While you may not put much thought into it, knowing how your Philadelphia realtor gets paid is important information to know. Learn how a realtor gets paid in the Philadelphia real estate market.
Understanding Pennsylvania Real Estate Commissions
It may come as no surprise that realtors in Philadelphia earn their income by receiving a commission on property transactions. However, how much they make is determined by a governmental group.
The Pennsylvania Real Estate Commission (PREC) is not only the entity that grants real estate agents their licensure, it also sets the guidelines for fair commission rates.
While commission may not be the only source of income, it will be the largest part and one that is split between the agent and the broker.
According to PREC, the average real estate commission in Pennsylvania that is split between agent and brokerage is 6%.But it’s not as easy as saying the agent gets 3% and the broker gets 3%. Take a look at this situation: A property sells for $200,000. When using the 6% commission rate, that is split between the buying and selling agent–meaning your agent gets 3% or $6,000 from the property.
Now, the next rate is determined by the commission split between the agent and broker. In many cases, this can be a 60/40 commission split. In these cases, that may mean the agent gets 60% of the initial commission rate.
These numbers are taken before expenses and taxes, which also should be kept in mind.
While the commission split is agreed upon by a broker and the agent, the broker still must adhere to the PREC guidelines. Further, these rates are not set in stone and can fall at a rate of anywhere from 5% to 6% commission.
I’m Buying a Home. Will My Realtor Charge a Fee?
When you are looking to buy a home, the idea of having to pay a realtor may seem like an extra cost you need to plan for. However, it doesn’t technically work that way.
When you buy a luxury property in Philadelphia, you will be working with both your realtor as well as the seller’s realtor when closing the deal.
Once the sale is final, both realtors will split a commission fee which is calculated by the purchase price of the home.
This fee is paid by the seller, but it is calculated into the overall cost of the home. So, once you make the transaction on the home or property sale, you’ve done your part in “paying” the agents.
What Other Fees Do I Need to Consider When Purchasing a Home in Philadelphia?
When purchasing a home in Philadelphia, there are other fees you as the buyer or seller need to be mindful of, such as:
- Home Inspections: Before a home can go on the market, an inspection must occur which can cost a few hundred dollars or more.
- Photography: While many brokers will have someone on staff to take professional photos of the property, these are a necessary part of the listing process.
- Staging: In some cases, you may have already moved out all of your belongings in preparation to sell. In those cases where not even barebones exist, the realtor may suggest staging the home to sell which can be hundreds of dollars a month.
- Closing Costs: While not technically a realtor fee, you need to be mindful of the costs accumulated at closing such as loan and title fees, insurance, taxes, surveyor, recording of the deed, etc.
Looking for a New Home in Philadelphia? Contact Maxwell Realty
With more than 10,000 closed transactions and over $3 billion in real estate transactions, Maxwell Realty will make sure you will get the best deal for your new luxury home or on the sale of your current property. Our CEO Nancy Alperin has been in the real estate business for more than 50 years. An active real estate owner and investor, Nancy has bought and sold millions of dollars worth of residential and commercial properties in the Philadelphia real estate market.
If you are thinking of buying a home in Philadelphia or are interested in selling property in the City of Brotherly Love, we’re here to help. Contact us today or check out our featured properties for sale.