Sep 9, 2019
Whether you’re buying or selling a house in Georgia, you probably already know that there are a number of different costs involved.
For example, if you’re buying a home in Georgia, you need to cover the down payment long before you begin making monthly mortgage payments. You might have to invest in mortgage insurance before even getting approved for that loan, too.
If you’re selling your home in Georgia, you might want to invest in anything from a presale inspection to help with staging. You could also have to pay for escrow fees, remaining HOA dues, and more.
Whatever the case, both sellers and buyers need to be wary of one especially important cost involved: the real estate commission in Georgia.
According to the National Association of Realtors, more than 90% of sellers used a real estate agent to help them sell their homes last year.
The vast majority of those real estate agents charged their clients the same way, too: on commission.
Just how much those clients were charged depends on the real estate agent themselves. They might charge more as a reflection of their experience level, the high-end market they work in, or because they specialize in serving a very specific clientele.
For the most part, though, the average real estate commission is between 5-6% of the home’s price. So, if a home sells for $300,000, and the agents charge 6%, they would collect $18,000 at closing.
Again, some experienced real estate agents may be able to justify charging 7% or more for their services.
In the example above, the agents may collect $18,000 at closing, but they’re not actually keeping all of it.
First, if the buyer used a different agent, the commission is split between both the listing agent and the buyer's agent. Using the earlier example, if the commission was split in half, the seller’s agent would keep $9,000 and the buyer's agent would get $9,000.
Second, if the agent works for a brokerage – and most do – they typically have to pay that broker for their help. Just how much they have to kick back to the broker usually depends on the brokerage and it's individual rates or fees. In some cases, those who sell more homes every year are usually allowed to keep a larger percentage of their commissions.
Some brokers charge their agents a flat fee per sale or even just a flat monthly fee. The majority charge a commission, though, which can easily range from 30-60% of what the agent made on a sale. So, although you may have to pay the agents 6% of what you sold your home for, they might have to split that with the other agent and then split the rest with their broker.
Now that you understand how real estate agents get paid, let’s talk about what kinds of commissions you can expect them to charge in Georgia.
The average real estate commission in Georgia is right around 6%. That’s the higher end of the average that we mentioned above, but keep in mind that Georgia’s real estate market is extremely healthy at the moment. It also isn’t lacking for attractive neighborhoods, so it makes sense that commissions would be a bit more than other states.
In Georgia, it pays – literally – to hire an experienced agent who can make the most of these opportunities.
Fortunately, as we mentioned earlier, you can greatly reduce your real estate commission in Georgia by choosing an agent who only charges 1% to sell or looking for an agent who offers incentives when you buy, such as a Homebuyer Refund.
Sometimes, one agent will work for both the buyer and the seller in Georgia. Other times, the homeowner may handle the sale of their house, but “for-sale-by-owner” is losing fans.
However, most of the time, sellers and buyers both have their own real estate agents in Georgia. Each agent is tasked with looking out for their respective client’s best interests while also working together toward the common goal of finalizing the sale of the home.
You already know that a seller’s agent charges their client a commission once the home is sold.
However, many homebuyers in Georgia hear this and assume that means they don’t have to pay their agent. Many agents even market themselves by explaining to potential clients that their services are free.
As it turns out, that’s not completely true.
Instead, it’s probably more accurate to say that both the buyer and the seller end up paying the real estate agents, albeit in a fairly roundabout way.
Put yourself in the shoes of the seller’s agent for a minute.
If you knew you had to split your commission with someone else before you had to then pass along another large percentage to your broker, what would you do?
Like most other agents, you’d factor that cost into your total price.
So, while technically the seller pays the real estate agent’s commission in Georgia, the buyer is contributing their fair share, as well. It’s just baked into the price they’re paying for the home.
On paper, the real estate commission in Georgia can appear fairly straightforward, but you now know that there’s a lot that goes on behind the scenes. Even though it might seem high, agents have to charge at least 5% just to make a decent living.
Or do they?
At SimpleShowing, we are pioneering a new way of helping homeowners save a lot of money when they hire experienced agents to sell their homes.
Contact us today to learn all about how we keep the real estate commission in Georgia to a minimum.