Poll: Home Sellers Don’t Understand Real Estate Commissions
Many homeowners are misinformed about how much it actually costs to sell a home, according to a new study of prospective home sellers.
The average homeowner remains ill-informed about real estate commissions, according to a recent survey of 1,000 Americans who indicated they were planning to sell their homes within the next year. The survey from St. Louis-based Clever Real Estate found that 45 percent of home sellers didn’t know they were expected to pay the buyer’s agent commission. Only 35 percent knew what the standard commission fee is as determined by their home’s final sale price.
The findings echo concerns voiced earlier in the year by the Consumer Federation of America, which called for improvement of disclosure laws, and an outright ban of dual agency.
Tom O'Shaughnessy, author of the report from Clever Real Estate, said the poll showed 37 percent of home sellers would consider a dual agency, and 46 percent were unsure. These types of arrangements are controversial, as dual agents have no clear fiduciary responsibility to either party involved in the sale.
O'Shaughnessy said that despite widespread industry disruption, real estate professionals still have a crucial role to play in the home-selling process — and it’s unlikely that demand for their services is going to go away anytime soon. Most home sellers — even those trying to sell for sale by owner (FSBO) — still need a real estate agent. About 50 percent of respondents said they wouldn’t feel comfortable negotiating with buyers, and about 62 percent wouldn’t feel comfortable finding and completing the necessary paperwork for closing.
Clever's poll found that many home sellers are on the fence about using a real estate agent, said O'Shaughnessy: 32 percent were unsure if they’d end up using an agent, and 14.5 percent said they were planning to try to sell FSBO.
The key takeaway is that many homeowners simply don’t understand all of the costs involved in selling a home. Real estate agents should set realistic expectations at the outset in order to avoid nasty surprises and difficult conversations further down the line. This is especially true for first time home sellers, who were 53 percent more likely to believe home buyers pay commissions than experienced home sellers.
“Many home sellers don’t understand commission fees," said Chris Doss, an Atlanta-based Keller Williams agent. "Closing costs are important, and many sellers don’t realize the true costs until I’ve met them and gone over their net price. It’s been so long since they bought their first home, and they forget (or maybe never knew) sellers pay commission fees. I recommend real estate agents be open and honest when courting clients to avoid uncomfortable conversations down the road.”