5 Things to Know About Real Estate Commission on Land Sales


Bailey Peterson


March 2nd, 2021


If you’re struggling with real estate commission on land sales, you need an agent to help guide you. Working with an experienced local agent can ensure you find someone who will get you the best deal. Check out our guide for what buyers and sellers need to know in a land deal.

The modular and mobile home market has been growing as more millennials find it much harder to buy pre-built homes in suburbs and cities. This has caused the land and lot buying numbers to go up.

Lot and land buyers are different from home buyers because, whether they’re developers or individuals, the location has to be unique to their needs. Otherwise, it needs to have all the raw elements to allow it to be customized later.

It can take time to buy or sell land, so it’s vital to work with an experienced local agent who knows the market well. If you’re buying a farm, a plot of raw land, or a place with a demolished home, you need someone to help you navigate. Both sellers and buyers need to know these five things about how real estate commission works on land sales.

How does real estate commission work on land sales?

Work with a Clever Partner Agent to save on commission on land sales.

1. It’s fully negotiable

While there’s a standard going rate of 6% split between buyers and seller’s agents, there’s no legally set rate for any type of real estate transaction. The rate is 100% negotiable whether you’re buying a parking lot, a condo, or a plot of land.

Call several realtors to see what they have to offer you when it comes to rates. You can even ask them what kind of services they can promise in exchange for that rate. This can help to inform your choice of an agent.

Some agents work with a brokerage that takes a lot off the top. If you’re selling with them, it means you’ll have some negotiating power and your listing will be available to every local agent. If you’re buying from one of those agencies, it means they might have the power and influence to fight for a lower price.

2. It’s still split

Even though you’re not dealing with a home sale, there are usually still two separate agents for buyers and sellers. Sellers typically bear the responsibility of the fees, which will fall between 1% and 6% depending on the property.

The real estate listing agent charges you a rate based on their proposed value of the final sale. Land values are typically lower, so in competitive markets, you might have negotiating power. If the selling agent thinks that it’s going to be hard work to find a buyer for your land, expect to pay significantly more.

As a buyer, there’s no reason to settle for anything less than a top-rated agent who knows how to negotiate on your behalf. Since the seller is going to be paying them, it’s in your best interest to find an experienced local agent who has dealt with the time of land you’re looking for.

3. The type of land matters

Since rates aren’t set in stone and full negotiable, the type of land and the type of service matter. In southern U.S. states and places where land is cheaper, you might pay commissions as high as 8% to 10%.

If it’s a buyer’s market, consider subdividing property as a seller. It could be more lucrative to make several transactions rather than to sell the full plot. Working with an experienced local agent can help you determine the size of each plot of land.

4. When selling a mobile home or raw land, rates go high

When commissions on land go as high as 10%, it’s usually because of the kind of legwork that goes into dealing with that type of land. Land for mobile homes requires getting maps, septic information, drainage information, and testing out the well for water. These plots of land are fairly inexpensive, so it makes much more sense to pay agents a higher rate.

Plots for manufactured homes can be wildly inexpensive. If land prices are as low as $50,000 or less and the plot is several acres, paying $5,000 is fairly reasonable an agents’ fee. This fee is going to be split, all while you get the full services of having your property marketed, sold, and closed.

5. Standard charges still apply

Following your transaction, don’t forget that you’ll still have to deal with the standard charges that go along with any kind of real estate transaction.

Title companies charge for escrow services. They hold the funds and give you a venue for the closing. While the buyer usually pays the costs here, it’s split in some instances or paid for by the seller when the market is tightly competitive.

The basic owner’s title insurance policy and the title search that’s usually required need to be handled. They go hand in hand with escrow charges, so if you’re the buyer, expect to pay for these charges out of pocket.

Depending on the stay you’re buying land in, you might also have to pay transfer taxes, which are just a fraction of a percentage of your overall cost. However, if you’re to pay $1.50 on every $1,000 of value on your land sale of $1 million, you must pay an additional $1,500 in cash at the close of the transaction. To get the county to file the deed, you usually must pay a recording fee.

Real Estate Commission on Land Sales Can Be Reasonable

While you might feel like the rates of commission on land sales are too high for what you’re looking for, in most cases the rates are standard and fair. Buying land can be complicated and selling it is no less difficult. Having an experienced local agent in your corner can help make the whole process much easier.

Sellers in sales of over $350,000 pay just 1% commission to the selling agent when working with Clever. Qualified buyers can receive 0.5% of the purchase price back when working with one of our Partner Agents. Contact us today for help dealing with a land sale to ensure you can save on your next transaction.

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