Nashville Real Estate News

If you are in the Nashville real estate market and considering buying or selling a home, it's likely you will be using a Nashville real estate agent to guide you through the process. Per the National Association of Realtors, nearly 90% of buyer's bought their home through a real estate agent. As for sellers, the National Association of Realtors reports that 92% of homeowners used a real estate agent to help sell their home. My point is, chances are, you will be using a Nashville Realtor regardless if you are buying or selling a Nashville home.

When using a licensed agent, one of the main discussions you will need to have is how to compensate the agent. For the most part, Nashville real estate agents are compensated through a commission which is usually a percentage of the gross sales price of the home. Seems fairly simple really however, due to many different factors, it's actually a bit more complicated. 

It's important for you to understand that the source of compensation doesn't determine agency. In other words, just because you are selling your home and your agent is splitting his commission with the other agent, doesn't mean the other agent or buyer's agent is representing you. It's also possible that agency or representation can exist even if no agent is collecting a fee. What you need to know is the fee structure should always be spelled out in detail in your representation agreement. It's upon you to understand it and ask any questions before you sign the agreement.

Here in Tennessee, a licensed real estate agent will always work under the umbrella of a real estate broker. A Tennessee licensed agent can't work independently and they are prevented from being paid a commission directly by a buyer or seller. On the other hand, a real estate broker can work independently and even hire licensed agents to work up under his umbrella. In this case, all real estate commissions earned by agents are paid directly to the broker and then the broker splits those commissions with the other agents involved in the transaction, minus any fees.

In most percentage based commission models, the commission isn't paid until the transaction actually closes or settles. Their are also commission models where the client could be responsible for paying a commission, even if the transaction doesn't close. Some more recent compensation models, like flat fee models require the client (buyer or seller) to pay a greatly reduced upfront fee which is non-refundable. These flat fee models are growing greatly in popularity as the cost savings to the consumer can be as much as 90% of a traditional percentage based commission model. Once again how your agent earns his income will be described, in detail, in the representation agreement you sign. 

Most real estate agents make money by earning a commission. You as the consumer must be aware of how the agent is paid and when payment is expected, so you aren't surprised at the settlement table. It's critical to your success that you read your representation agreement thoroughly ask any questions and seek legal advice if necessary, before you sign. 
Posted by Jesse Gonzalez on October 24th, 2018 1:06 PM

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