Are you someone who is trying to sell or purchase land and is having difficulty in doing so? Then probably a huge reason behind this is that you are unable to contact a real estate agent to help you out. These associates are an excellent portal through which you can access all your potential options. They will market your land for you if you are looking to sell property. On the contrary, if you are willing to buy land, these agents will assist you by understanding all your requirements and then searching for suitable properties.
Sometimes, an agent is able to connect two of his own clients for the dealing of a property. Regardless, the way agents make money is via commission. This commission is a percentage of the price that the land is sold at, and hence its value depends on the value of the real estate being bought/sold.
On average, this commission is estimated at 6% of the final sold price, whereas it could be higher for vacant and raw lands because, in their case, an estate agent’s job is considered much tougher. There are few features of dealing with an agent that sellers and buyers must be aware of, and that is what we will be discussing in today’s blog post.
The Commission Is Always Negotiable
A usual misconception that buyers and sellers have while working with an agent is that their commission is fixed, and hence some naive clients pay up whatever price they are asked. But no, that is not how it works. A standard rate of 6% is established, which is to be split between the buyer and seller’s agent, but this is not fixed by the law and has no legal importance.
Hence, the rate is always negotiable, and you can have a quick chat with your agent deciding the rate before you choose to hire them irrespective of what it is you are buying. Instead of randomly picking out an agent for your real estate adventure, do your homework on a bunch of them. Call them up and take an idea of how much commission the market agents ask for, and then you can compare them.
Also, ask them what services will exactly be offered in return for the commission you will be paying.
The Commission Is Split
Even though the selling of houses is not considered here, even with lands being the topic of discussion, the commission is still split between the seller’s agent and the buyer’s agent. And it is the buyer who is responsible for paying this commission to both the agents. The agents will ask for a commission depending upon the price at which the property is sold. If the agent thinks that your land will be hard to sell because of its location, there are high chances that he will ask for money so prepare to pay up more than usual.
If you are the buyer, use this position to your advantage and go for a best-rated agent who will be able to provide you better options for purchase. As the seller will be responsible for the commission, do not worry about the money and choose the best real estate agent you can find.
Commission Depends on The Type Of Land
As the commission value is open to discussion and is entirely negotiable, there are high chances that it will be the type of your land that will act as the critical feature in deciding the amount of the commission. Where lands tend to be cheaper in value, commission rates can go as high as 10 %, as is the case with southern states of the US.
If your land is being sold in the case of a buyer’s market, it will be a good idea to subdivide your land and then sell it. A divided land will help you as multiple separate transitions make more money than selling the entire land as a whole. An experienced real estate agent will help you divide the land by letting you know how to divide the land, how significant each portion should be, and its complete process.
Commission Is Higher for Raw Land
Commission for raw land is higher because extra effort goes into its marketing and purchase. Maps and information about the drainage and water supply, for example, need to be wrangled up by the real estate agent. Plus, empty lots are usually not that expensive, so there is more wiggle room to pay a good agent for their contribution. Considering the extra complexity of buying raw land, you’ll probably thank yourself later.
PS: also keep in mind that there will also be some must pay amounts in the process of insurance dealing and tax transfer etc.