Understanding the Fees Paid to Agents

You’ve decided to sell your house, and you’re probably excited about the prospect of making some money. But before you get too excited, it’s essential to understand that selling your house may come with costs and fees. In this blog post, we’ll explain the various fees associated with working with real estate agents versus selling directly to investors.

Why You Might Have to Pay to Sell Your House

It’s true—selling your house can sometimes mean paying fees. This isn’t always the case, but it often is. Knowing about these fees can help you decide whether to work with an agent or sell your house directly to an investor.

Before we dive in, understand that the fees you owe during the sale process are typically deducted from the sale proceeds if there’s enough equity. However, if there’s not enough equity, you may need to bring additional funds to the closing table.

An Example to Illustrate Fees Paid During a Sale

Let’s say you sell your house for $100,000, and you owe $50,000 to the bank. If your fees total $5,000, this amount will be subtracted from the $100,000 sale. After closing, you’ll receive a check for $45,000 ($100k – $50k – $5k).

Now, suppose you sell your house for $50,000, and you owe $50,000 to the bank. If your fees total $2,500, you’d need to bring $2,500 to the closing to complete the transaction ($50k – $50k – $2,500).

Agent Fees vs. Investor Fees

Fees Paid to Agents

An agent is a salesperson who will list your house and use various marketing strategies to find a buyer. If the agent sells your house, you’ll typically pay a commission, which is often around 6% of the sale price. For a $100,000 sale, this amounts to $6,000.

In addition to the commission, you might face other fees. These could include advertising fees, listing fees, brokerage fees, or costs for signage. Many real estate companies in Kansas City charge a commission and then add on fees for their support staff, sometimes even their broker. These extra fees typically range from $200 to $300. However, not all agents charge this extra fee, so it’s important to ask. They should explain all their fees upfront.

Investor Fees

Here’s where many house-sellers are surprised: most investors don’t charge fees. There’s no commission because they aren’t agents and don’t list your house. You might be responsible for closing costs at the title company, but this depends on the investor, so make sure to ask who covers those costs.

Other Fees That Come Out of Your Proceeds at Closing

Some investors advertise that they pay all fees, meaning you don’t have to worry about anything. What are these fees? There are several, including title policy fees for the buyer, closing fees, filing fees, wiring fees, and document preparation fees. There may also be transfer taxes and county filing fees that the seller typically covers. While many investors will handle these costs, real estate agents usually won’t.

If you have unpaid real estate taxes or liens, those are generally your responsibility as the seller, regardless of how you sell. However, some investors and even agents can help you negotiate these down, depending on the situation.

When we buy, we cover the closing fees with the title company and the seller’s fees. We’ve also helped negotiate mortgage loans through short sales and removed old liens.

The “Fee” You Might Not Be Thinking Of: Holding Costs

There’s one more cost to consider: holding costs. When you work with an agent, you’re responsible for bills and taxes as long as your house is on the market. Although this isn’t a fee paid directly to the agent, it’s a cost you incur because of the time involved. On the other hand, when you sell to an investor, they typically buy quickly, saving you from these holding costs.

What’s Right for You?

Deciding whether to work with an agent and all their fees or sell directly to an investor depends on how much you’re willing to pay and how quickly you need to sell.

If you want to explore this in more detail or confirm that we won’t charge you any fees if you sell to us, please get in touch. We’re happy to walk you through the process.

We’re happy to give you more information about our buying process and to share with you exactly how it all works. Just fill out any of the forms here on our site to start the process.