The Cost of a Real Estate Transaction

Brokerages have costs, for offices, and providing online presence. It’s a high over head cost that some other Brokerages cut to offer services for a discount, or the new thing is to rebate money at closing. All Brokerages try to present the idea that a Real Estate transaction is complicated, which it is, but once the Principals are in place the transaction itself is kind of automatic.

Agents can hire a transaction coordinator, or many Brokerages offer a transaction coordinator for a fee. The cost is low, because the coordinator gets paid on volume. You can look up mortgage Brokerages that operate on the same principle. A second part of the equation is a virtual assistant who does the little things to keep the transaction moving along.

Total cost for services that are contracted out is about $1000, maybe $2000. If you include the escrow, Purchase, and Sale Agreement a Real Estate transaction could cost as much as $4000 for both sides, total.

So this idea of paying a 6% commission is pretty high. That’s $12000 for a $200K transaction.

On this blog we have talked about why people pay the commissions, and justified the idea of paying a full Brokerage commission. What I have never done is present the realities that the Real Estate industry is loaded with scammers. Online Brokerages are my biggest target for presenting the fact people pay way too much for very little that an Online Brokerages gives them. If you aren’t paying for Real Estate experience, know how, or insider information then why pay the high fees?