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Should a Family Member Be Your Realtor and Charge Commission?

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Should a family member be your Realtor and charge commission for selling your home? Before you ask your family member for a commission discount, think of what it really takes to get a home sold.

Q: Should my brother-in-law charge commission for selling my mother’s house?

Should a Family Member Acting As Your Realtor Charge Commission?

A: Real estate agent, plumber, attorney, electrician, gardener, personal caretaker, chef – the job itself isn’t the issue. The question you’re really asking is should one relative should charge another for his or her services.

The implication is that you think your brother-in-law should should act as your mother’s Realtor but not charge a commission and instead do this job for free.

So, let’s stop for a moment and consider what the job of a real estate agent entails: A great agent should not only provide a comparative marketing analysis, so that you know what similar homes have sold for in the neighborhood, but should help you arrive at a marketing plan for the property that takes into consideration what competitive properties are on the market now and for what prices. The idea is to come up with a hook or niche pricing, that allows your property to shine above all others. If done right, it’s not an insignificant amount of work.

Once the agent wins the listing, he or she should work hard to make sure information about the property, including its location, amenities, size and price, is widely available. There should be lots of high-quality color photos, perhaps even a video, listings on a number of publicly available websites, and a social media engagement strategy that promotes the listing everywhere buyers might see it.

Realtors Pay a Lot of Fees That Come Out of their Commissions

Real estate agents often pay a lot of the costs associated with these efforts out of their commission. An agent may have to pay a fee to list a property, as well as shell out for other fees on the way to the closing. In addition to splitting the resulting commission with his or her own broker, the listing agent typically shares a portion of the commission with the buyer’s broker. The net take? Sometimes less than a quarter of the total commission, or maybe as little as one to 1.5 percent of a total 4 to 6 percent commission.

Is It Fair For Family Members To Charge a Real Estate Commission?

So, is it right for your brother-in-law to charge a commission for selling your mom’s home? That depends. What if he is only charging your mother the out-of-pocket expenses he has to pay to sell the home. Or it could be that he is only charging a reduced fee from his end and paying the buyer’s broker his or her fee. Sometimes agents are required by the brokerage firms they work for to charge for their services. Others can discount the amount they charge and still others will charge the fee and give a portion of it back to the relative after paying taxes on the money.

Now if your brother-in-law is charging your mother a full freight commission and she isn’t confident in his abilities to sell the home, the solution is to find someone else to list and sell the property. If your brother-in-law is the best one for the job, then your mother will be in good hands with a broker she trusts and she’d be paying a commission to him in exchange for the work he’s going to do as she would with any other real estate agent broker.

How to Decide if You Can Ask for Zero Commission

What you should do is talk to your mom and ask her to help you understand why she made the decision to have your brother-in-law help out. Ask what the financial terms of the deal are so you know if he is extending any discounts to her or doing things that any other broker might not do.

But be prepared for your mother to tell you to MYOB. It’s her house and unless you own it or suspect that she is being taken advantage of, how she disposes of it (and who she pays to help her) is her business.

Related Articles

Real Estate Agent Commission: What Agents Really Make

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Home Seller And Buyer: Negotiate Lower Real Estate Commission With Agent

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