The Federal Trade commission has released a real estate guide for consumers that includes information about commissions, contracts and business models.
The guide, “Selling Your Home? Tips for Selecting a Real Estate Professional,” notes that real estate commissions are negotiable.
“They are neither fixed by law nor by any local real estate associations (at 6 percent or any other level),” the guide states. “A traditional full-service broker generally charges more than a nontraditional broker, and if you hire a nontraditional broker you can expect to pay higher fees if you purchase more services.”
When working with a nontraditional real estate broker, the guide notes that sellers may have to do more of the work themselves. “For example, some nontraditional brokers offer a Multiple Listing Service-only package, which includes listing the property on the local MLS for a flat fee: you would be responsible for every other aspect of the transaction, like advertising, running open houses, negotiating with buyers and coordinating the closing.”
Also, the four-page FTC guide suggests that sellers may want to ask about or negotiate a termination clause in a written contract in case they are not satisfied with the broker’s services. And sellers are encouraged to ask about the commission that should be offered to another broker who finds the buyer. Sellers should also ask how the home will be marketed, and whether the listing broker plans to use some combination of multiple listing services, newspaper ads, open houses, and popular Web sites, for example.
When hiring a real estate broker, the guide suggests that consumers ask friends, co-workers and neighbors for recommendations on brokers, and by checking lawn signs and ads for locally active real estate professionals. Consumers should ask for references and should ask how many homes the agent or broker sold in the past year, the guide also suggests.
“Interview several real estate brokers/agents to learn about their experience, track record, style and market knowledge. Expect a broker to be professional: to return phone calls, to be organized, and to communicate clearly,” the guide states.
Consumers seeking more information about buying and selling a home are directed to the “Mortgages & Your Home” section of an FTC Web site: ftc.gov/credit.