A number of real estate markets experienced substantial booms as a result of the pandemic, and Southwest Florida is definitely one of them. At least 555,710 people moved to Florida between January 2020 and April 2021, and experts don’t think the migration is going to slow down anytime soon.
If you’re a homeowner in Florida, this means that there’s a good chance you could make a pretty penny selling your home. After all, the median price for single-family homes in the state increased by 20.3% year-over-year.
One of the things that many home sellers are concerned about when it comes time to list their property is the reality of realtor commissions.
Are you wondering what you need to know about realtor fees in Florida? Let’s take a dive into what you need to know.
Realtor Commission in Florida: The Basics
What is the real estate commission in Florida?
The average realtor commission in Florida is 6%. However, this percentage can range between 5% and 7%. This means that if you sell a home for $300,000, the real estate commission will amount to $18,000.
The median price for a single-family home in Florida was $355,000 as of July 2021. If you sold a house at this price at a 6% commission rate, the real estate agents and brokers would get $21,300.
It’s worth understanding that all of this money doesn’t go to your agent. Buyer and sellers agents will split the commission typically, meaning that in this example each agent would get $9,000.
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On top of that, though, it is common for real estate agents to work with brokerage agencies or firms, who will also end up getting a cut of the money.
How much the brokerage gets and how much the real estate agent gets depends on negotiations between these parties. It can vary quite a bit depending on the partnership. In most cases, though, it will be 50%.
This means that each real estate agent and each brokerage firm will actually end up receiving 1.5% of the price of the home. In our example above, that means that each party would receive $4,500.
Who Pays Realtor Commission in Florida?
The seller of the house pays the total commission in the state of Florida. At the closing, the commission is taken out of the home’s final sale price.
Let’s stick with our example above where you are selling a home for $300,000. If the commission is 6%, this means that $18,000 is going to real estate agents and brokers. The seller would then receive $282,000, some of which would go to paying off any remaining mortgage, closing costs, and more.
There are occasionally some instances where sellers choose to put their homes on the market without an agent. If you are selling your home with a listing agent, it is definitely a good idea to take the fee into account when setting the listing price.
If I’m Buying a House in Florida, Do I Have to Pay Real Estate Commission?
Usually, the buyer of a house in Florida doesn’t have to pay the commission. In most instances, the seller of the home deals with the entire payment fee. However, considering that the cost of hiring a real estate agent is often factored into the sales price of a home, the buyer could argue that they do indirectly pay for the real estate commission.
What Other Fees Do Sellers Pay in Florida?
It usually costs an additional 1% to 3% of the total sales price when you are selling your home. These costs are known as closing costs. These costs include municipal lien searches, recording fees, prorated taxes, title searches, and other things.
It is required that sellers pay a tax on property transfers in the state of Florida. You might also hear this referred to as a “documentary stamp tax” or the shortened term of “doc stamp.” This tax is charged at a rate of $7.00 for every $1,000 of the sales price.
For example, if you sold a house for $300,000 in Florida the doc stamp tax paid by the seller would be $2,100.
It’s worth noting that the county of Miami-Dade has a lower rate for the documentary stamp tax. In this county, the rate is $6.00 for every $1,000 of the sales price. This means that if you sell a house in Miami-Dade County for $300,000, the doc stamp tax would be $1,800.
Do Closing Costs Include Realtor Fees?
Realtor fees aren’t considered a part of the closing costs you pay when selling a house. However, they are paid at closing.
Who Pays Closing Costs in Florida?
Both the seller and the buyer have separate closing costs that they are responsible for. While sellers usually have to pay for things like title and lien searches, buyers usually have financing expenses to take care of. These include the cost of an appraisal and the loan origination fee.
Can You Negotiate Your Real Estate Agent Commission in Florida?
If 6% seems steep to you, you can negotiate your fee as the seller. The largest expense many people face when selling a home is the cost of commission. For this reason, it’s worth shopping around and finding an agent you are happy with that you believe will do a good job.
However, you typically can’t negotiate the commission if you are on the buyer’s side of the transaction. This is because you aren’t the party that is bearing the cost of the agent’s commissions.
Why Are Real Estate Commissions So High?
When you’re selling a house, you might be disappointed to learn how high commissions are. However, there are a number of reasons why it costs so much to hire a real estate agent.
For one, there are several parties that end up splitting the commission. This means that no single party is making nearly as much as you are paying.
Secondly, real estate agents cover the marketing costs of selling your property. This can end up getting pretty pricey, particularly if the house stays on the market for a long time. There is also the cost of your agent’s time, as well.
Lastly, there are a number of expenses that real estate agents will accrue when working to sell your property. These include putting on open houses, hiring a professional photographer, home staging, and more.
If you are going to hire a real estate agent, you will definitely want them to be working for you in this way. The sale price of your home could increase depending on how well marketed the property is.
(Are you wondering if you can skip all of the time-consuming and costly repairs that your house needs before listing on the market? Check out this guide to selling your house as-is.)
How to Calculate Real Estate Agent Commission
If you choose to hire a real estate agent when you are selling your Florida home, you will want to closely read the contract that you sign with the agent. It is here that you will find the commission rate they are charging in exchange for their services.
You will also agree on a listing price as a part of this contract. However, during the course of listing you can choose to either raise or lower the price.
Real estate commissions can range between 5 and 7%, but 6% is standard in Florida.
Let’s say that you are listing your home for $300,000 in Florida. If you home sells for the listing price, you’ll pay $18,000 towards the real estate commission.
If the sale price gets negotiated down to $290,000, then you will pay $17,400 towards realtor fees. If the sale price gets bid up to $310,000, you will pay $18,600.
You can find out how much of your profit will go towards realtors and brokers by multiplying the total sale price of your home by .06 if the commission rate is 6%.
Tips For Negotiating Realtor Commission in Florida
There are two main factors that come into play when you are hoping to negotiate a lower commission with a real estate agent. The first is your particular situation and the second is the housing market.
There is a good chance you will have an easier time negotiating lower fees if you have a personal relationship with the realtor, if you’re selling a high-value home, or if you can offer repeat business.
In terms of the housing market, negotiating lower rates is more likely if there is low inventory, homes are selling quickly, and values are rising.
If you are selling your home in a seller’s market, it means that the job of your listing agent is quite a bit easier. Therefore, they might be willing to lower their rates because they expect that your home will sell more quickly and with less work than if it were a buyer’s market.
Based on the stats regarding Florida’s current real estate market, it’s definitely a market that favors sellers. This is because the inventory is still low, the sale-to-list ratio is high, and home values have risen nearly 18% year over year.
(Do you want to add value to your home so you can pocket the biggest profit when it comes time to sell? Take a look at this article to learn how to add value to your property!)
Do I Have to Hire a Real Estate Agent in Florida?
No, you aren’t required to hire a real estate agent in Florida in order to sell your home. However, many experts advise having an agent if you’re listing your home on the open market. Many people don’t realize how involved the marketing and selling process is, and taking the task on yourself might be more than you want to deal with unless you are a real estate professional yourself.
However, there are other ways to sell your home rather than listing it on the market. One increasingly popular route when it comes to home sales is to sell to an iBuyer. An iBuyer is a company that will make an instant offer on your home.
When you sell to an iBuyer, the process is much faster and comes with a lot fewer hassles. The offer they make on your house is cash, meaning that you don’t have to wait for buyers to go through the long, drawn-out financing process.
On top of that, many iBuyers will purchase your house as-is. This means that you don’t have to worry about making repairs, boosting the curb appeal, or even cleaning up.
When you sell to an iBuyer, you’re selling to a real estate investor. This means that they plan on making money from the property either by keeping it as a rental or by flipping it for a profit. Basically, you won’t get an offer that is as high as how much you might be able to get on the open market.
However, for many people, that tradeoff is more than worth it. A lot of home sellers don’t want to deal with making expensive repairs and going through the lengthy process of endless showings, constant cleaning, and negotiations. On top of that, a chunk of your profit from a traditionally listed home is going to go to real estate agents.
Would You Rather Skip Paying Realtor Commission?
When you’re selling your home, handing over roughly 6% of the sales price for a realtor commission can seem pretty steep. Add that to the fact that selling your house is one of the most stressful things you can do, it’s perfectly understandable if you’ve been thinking about taking an alternate route.
Selling your home to an iBuyer is a much more straightforward and fast process than selling on the open market. The process is quick, simple, and hassle-free.
Are you wondering how much an iBuyer would buy your Florida home for? If so, check out our home value estimator here!