Real estate commissions: How much do agencies charge?
The real estate sector has undergone a profound transformation in recent years. One of the segments that has noticed the change the most is that of the commission for real estate brokerage, as it has seen how, in parallel to the spread of the Internet and new technologies, different very disruptive online agencies have appeared.
These companies offer clients obvious advantages, such as reducing property sales times and greater control over the duration of this process.
Of course, they are real estate companies like Tajarat properties that do not charge the buyer a commission. Their main asset is of an economic nature, since they have established a wide range of fees that have revolutionized the traditional real estate commissions.
How has this business strategy affected the percentage of commission for the sale of real estate or how much real estate commission is paid for rent?
How much is paid to sell an apartment through an agency.
The real estate commission revolution: When the commission for the sale of an apartment is a one-time fee.
There are already online real estate agencies that allow owners to sell their home in exchange for a fixed rate. This is the case of Housell, which was born in 2017 with the aim of “changing the rules of the game in the sector and, above all, generating value for customers, continually innovating”.
This is how Guillermo Llibre, CEO of the company, explains that the cost of his services is 1,395 euros, an amount with which sellers have access to different tools, such as taking a photographic report of the property, contact via chat with potential buyers, personalized marketing and dissemination of your ad, among others.
This business model, in his experience, “makes it possible for anyone to sell their home in a simple, comfortable and transparent way.” In addition, it allows saving on real estate commissions an average of 12,000 euros per client, “an amount that previously had to be paid to real estate companies as fees “.
Likewise, this businessman acknowledges that thanks to the incorporation of technology in the sector, it has been possible to reduce “significantly” the sales times of a property.
In this sense, he argues that using the company’s software, a home has gone from being sold in three months to 43 days, while in cities such as Barcelona or Seville the sale time has been reduced to 60 days.
And was the real estate brokerage commission a flat fee?
Other online agencies, charge a single flat fee per transaction, but they only do so once the home is sold. This cost is 2% of the final sale price of the home, as stated by its CEO, Juan Merodio, who also points out that the chosen strategy “does not contain added commissions” nor does it generate “any type of risk for the seller.”
“We only charge when we sell the apartment, so the owner does not have to pay absolutely anything,” he clarifies.
In return, during the period in which the property is available, those responsible for making available to the seller “a whole team focused on selling the home in the shortest possible time and in the best conditions.”
Specifically, the owners have a personal advisor 24 hours a day throughout the year, in addition to home staging advice, big data analysis and quality certificates, which in Merodio’s opinion means “everything necessary for the potential buyer sees in it the home of their dreams and decides to buy it”.
A ground-breaking strategy with respect to traditional real estate commissions: Payment conditional on the time of sale.
Is it possible to sell a home over the Internet in less than 90 days? Time has become a differentiating factor in the modus operandi of some online agencies, which have seen a market niche in the replacement client.
ts co-founder, Diego Paradinas, comments that this company emerged to respond to those clients who have to sell their current properties “in a tight period of time to be able to acquire new ones.
“If after that time the house has not been sold, the company delivers 100% of the market price of the property to the client at no cost,” he clarifies.
To access this service, customers accept a commission of 5% on the final sale price. But these fees are not scalable, establishing a whole guide to real estate commissions.
Thus, from this company they indicate that they have a second plan, “for those who need to have part of the money from the first moment”, which is why they advance 10% of the amount of the house when the owner needs it, they guarantee the rest in three months. A measure by which they have established a commission of 7.5%.
Likewise, they have also thought about the owners who are not “in such a hurry to sell”, to whom they have designed a standard plan with a commission of 4% of the final value of the operation that guarantees the sale of the house “with the utmost professionalism, in the shortest possible time and at the best price”. ¿ When is the real estate sales commission paid? Always when the operation is closed.
The commissions of traditional brokerage agencies remain the same
The irruption of online agencies has not made a dent, for the moment, in the commercial policy developed by most of the companies that make up the traditional real estate brokerage sector. In this sense, Jesús Gil Marín, anticipates that this company “always, forever” has charged a 5% commission on each transaction.
That is why it rejects that online real estate companies are more competitive than traditional ones, since “they are the ones that give the customer the most guarantees”. “It is convenient to compare similar things and it is not the case.
By type of product and market niche, these real estate companies fulfill a task, but it is the furthest thing from a transaction with guarantees”, he criticizes.
Mercedes Blanco, partner-director of Fincas Blanco, is of the same opinion, who affirms that her profession has “a very important personal component”, which is why she considers that clients require “professionals behind to advise them”. Regarding the commission charge for the sale of the apartment that applies, he asserts that this real estate, which works exclusively with the client, has always charged “a percentage of the final price that he wants to obtain for the sale”, which increases “when the value for which the house is sold is higher”.
For her part, Elisabeth Hernández, director of the Barnes offices in Barcelona, acknowledges following the emergence of online agencies “with interest”, especially in the use they make “of technological transformation “.
However, he affirms that these alternative agencies do not affect the housing segment in which they operate, the high-end, “so we do not see them competitive, nor have they motivated us to vary the real estate commissions that we apply.” These move around 4% -5% per sale.
What will real estate agency commissions be like in the future? Fusion between the traditional and the new?
Those in charge of the online agencies consulted coincide in perceiving the great weight and representation in the housing market that traditional real estate companies currently have.
However, they also defend that the change that the sector has undergone with the arrival of new technologies, “where the great beneficiary is the user”, will force these organizations to reinvent themselves.
In fact, they predict that “if they do not do so they run the risk of losing some customers who have seen how innovation made their lives easier”. This step leads other professionals to think that the future of the sector will go through the merger between the traditional real estate market and online agencies.
Thus, they conclude, for whose managers that synergy “is already an indissoluble reality that will increase in the coming years”, given the advantages it offers to both types of actors.
Negotiating the price of the sale: What is the difference between the starting price and the agreed price?
The coronavirus pandemic has revealed a significant gap between home buyers and sellers. This has to do with the increase that has been registered in recent months between the difference in price at which the owners are willing to part with their properties and the purchase value at which the buyers wish to close the operation.
What reasons explain the discrepancies between supply and demand? And what is more important: What percentage in the final price of the sale can this distance represent? To what extent can the price of the sale be negotiated?
The differential between the price at which a home is offered and the value at which it is actually bought increases in times of crisis and can reach double digits.
According to the latest supply and demand report from the real estate portal flats.com, in 2020 sellers offered a standard apartment for an average price of 137,520 euros, while buyers had a budget of 97,500 euros.
Buyers are launching more aggressive offers to the downside, although their budgets can be somewhat more flexible if it really is a home that they are interested in purchasing
The residential market has assumed in 2020 a reduction in the price of second-hand housing close to 10%. This situation, indicates Expósito, is prompting potential buyers to launch more aggressive offers, “knowing that today they are the ones who have the upper hand”. However, from this company they recognize that given the situation of bank financing for housing, “the lowest we have ever seen”, demand budgets are beginning to become more flexible, “especially if it is about acquiring the house that is really want”.
Jesús Duque, also believes that the demand is benefiting from such conditions. Along these lines, he insists that buyers are aware both that “they may be in the lower zone of the house price curve ” and that banks have started a mortgage war to attract the most solvent clients.
“So the mortgage conditions, both at a fixed rate and at a variable rate, have reached the bottom.” “All this allows those who can buy to be more interested than ever in doing so and even invest a little more budget to access a much better home than what they could have allowed a year ago,” he emphasizes.
The crisis situation has generated a situation of oversupply of housing for sale before which the owners require advice and information from professionals.
Since the coronavirus pandemic broke out, there has been a drop in the number of real estate transactions close to 25%. This result explains the situation of oversupply of homes that exists in our country, as a consequence, among other factors, “of the growth in the number of homes from rent or the increase in empty properties due to the death of their occupants,” says Duque.
In the same way, from this organization they regret that has stopped receiving foreign population seeking housing and that it has been accusing a drop in international investment for several quarters.
Faced with this problem, industry experts point out that homeowners require advice and information, since “if they really intend to sell, they must put the best price on their home within the context in which we find ourselves.”
This is explained by Jesús Gil Marín, who argues that brokerage professionals help to close the sale in the best conditions for the owner, since “they have data that is difficult for anyone to obtain.” Otherwise, he regrets, “the product may burn” and lose value.
Sales times are lengthening, but they are doing so fundamentally motivated by factors external to the operation, such as the perimeter confinements imposed by the pandemic.
In parallel, from the sector it is noticed that currently the deadlines to close a sale and purchase transaction are getting longer. In this sense, Blue world city islamabad refers to the fact that there are “many owners who do not want to give their arm to twist and accept the real market price that is currently set.”
On the other hand, from donpiso they insist that there are properties that have no demand “or have very little and at prices that increase the differential to what the owner is willing to sell”, which explains this increase in purchase terms.
“Administrative procedures and visits to notaries are delayed, we can say that perimeter confinements They are affecting sales times, but these are factors external to the will of the buyer or seller”, he concludes.