Reasonable Realtor Commission (sale, foreclosure, HOA)

[gtrman]

Originally Posted by domergurl

ok ok ... let's not turn this into a real estate agent bashing thread.

Name one element of what I said that could be considered "bashing."

[locean]

Originally Posted by gtrman

$10,000 to the realtor meant a paltry $350, money he/she would have surely spent on advertising while waiting on it to sell at a higher rate. Obviously, it's a lot more significant to the seller. (There's a great analysis of this in the book "Freakonomics," if anyone is interested.) Seller beware, in other words.

Get someone you can trust. There are some good agents out there, but there are also some who will be happy to sell you short, take their %, and move on.

You don't understand. For example, if he told us to list our home at $100,000, and we didn't think that was enough, we told him to list it at $110,000. If we didn't tell him to list it higher, he would have walked away with $7,000. Since he listed it at $110,000, he got $7,700. Remember, he charged us 7% commission! Yes, it's a paltry extra $700 to him, but what extra work did he do to sell a house in 11 days? The answer...NONE. He didn't even have time to advertise it. The only advertising came in the form of a sign in our yard.

I'm familiar with "Freakonomics" and I know the part about realtors not caring or putting forth extra effort for a few extra dollars they gain by increasing the sales price of a home. Contrary to what the book would have you believe, there are realtors out there who work hard for their money and go out of their way to help their clients, and I don't think it's fair to say something you read in "Freakonomics" holds true 100% of the time. It's good to make you think about things and, as you say, beware.

On the flip side, realtors have to deal with some real nuts, and the kind of people who really don't understand the market and the true value of their home, and expect realtors to bring in customers by the dozens, while their home sits in a filthy and in need of repair.

[Michelle Morris]

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.

[Naptowner]

There's no reason to pay more than 5.5%

Open houses don't sell homes - they're mostly for the benefit of the realtor.

If your home is priced properly and staged well, it should generate some offers. The realtor has the right to decide whether s/he will list the house for the price the owner wants to list it for. I feel for realtors whose clients refuse to accept reality, but the realtor has an opportunity to decide whether the listing is a good one or not, and accept it, or not. And I agree there is a wide discrepancy between good realtors and poor realtors, but there's still no reason to pay more than 5.5 or maybe 6 percent.

[Michelle Morris]

There are plenty of reasons to use a full-service Realtor vs. a discount Realtor, or vice-versa. It just comes down to what the client prefers. No biggie. Just like some people drive Cadillacs and some drive old clunkers. Some people prefer fine dining, some will happily eat at Burger King every day. Some buy their clothes at Wal-Mart, some shop at department stores. There is nothing wrong with either approach, they are just different preferences.

Just don't expect to get "Cadillac" marketing and service at "Burger King" prices. That will usually not be the case.

[Chuckity]

Originally Posted by dansuz1

We're putting our house on the market soon and have interviewed 3 Realtors in the last few days. The first one wants a 6.5% commission, the second wants 7%. The third will get back to us on Monday, and we're on the edge of the seat waiting to see what she wants for a commission (7.5%?)!

I plan to negotiate all three of them down, but want to understand the market better. My understanding is that 6% is the standard. But, with real estate markets what they are, can I negotiate the rate down to 5.5% and still expect top performance by my agent and many willing buyer's agents willing to act on those terms.

The agents we've talked to are from Century 21 and ReMax. Maybe smaller realtors would be willing to take a smaller commissioner.

Thanks for your input.

I have to say, I haven't seen commissions over 6.5 in a while - except in some REOs.

I'm wondering if your home isn't priced on the lower end of the sales spectrum - hence the higher commission structure.

[Naptowner]

Originally Posted by MikiJayne

There are plenty of reasons to use a full-service Realtor vs. a discount Realtor, or vice-versa. It just comes down to what the client prefers. No biggie. Just like some people drive Cadillacs and some drive old clunkers. Some people prefer fine dining, some will happily eat at Burger King every day. Some buy their clothes at Wal-Mart, some shop at department stores. There is nothing wrong with either approach, they are just different preferences.

Just don't expect to get "Cadillac" marketing and service at "Burger King" prices. That will usually not be the case.

For a $300,000 house, the difference between 5.5 and 7 percent is $4,500. Split that in half and you get $2,225. I'm curious to know what extra services a 7 percent realtor would provide over a 5.5 percent realtor, and how the cost of those services compares to the increase in commission. In either case, the realtor doesn't get paid at all unless the house sells, and I think more and more, people depend on online listings, which are cheap as all get out, rather than looking through print publications for homes. I'm not bashing, just curious about what someone should expect from a 7% realtor versus a 5.5% realtor.

[Michelle Morris]

A 7% Realtor is known as a "Full-Service". I have a full marketing plan at my fingertips, I really take care of everything while you go on living your life and doing the things that are important to you. I am not trying to advertise myself, but I do want to answer your question from my perspective. Here are some things my company and/or I can offer that are different from many other companies:
*TV Showcase of Homes
*Centralized Showing Service- sets up the showings and then gets more feedback by e-mailing showing agent a survey immediately after showing. Then, I follow up with calls. Some agents have no way to get feedback put in place.
*Internet Lead Management Team- all companies put your house on the net, but when we have someone fill out the online requet form for more info, we actually have a staffed office that will call them back and answer their questions, usually within half an hour during 8am-8pm weekdays or 10-5 weekends. Yes, it's staffed 7 days a week. If that person is ready to go look at the house, they will hook them up with an agent in the area they would like to look. That agent MUST be able to contact them within 2 hours or we don't get the lead. Most times, when you fill one of those out you might hear back in a few days, we answer them
*The marketing is pretty much all automatic. We do not have to contact newspapers, worry about getting things online or even mess with it. We have all the mechanisms in place ready to go.
*Of course, I also put my listings on my blog, website, social networks.
*We have a great partnership with the Indy Star, of course we put ads in their papers, but we also have the "premium package" for their online home search, "homefinder.com" all of our listings are brought to the top of the page and have added features like photos, guided tour, an open house notification.
*The best part is that all of our advertising is co-op'ed by the company so if I had a slow month or made a ton of money, you still get the highest level of service. I do not have to pay out of pocket for the things I offer you. I am currently having my best year ever, but if I wasn't, your advertising would not be feeling the pinch.

With some lower commission agents, I've seen they have no set plan, but haphazardly throw your house out there and "hope" it sells. They put it on the internet, and do nothing about it. They may leave scheduling showings up to you by putting your phone number on the MLS. If they want an ad in the Indy Star, they have to call them up, design the ad, and pay out of pocket for it.

Also, as you mention, we get nothing if the house doesn't sell, so we are taking on a risk with every home we list. We spend a lot of time to do all the work involved, and people very rarely want to account for the time and efforts spent, they just mention the cost of the marketing, as you did. A more expensive home is more of a risk because they often take longer to sell, require more time from the agent, and we stand to lose more if it doesn't sell. I do not offer some people a lower commission based on how much their house should sell for, I don't think that's fair at all. How can I tell Seller A, ok, you have to pay me 7%, but seller B only has to pay 6%.

[dansuz1]

Chuckity,

We're listing at $124,900. Not a mansion on Geist. Right in the middle of the spectrum, I think.

Maybe agents should be paid a flat fee. Why a sliding scale based on home worth. The time and tools are the same for a 125K home as a 400K home, aren't they? Are the 400K homeowners subsidizing the 125K home owners?

[Chuckity]

Originally Posted by dansuz1

Chuckity,

We're listing at $124,900. Not a mansion on Geist. Right in the middle of the spectrum, I think.

Maybe agents should be paid a flat fee. Why a sliding scale based on home worth. The time and tools are the same for a 125K home as a 400K home, aren't they? Are the 400K homeowners subsidizing the 125K home owners?

I'm all for that - and in advance too.