
When you’re ready to make an offer, your agent will assist in crafting a competitive bid that reflects the market conditions, comparable home sales, and your financial situation. Agents are experts at negotiating with sellers and their representatives, working to secure the best possible price and terms for you.
This negotiation expertise can be invaluable in a competitive market, as agents often know strategies to make your offer more appealing, such as pricing, contingencies, or closing timelines.
4. Transaction Management from Offer to Close
Once your offer is accepted, the real work begins. Your agent will handle the myriad details involved in converting an accepted offer into a closed deal. This includes coordinating home inspections and appraisals and managing the documentation required for the sale.
The transaction process can be complicated, involving multiple parties such as attorneys, lenders, title companies, and inspectors. An excellent real estate agent will ensure everything is organized and on schedule, helping resolve any issues and keep the deal moving forward smoothly.
Selling a Home: What Do Agents Offer?
For sellers, the services included in an agent’s commission are tailored toward marketing the property, attracting potential buyers, and ensuring a smooth sale process. Here’s a closer look at what you can expect:
1. Pricing Strategy and Market Analysis
A real estate agent’s first job is to help you determine the right price for your home. Using a comparative market analysis (CMA), agents will evaluate recent sales of similar properties in your area, considering local market trends, your home’s features, and your selling timeline. The goal is to set a price to attract buyers while maximizing your return on investment.
Agents also bring an understanding of market psychology—knowing how to price a home to generate interest and even incite bidding wars rather than pricing too high and scaring off potential buyers.
2. Comprehensive Marketing and Advertising
Marketing is one of the most critical services included in a seller’s agent commission. This typically includes listing your home on the MLS, which will syndicate it across various real estate websites, including Zillow, Realtor.com, and Redfin. But the marketing effort doesn’t stop there.
Many agents invest in professional photography, virtual tours, and drone footage to showcase your home in the best light. Some agents organize open houses, broker tours, and paid advertising campaigns on social media or other digital platforms to reach a broader audience.
3. Staging and Property Preparation
First impressions matter in real estate, and agents often advise preparing your home for sale. This might include recommending repairs, minor upgrades, or professional staging to make your property more appealing to buyers. Sometimes, agents provide access to professional stagers who arrange furniture and decor to highlight your home’s best features.
In today’s competitive market, homes that are correctly staged and prepared for sale often sell faster and for higher prices, making this service invaluable for many sellers.
4. Handling Buyer Negotiations
Your agent will act as your representative in all negotiations with potential buyers. This includes reviewing offers, responding to counteroffers, and working to get the best price and terms for your home. Experienced agents know how to read the market and negotiate from a position of strength, ensuring you’re not leaving money on the table.
In addition to price, negotiations may cover contingencies, closing dates, and who covers certain costs, such as repairs or closing fees. Your agent will guide you through these decisions, ensuring each term works in your favour.
5. Transaction Coordination Through Closing
Once you accept an offer, the process of finalizing the sale begins. Much like on the buyer’s side, this involves several steps—inspections, appraisals, and the final walkthrough. Your agent will coordinate with all the parties involved to ensure a smooth closing, handling the paperwork and meeting deadlines.
This service is especially important if issues arise, such as buyer repair requests or delays in financing. Your agent’s job is to keep the deal on track and help resolve any potential roadblocks.
Renting a Home: What Can Renters and Landlords Expect?
Real estate agents also provide services for renters and landlords, though the scope of these services is typically more limited than that of buying or selling.
However, the following tasks are commonly included:
1. Finding Rental Properties and Arranging Viewings
For renters, an agent’s commission often covers finding suitable rental properties and scheduling viewings. Agents help identify homes or apartments that fit your budget, location preferences, and specific needs, saving you time and effort in the search.
2. Lease Negotiation
Once you’ve found a property, agents can assist in negotiating the lease terms, ensuring that both the renter and landlord are satisfied with the conditions. This may involve discussing rent, security deposits, lease duration, and maintenance or repair obligations.
3. Property Management (Optional)
Some agents provide ongoing property management services, particularly for landlords. This might include handling tenant inquiries, coordinating maintenance requests, and managing lease renewals. These services can be valuable for landlords who prefer a hands-off approach to managing their rental properties.
The New Regulatory Changes (Effective 17 August 2024): More Flexibility and Customization
Starting 17 August 2024, new regulations allow for greater flexibility in what services are included in a real estate agent’s commission. These changes empower clients—buyers, sellers, or renters—to negotiate the services they need and tailor the commission to fit their specific situation.
For example, buyers comfortable handling certain aspects of the home-buying process, such as property searches or transaction management, might negotiate a lower commission in exchange for fewer services. Sellers might opt for a full-service package that includes everything from marketing and staging to negotiations and closing management, or they could handle specific tasks to save on commission costs.
This increased customization allows clients to control their expenses more effectively, potentially leading to more efficient and transparent real estate transactions.
Considerations and Implications of Customizable Commission Services
With more control over which services they pay for, clients can expect a shift toward personalized service packages. Some buyers may prefer a basic package that covers only property showings and offers negotiation, while others may choose a comprehensive service plan that includes transaction management and post-sale assistance.
For sellers, the ability to customize could mean more selective marketing efforts or a streamlined pricing strategy, depending on the seller’s goals. The implications for the real estate industry are significant, as agents may need to offer more flexible business models that cater to varying levels of client involvement and budget.
This shift toward customizable commission packages may also increase competition among agents, driving innovation in how services are delivered and priced.
Conclusion
The services included in a real estate agent’s commission depend on the nature of the transaction—whether you’re buying, selling, or renting a home. For buyers, agents typically offer property searches, showings, offer negotiation, and transaction management. Sellers can expect services such as pricing strategy, marketing, staging, negotiation, and transaction coordination. Renters may receive assistance finding properties and lease negotiation, with optional property management services for landlords.
The new regulatory changes, effective 17 August 2024, bring increased flexibility. They allow clients to customize and negotiate the services they need, ensuring they receive value that aligns with their specific goals. As the real estate market evolves, understanding these services and actively negotiating the terms of your agent’s commission will be essential to ensuring a successful and cost-effective transaction.
