People thinking about selling their homes for the first time sometimes wonder — and sometimes have asked me — why they should give a cut of their sale price to a broker. Another way to ask the question is: What do sellers get for the commissions they pay their real estate agents?

The simple answer that we real estate professionals offer is that selling quicker, and for a better price, makes our commissions more than worth the money. But I’d like to elaborate on this, because so much of the work of selling a house goes on behind the scenes. Much of that work also requires cash out of pocket: spending money to make money.

An agent’s commission typically ranges from 5 percent to 7 percent of the sale price.

That commission is a real estate agent’s entire income. We don’t get a salary; we don’t get paid anything unless we complete a transaction on our client’s behalf. From that commission we cover all the overhead of operating an office and keeping our professional credentials up to date, as well as all the expenses required to effectively market the client’s house.

Biggest of these is print advertising. This is my largest expense after paying my office staff, amounting to tens of thousands of dollars annually. Other specific marketing tasks that take time, expertise and money include:

• Maintaining and updating website listings.
• Designing professional-looking ads, both print and online.
• Posting information about a property on social media such as Facebook and YouTube.
• Having professional photographs made to show off the property to its best advantage.
• “Staging” the home to make it as appealing as possible when prospective buyers visit.
• Getting accurate measurements and floor plans made by a professional appraiser.
• Making signs, which sometimes include specific details about the property, or must meet an individual neighborhood’s requirements.

Each of these services can cost several hundred dollars. Each one has been proven to help sell a home. If the agent doesn’t make these investments in the sale, either they don’t get made, or the seller has to make them.

An important fact about commissions that isn’t always obvious is that most agents split their commissions with the company they work for. Real estate firms provide a lot of services in return for their share of an agent’s commission, but that also means the individual agent may end up netting just 3 percent or 4 percent, or even less.

That percentage, what’s left after out-of-pocket expenses and the company’s share, buys the individual agent’s experience, contacts, time and hard work.

Here’s an important example. Every Tuesday, my company holds a sales meeting in which we discuss our new listings. Then we all go out and preview those properties, walking through them all, sharing ideas about which potential buyers might be most interested in each one. Offering suggestions to the listing agents of how to make the property more marketable. If we have a home listed, it’s also helpful to take a look at the competition. Those are the houses in the same neighborhoods, or with similar features, that are listed by other agents.

All this takes time and burns gasoline.

More time and gas money is invested in showing homes to prospective buyers. Add in the time spent on the phone, returning messages, and networking. Some people get paid by the hour for this kind of work. We don’t.

Then there’s the matter of expertise. 

Some of this is highly technical, making sure that all the many disclosures and forms required in a real estate transaction are handled correctly. These tasks can be very cumbersome. Making mistakes can be very risky. So having a pro who’s up to date on all the rules and all the paperwork can save you money, and keep you out of court.

A homeowner is also buying an agent’s expertise in the art of selling.

A full-time agent knows how to sell a house. That’s not just promoting it to possible buyers; it’s also helping to iron out the inevitable wrinkles that turn up when buyers and sellers are trying to reach an agreement. Helping both sides to say “yes.”

The more experienced the agent, the more creative he or she can be in solving the sorts of problems that can derail a sale. Aside from experience, an agent will be able to look objectively at issues that might be emotional tangles for the buyers or the sellers. More than once, I’ve helped find a solution for a husband and wife who are disagreeing about the details of a sale. These are solutions that neither of the parties could see on their own.

Just the other day, I met with a seller who was frustrated by a long list of issues that had nothing to do with me, but who just needed to complain. He griped to me for a full 30 minutes — I checked my watch — before turning to me with a smile to ask, “What do I owe you for the therapy session?”

So one of the many ways that agents earn their commissions is to help calm people down during a stressful and emotional time in their lives, and help them keep focused on their goal. Sometimes the best service an agent can offer is to be just a sounding board, reassuring clients that they’re making the right decision. Or, sometimes, to help them figure out what the right decision is.

Have a question about buying, selling or any other real estate matter? Let me know and I’ll address it in a future article.

Michelle Clark is a broker with Intracoastal Realty, based at the Wrightsville Beach office. She is an Accredited Luxury Home Specialist, ALHS and also a Short Sales and Foreclosure Resource. Whether you are buying, selling, or investing, know that Michelle and her team will go the extra mile for you. To learn more about Michelle and Intracoastal, go to www.intracoastalrealty.com. You may contact Michelle at [email protected] or 910-367-9767. Like Michelle’s team on Facebook at www.facebook.com/MichelleClarkTeam.