Partnering with the right real estate agent is key to selling your home timely and within your budget. Most real estate agents collect 3% of the home sale as a fee for doing their work. Realtor commission fees play a huge factor in real estate, and many homeowners often wonder if their agent even did enough work to justify paying their fees.
When selling your home in Colorado, it is crucial to consider the cost of partnering with an agent. Continue reading below to learn more about choosing the right realtor and budgeting for a realtor in Colorado. This brief real estate guide will cover realtor fees in Colorado and who you can contact to minimize your expenses when selling your home.
How Do Realtors Get Paid?
There are two agents in a real estate transaction, the buyers’ agent and the listing agent. The buyers’ agent represents the homebuyer, and the listing agent represents the party selling the house.
In most real estate transactions, both the listing and the buying agent receive payment from the party selling the home. The person selling the house has the opportunity to set how much they will pay both agents in the listing agreement.
The amount can either be a percentage of the sale or a fixed rate. It is not uncommon to see this commission rate set as a flat fee as well.
After closing the sale, part of the commission goes to the listing agent, and the other goes to the buying agent. For example, the listing party can let the MLS know they agreed upon a 6% commission split. This means the listing agent will get 3% of the commission, and the buying agent will get the other 3%.
The commission received from a sale also goes to the brokers under who the agents work. The commission payments made at closing get broken into smaller percentages to the realtor, agents, and brokers.
Flat Fee Brokers
As technology continues to change the way we work and live, it also affects real estate businesses and how they work. Some agents and brokers will list a property for a flat fee. In general, this fee is around $3,000 to $4,000.
Type of Listing Agreements
As mentioned earlier, the amount of commission that an agent receives is defined in the listing agreement. Most real estate transactions use an “exclusive right to sell” agreement, but it is not the only agreement available. The listing agent receives a commission under an exclusive right to sell no matter who sells the house.
For Sale by Owner
For sale by owner, also known as FSBO, is another type of agreement where you, the owner, sell the home without a listing agent. Although this can cut out the need to pay a listing agent commission, you will still need to pay the buying agent.
One-time show listings are relatively rare, and many agents and brokerages don’t use this type of listing. This type of listing agreement only shows the home to one potential buyer instead of multiple potential buyers looking at the house.
What Is the Average Realtor Commission in Colorado?
The average realtor fee in colorado averages around 6% of the home’s purchase price. The average real estate commission in the United States is around 5.7% for both the listing and the buying agent. It is very important to note that there is no set or designated commission split amount.
Who Pays Realtor Fees in Colorado?
In general, the seller of the house pays for the commission fees of both realtors. The commission fees are baked into the sales price, so the home seller isn’t paying these fees out of their pocket. Instead, the commission comes out of the home sale.
Why Are Realtor Fees High?
Realtor commissions are high because the agents have to split the commission. If you have the “exclusive right to sell” type of listing agreement, the agents must split the commission.
Another reason why it is so high is because listing a home involves risk. Realtors have to pay upfront for marketing costs, and they only receive payment when the home sells.
Finding clients can also be a challenging and costly process. Many real estate agents spend a lot of their time and money finding new business opportunities.
How to Save On Real Estate Commission in Colorado
There are many ways to save on real estate commission fees in Colorado, such as selling the home on your own. If you decide to sell the house without a realtor, you will only need to pay for the buying agent’s commission out of the house sale.
Negotiate the Terms
If your realtor is flexible, you can negotiate their realtor fees. You may have an easier time negotiating lower rates if you have a high-value home or if you have a personal relationship with the realtor.
Your situation may vary, but in general, Colorado’s real estate market conditions will dictate all home sales in your area. If it is currently a seller’s market, the listing agent may be more willing to lower their commission rates because it is easier to sell a home in a seller’s market. As of this writing, it is currently a seller’s market in Colorado.
How to Choose a Colorado Realtor
The best real estate agent knows your market area fairly well and has good reviews. When shopping around for an agent, make sure to look at their reviews to see what other clients did or did not like about their service. If you have friends or family who recently sold their home, ask them about their experience with their real estate agent.
Meet With Multiple Agents
Selling a home is a big decision to make, so you want to be sure to work with the right agent who can protect your interests. You won’t want to settle on the first agent you meet. Talking to multiple agents can help you compare their fees and can help you gauge if they are the right fit for you.
Ask the Right Questions
Getting a good sense of how the agent works and how they plan to work with you is an important step. You can ask the agent how long they’ve worked in the industry and if they have a specific specialty. For example, do they sell only single-family homes, or do they mainly sell condos?
Other important questions to ask:
- Are you a part of a team?
- Are you my main contact for questions?
- Do you work mainly with sellers or buyers?
- How will you market my home?
As you vet out the right agent, more questions may arise. Everyone’s situation is different, and you may have a unique situation that the real estate agent may or may not be able to handle. The main goal of asking these questions is to see if you and the agent will have an amicable working relationship.
Clarify Your Selling Motivation
Everyone has their reasons for selling their home. You may need to sell it quickly because you have a job opportunity in a different city or state.
You may need to sell the house because you recently inherited it and have no use for it. Regardless of your reason, it is very important to communicate this early in the selling process, so your agent knows what to expect.
Discuss Communication Preferences
Communication is vital when selling a home. The last thing you want is not to be on the same page with your agent or be lost in the process. When speaking with an agent, be sure to discuss how you want to receive critical information.
Do you prefer communicating via text or phone? Do you check your email often? If your agent is more responsive to phone calls but you prefer emails, it may not be a match.
Check Out the Housing Market
If you have time, walk or drive around your neighborhood and check out the name of the listing agents. If you notice repeat agents with “sold” real estate signs, you may want to reach out to them.
Since they recently sold homes in your area, they already have a good understanding of your market area. Even though the agent has experience in your area, it also helps to interact with them in person. Take the time to get to know them instead of just taking their information and moving on.
Discuss Selling Strategies
Before committing to an agent, talk to them about their selling strategies. Do they plan on doing open houses? How many showings do they plan to do with your property?
How much time in advance should the agent let you know about a showing? How will they market the property? Do you need to be there for the showing?
If you still live in the home while being shown, you will want to know about these showings ahead of time. If your agent does not have a strategy for selling your home, you may want to look for another real estate agent.
Agree on Important Details
The best relationship between a selling agent and the home seller are those with clear expectations. Ensure that you have the list price, commission structure, and contract length in writing. Having these critical details in writing helps define the relationship and is a means to keep one another accountable.
Alternative to Selling With an Agent
If you want to avoid budgeting for a realtor in Colorado on the buyer and seller side, you can sell your home for cash to an iBuyer. There are several different iBuying companies that buy houses for cash without any realtor commission fees.
What Is an iBuyer?
An iBuyer, also known as an instant buyer, is a company that purchases homes for cash. They use technology to instantly make an offer on your home, cutting down the time it takes to appraise, show, and sell a house. If your home meets their criteria, they will send you an all-cash offer, and you won’t have to worry about any repairs.
How to Sell to an iBuyer?
Selling a home to an iBuyer is relatively straightforward and only takes a few steps. Once you locate the iBuyer that you want to work with, you simply send in for an offer request by inputting your contact information and information on your home.
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If your home meets the criteria, they will send you an all-cash offer, and you have about a week to decide. When you decide to move forward with the transaction, the iBuyer will send someone to look at the house to ensure that its condition matches the information you input when you originally sent in the request.
If any repairs are needed, the iBuyer will deduct the cost from your net proceeds. You won’t have to worry about the repairs as they will handle that when you move out. Once everything looks good, you have the opportunity to choose your closing day, and after you close, you receive a payment within a few days.
Sell Your Home Quickly
Selling your home in Colorado can cost you a lot of time and money, especially if you partner with the wrong real estate agent. In addition to finding the right agent, cutting down your expenses when selling your home will put more money in your pockets.
Realtor fees in Colorado can quickly eat up your profits, so to mitigate that loss, it is better to sell your home to an iBuyer. If you are ready to see what your all-cash offer will be on your property, get started here.