Real estate agent's commission (Orlando: for sale, credit, brokers)

[deafcharger]

Hi,

I would like to know what is average for real estate agent's commission. I think 5% is average here in Orlando. Can it be negotiate down to 3 or 4%?

[chopchop0]

Originally Posted by deafcharger

Hi,

I would like to know what is average for real estate agent's commission. I think 5% is average here in Orlando. Can it be negotiate down to 3 or 4%?

I've typically seen 2.5-3% When two agents are involved

[bmw335xi]

It's very inappropriate to suggest they take a cut in commission. Commission is usually around 6% total, so when split it's usually 2-3% each. Redfin is now in South Florida and they are working on the Orlando area now. I'm not sure when you are planning to buy, but if it is not asap, you should wait until they are in Orlando because they give back 15-45% of the agent's commission back to the buyer. Agents work on a salary and get a bonus based on the customer review at the end of the process.

I just thought you may be selling your home, if that's the case commission is sometimes negotiated.

[usp2]

You can sell the house yourself and get it down to 0%. Real Estate agents do most things on the Internet these days. You have access to the same data and search engines that they have. Asking for a lower rate isn't inappropriate, and the 6% is too high considering all the automation that now exists that didn't exist back when Realtors had to work much harder for that same percentage. Some seller agents appear to do almost nothing. Buyer agents have to drive people all over town and pay for gas and tolls.

Why wait for RedFin? There are numerous discount brokers already here. It is the business model of some smaller agencies to offer discounts below the big guys. Two of my credit unions, PenFed and USAA give kickbacks to buyers if you get a Realtor through them, and both operate in FL. The buyer-agent I worked with gave me 50% of the commission he received (minus a processing fee) and he did a fantastic job.

If you look at the MLS listings of houses for sale you will see a variety of commission rates. Although if you offer a buyer commission that is too low then they will steer their clients away from your house, which will increase the length of time to sell, which will cause other buyers to be suspicious.

[nealrm]

You get what you pay for in real estate agent. I have seen the work of "discount" brokers. Dark, blurry, lopsided photos, limited advertising, poor pricing, etc.

You can also go FSBO, however make sure you understand all the legal aspect of selling a home in your areas including: what is required in disclosures, what can and cannot be used in advertising. You will also need to make all advertising materials, get them place and paid for, arrange for someone to be present for all the showing (even if that means taking off from work) arrange for photos, determine the correct price, do an open house, answer buyers questions at anytime during the day, negotiate with buyers, coordinate with the buyers or their agents for inspections, appraisals and the like, .....

You should also know that the average FSBO sells for 10% less and stays on the market 3 months longer than a similar home sold by an agent. Also expect to pay the buyers agent 3%.

[jameshardin]

Ok, I am a Realtor so I do have a bias about this.

Unless your market is different, the seller will pay a standard 6% fee. 3% goes to the listing agent, and 3% goes to the buyer's agent. I am strictly a buyer's agent, and I have been asked by clients to use my commission to help them get into a more expensive home. My answer is NO. Unless we make sales, our kids go hungry. There is no regular pay, or benefits for that matter. The one time I gave a portion of my commission to a client was due to his banks mis-representation of a closing credit. We had three contracts fall through before this home (due to sellers and bad inspections), and I could not stand to see the poor guy lose another home.

Listing agents don't spend nearly as much time servicing their clients. However, they will be crucial in representing you to the buyer's agent. I have had many inexperienced listing agents divulge things about their client which gave me a very strong negotiating position against them. If you hire a discount broker, you are more likely to get cell phone quality pictures, and poor quality marketing. My lead agent who handles all of our listings hires a professional photographer, at his own cost, for every listing. Even if the seller cancels, they are not asked to reimburse this cost. A good quality listing agent will usually never negotiate down their commission, unless you agree to use their services to acquire a new home.

[usp2]

I've heard that statistic that FSBO houses sell for less and stay of the market for longer, but there is no way I believe it. Realtors tell you that when making their sales pitch, yet it is never backed up with specifics. It is likely a completely made up number that the Realtor organization came up with to use in sales pitches. The buyer wasn't asking about FSBO, so I don't want to hijack his thread with that topic.

I don't believe that "you get what you pay for" applies. Nearly all Realtors will ask for 6%. The good ones and the bad ones. What they charge isn't a good indicator of quality and price is not the method you should use to distinguish good from bad. It is likely the case that the most experienced sales agents will say no when you ask for a discount, or they will say yes and pass you off to a junior associate. The bigger issue with the discount is that they will also offer the buyer agents less and the buyer agents may steer their best customers away from your house.

[CrystalBond]

There is a risk in paying anyone commission. There are a lot more costs in selling a home than most people think unless they are in the industry. The real estate agent bears ALL of the cost in the transaction whether or not the home sells. They coordinate every detail to make sure the home closes, they negotiate, they spend money advertising, etc. I don't know where people get the idea that our internet marketing is free. Of course, there are free sites - but in order for us to push to those sites like realtor.com, trulia, zillow, etc - we also have to maintain membership in a local board. That sure as heck ain't cheap. Also fuel costs, and the time we spend working with each client tend to get quite high. I can work for 6 months trying to sell a home, put out several grand, then lose out at the end of the day if it does not sell. Oh, and don't forget, since we all work for brokers - we have to pay them monthly and a percentage of every transaction. Sometimes we also have to pay them a transaction fee too.

6% is charged because it makes it more fair to both agents. Most good, or "experienced", realtors know that if they discount their rates on occasion - it will be expected on many more occasions. If you were working for an employer and they asked you to lower your hourly rate - would you? I'm going to guess that is a no. It's kind of the same deal for us. That is our bread and butter and is what helps feed our families.

I would encourage anyone to do their research when hiring a realtor. Find out who friends and family used and get their feedback.

[nealrm]

Originally Posted by usp2

I've heard that statistic that FSBO houses sell for less and stay of the market for longer, but there is no way I believe it. Realtors tell you that when making their sales pitch, yet it is never backed up with specifics. It is likely a completely made up number that the Realtor organization came up with to use in sales pitches. The buyer wasn't asking about FSBO, so I don't want to hijack his thread with that topic.

The numbers are based on actual studies. I'm not a real estate agent, but I am involved with real estate advertising. Based on what I see, the studies are correct. FSBO take longer to sell and sell for less.

Originally Posted by usp2

I don't believe that "you get what you pay for" applies. Nearly all Realtors will ask for 6%. The good ones and the bad ones. What they charge isn't a good indicator of quality and price is not the method you should use to distinguish good from bad. It is likely the case that the most experienced sales agents will say no when you ask for a discount, or they will say yes and pass you off to a junior associate. The bigger issue with the discount is that they will also offer the buyer agents less and the buyer agents may steer their best customers away from your house.

You contradicted yourself. First you state that you don't believe in the "you get what you pay for". Then you state several example that show that you get less experience or service for a discount rate.

[GregTraub]

WHOA WHOA WHOA other agents! For one, THERE ARE NO STANDARD COMMISSIONS, and the suggestion that there is, opens you up to charges of price fixing. Commissions are NOT set across the industry and there is no standard commission, call and interview as many agents as you wish and ask what they will charge, all brokerages and the majority of agents even within those brokerages can/will charge a different commission.

I personally charge a certain rate to market and sell your home but am flexible. Things like if you have been a past client of mine, the price range of your home, how easy you make it to sell your home (access, condition, location of the home, realistic price), and many other factors will go into whether I discount my fee, or in some cases, increase it.

A good listing agent is worth their weight in gold, a bad one (and there are many) is a complete waste of money and in that case, you likely would be better off selling by owner.
The good ones however, will be able to expose your home to the widest possible audience (at their cost), narrow down the audience to those interested in your area, neighborhood and house. Field calls on the house, coordinate showings, review offers and explain what all the terms of the now 11 page contract mean to you (and your equity) and to the success of the sale. Assist you in negotiations (Making sure you know what your position is, what terms mean more to you or the buyer and not just get you the highest price possible, but the lowest costs possible and most importantly get the deal together!)... Make sure both you and the buyer comply with the sales contract, coordinate title, mortgage, appraisal, inspections, closing, etc... and deal with any unavoidable issues that may come up along the way.

Those sellers that see the value in professional representation I love working with. Those that think they can do it themselves, I wish them the best of luck (and can even offer some helpful tips). There are lots of statistics out there showing what FSBO's get vs. those listed with an agent. I too am doubtful of the accuracy of those statistics, but what I find the most convincing thought in the FSBO vs. Agent debate, is looking at what kind of buyer is going to be going after FSBO's.
Given working with a buyers agent is free and that ~95% of homes for sale are listed by an agent...what kind of buyer is looking for FSBO's?
1. Buyers that don't know any better (find them! but hope they are cash buyers because their bank still won't let them buy for higher than market value)
2. Buyers that are also looking to "save the commission" or looking for a great deal (hence why they are putting in the extra effort themselves to find a home vs using the assistance of an agent for no charge)

So do you expose your property to the widest buyer audience possible that is willing to pay market price for a house? Or do you rely on luck finding the uninformed buyer willing to pay your asking and hope their bank agrees that your price is correct.