Reasonable Realtor Commission (attorney, house, title company)
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Location: Not the end of the Earth, but I can see it from here
2,091 posts, read 2,343,788 times
Originally Posted by MikiJayne
There are plenty of Realtors out there who don't care, and lots who do. Just like in every profession, there are people who are really good at their job and those who aren't. And yes, there are clients who are more work than others, and some that become our close friends.
A few things that many people don't fully understand:
*While some homes sell in a matter of days, some sit for years, it all balances out in terms of costs, risks, etc. While it might not seem fair that both would pay the same, that's the way it is.
*Even though we say you pay 7% to list your house, Realtors very rarely get that. Generally, it ends up being about a 1.75% paycheck. The listing agent's company usually splits half/half with the selling agent's company, the COMPANIES then split with the actual agent, depending on what kind of split they are on. Most commonly, it is a 50/50 split until the agent works their way up in the company. (Even if the same agent lists the house AND brings the buyer, they still have to split with the company, so on those rare instances, that agent might get 3.5%)
And no, I don't feel insulted or bashed, by this thread... yet. But I do ask for 7%, because I am worth it, and I do get it, and I do earn it.
I have bought and sold homes on my own and used a realtor, both in good markets and bad, so I think I can offer a balanced opinion in this regards.
I will first disclose that I used MikiJayne to purchase the home I currently live in. While I didn't pay her commission since I was the buyer, I still think she earned every point of her commission in the sale. Our purchase was especially tricky, because it involved a foreclosure and a lender who was wishy-washy right down to the closing over our terms (I might add that we closed two weeks after the accepted offer.) This was the equivalent to riding in a car with no driver down a very steep road with huge dropoffs on both sides. Her ability to act as our agent and handle the real estate aspect of the transaction made our job as buyers much easier.
In an "up" market, anyone can sell a house. We did this in the early 90s when the market was up. We staged the home, did our homework on comps, had an attorney prepare the paperwork and handle the transaction. We saved a boatload of money. Part of our success was due to the market, and I like to think part was due to our research and hard work to have the home priced fairly and staged properly. We also had the time to devote to doing it right, and also had a backup plan that would have brought a real estate professional in after a very short time should we have not been successful.
We sold our last house in a down market (August of 2008) in a market that had SEVEN years of inventory in our price range. We did it ourselves again, but in this case we had the advantage of knowing someone who wanted to live on our block that was looking to buy. One attorney, lots of faxing back and forth, and we saved the realtor's commission AND sold at a price that ended up being above the market for the time. I might add that the house has already depreciated about 10% in the last year, too. Ouch.
We relocated cross-country in a very good market, but used a realtor to market and sell our home. Why? Because the 7% was a small price to pay for the peace of mind that the sale would be handled with minimal interaction on our part - this allowed us to focus on the move and looking for a new home.
We built a new home when we relocated. With a realtor. This was the second new home we have built. Why would you need a realtor when you're building? For many of the same reasons you would when buying an existing home. And since we were new to the area, it allowed us to once again have someone with experience and factual information we needed to make the right decisions about many things relative to the move and new home.
Now - about that realtor. We're coming into an area we barely know, and haven't lived in for over 20 years. To do our due diligence and find a home that meets our needs and that of our family would take us some time. A realtor already has that part down - they just have to learn what you want (no pink and black bathrooms!) and start thinning out the listings that will appeal to you. Do you think you can do this on your own without spending hours driving around and gather information? And just how accurate will that information be? Do you know the idiosyncrasies of a given area? What might be close to some future planned construction that will affect your property values? Is there a perception (by the locals) that an area is more or less desirable than another?
As a seller, who is going to screen your potential buyers? Or will they? How often do you want to be run out of the house on short notice for a showing when the clients can't qualify for a mortgage? Does your agent know the area, and have a long-term relationship with the local realtor's association and other agents/agencies?
None of this is going to be on your radar without a substantial commitment of time, effort and money. And even then you still may be off the mark somewhere.
Who knows the local laws, ordinances, HOA rules, etc? Who knows the schools? Who knows the community? Can you field calls about properties at work?
Someone who is doing it on the cheap is cutting corners, and the professionals are going to be leery of working with them for just that reason - it will affect everyone in the transaction - their clients, too. Will a professional full service agent risk their reputation to make a sale? I very much doubt it, as they are in this for the long haul, and even like car salesman, rely somewhat on repeat customers and word of mouth.
I could go on and on, but I think I have established my point, which is that a realtor provides a valuable service, and, as stated previously, you get what you pay for.
I own a service business in the area. If a customer called me up and tried negotiating the price for my services, I would politely direct them to one of my competitors. I know my price is fair, if not a good value, for the goods and services I provide. I also know that if they want a "cut rate" job they will eventually call me back when things aren't done properly or poorly. And I highly doubt that they will want to try and negotiate my fees at that point. In the case of a home purchase, that "cut rate job" is something you're going to be living in, possibly for a long, long time. Think about coming home every night to be reminded of how you saved that couple of thousand dollars when you're in a home you hate, or doesn't end up meeting your needs.
While I will admit that I am biased in MikiJayne's favor, my comments apply to realtors as a group. They provide a valuable service, and in most cases are worth every penny they are paid. I would also emphasize what several agents have pointed out here - there is a general perception that the 3-1/2% or 3% they get out of a sale all goes into their pockets - they have to contribute to the overhead of their agency, pay their own taxes and expenses. By the time their share of the commission trickles down, it's not much, in my opinion - especially if you work it out on an hourly basis!
Add to that the hours that a full service agent works, and there is no "time off" - when that phone rings and it's a client, you better be ready to answer, or someone else will end up getting the business.
I honestly believe that people who want to negotiate a commission or want "something for nothing" are doing more damage to themselves than just stepping up and paying for the services of a professional. If you think of a real estate agent like a doctor or lawyer, you get my drift - when you're facing legal action of some sort, you're not going to try and negotiate your lawyer's fees, are you? And if so, would you expect the same level of service as a "full service lawyer?"
Just to let everyone know, our house was active on the MLS on Thursday, and yesterday we accepted an offer. I can't believe the house sold so quickly, especially since in earlier years we just couldn't sell it and right now everyone always says "in this ecomomy...".
I just want to thank you so much for everything you said. I am a full time realtor, and it is nice to hear your comments. I agree 100% with everything you said. Any realtor you have worked with or will work with will be fortunate to have you as a client.
so u paid 7% for him to send out a 'tweet'. it got it sold i guess!!!
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