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So, just a question here: since you believe 6% is fair, what about the poster's contention that as prices have doubled in just a couple of years, so did your income? I understand it might not be "exactly" double, as other costs have changed, etc, but assuming home prices doubled, so did gross commission. I think the question might be are you being overpaid now (or at least during the white-hot market) at 6%, or were you being substantially underpaid a few years back?
BTW, I responded to your post, but many have posted similar sentiments. In this post, "you" is generic for agents/brokerages that charge 6%. Also, it was the same scenario re: splitting commissions between listing and selling and agent/broker, so that fact doesn't really come in to play as justification in response to his point. The only difference is the gross commission being split has doubled (in the scenario given).
I am not saying agents do or do not deserve the 6%, but I am interested in an answer as to which time period(s) is(are) truly "reasonable" compensation.
When the market shoots up so do the number of agents. It is just like eevry hot industry, everybody wants a piece.
This cuts into the number of sales.
During a hot market more homes also go FSBO which takes more homes out of the mix.
All I have to say to this is what I say every time commission questions come up.
Sellers have the choice between
FSBO and no commission
FSBO w/MLS at maybe $500 plus 2-3%
Budget Realtors at 3-4%
Full Service at 6,7,8,9,10%
Ultimately the seller always makes the choice and these threads should not degenerate into a question of what a realtor should charge because there are so many choices.
If you do not want to pay a realtor 6-8% then don't but also don't complain when you don't get the service you thought you would from the 4% realtor.
So, just a question here: since you believe 6% is fair, what about the poster's contention that as prices have doubled in just a couple of years, so did your income? I understand it might not be "exactly" double, as other costs have changed, etc, but assuming home prices doubled, so did gross commission. I think the question might be are you being overpaid now (or at least during the white-hot market) at 6%, or were you being substantially underpaid a few years back?
BTW, I responded to your post, but many have posted similar sentiments. In this post, "you" is generic for agents/brokerages that charge 6%. Also, it was the same scenario re: splitting commissions between listing and selling and agent/broker, so that fact doesn't really come in to play as justification in response to his point. The only difference is the gross commission being split has doubled (in the scenario given).
I am not saying agents do or do not deserve the 6%, but I am interested in an answer as to which time period(s) is(are) truly "reasonable" compensation.
Well, the market is anything but "hot" right now. It is all a matter of supply and demand. When the market was "hot" there was a battle to find property and make an offer quick enough to get it. The supply was low and demand was high. That made it difficult for buyers to get what they wanted at a price they could afford. Now it is a buyers market, so just the opposite is occuring. Too much inventory that isn't moving. I guess my point is that our job always has challenges and we deserve the money we make. As property prices go up, the cost of everyday things we buy goes up with it. Have you seen the price of gas and do you know how much driving people around we do? We are running our own business and it is an expensive business to run. We cannot "give" our services away. Statistically, most realtor's incomes decreased in the last few years.
... prices have doubled in just a couple of years, so did your income? I understand it might not be "exactly" double, as other costs have changed, etc, but assuming home prices doubled, so did gross commission.
How about in my market; Metro Denver, our prices haven't increased more than 2% in 8 years?
Should I get paid more, since housing prices haven't doubled?
So, just a question here: since you believe 6% is fair, what about the poster's contention that as prices have doubled in just a couple of years, so did your income? I understand it might not be "exactly" double, as other costs have changed, etc, but assuming home prices doubled, so did gross commission. I think the question might be are you being overpaid now (or at least during the white-hot market) at 6%, or were you being substantially underpaid a few years back?
Home prices probably haven't doubled in my market since the mid 90's. But I know gas has, milk has, eggs has, cable has...
It' cost of living unfortunately. Some areas are hit harder by inflation. I know I'm a top agent in my area but without my 3% I couldn't survive in the industry because the profit wouldn't be there. I know ultimately, I just want to make this a more professional industry.
I know I'm a top agent in my area but without my 3% I couldn't survive in the industry because the profit wouldn't be there. I know ultimately, I just want to make this a more professional industry.
Say, don't you ever get tired of patting yourself on the back?
I'm a Realtor in Billings and I have to say that I'm worth every penny. When I work for buyers or sellers I do all the homework, all the leg work, all the time...after all that's my job and that's what I signed up for and i love being busy so it's great for me! My buyers and sellers don't have to worry about a thing.
As for the post about Real Estate Attorneys...I think it's great that buyers/sellers go to an attorney for their services. The more protection the better.
As for all the talk about the 6% though - here in Billings, MT 6% is the going rate and that's 3% for the listing agent and 3% for the selling or buyer's agent. I work for a franchise so right away there's a small cut off the top that goes to the franchise. THEN I get to split what's left with my Broker so I don't get the whole 3%. DOES ANYONE REALIZE THAT Realtors are INDEPENDENT CONTRACTORS and can be SUED at any given point when anyone feels like they were wronged even if the Realtor's not to blame...GUESS WHO GETS SUED??? THE REALTOR!!!!! GUESS WHO LOSES THE CASE IN COURT? Usually the Realtor. I don't hear about law suits very often but when I do it's never good for the Realtor. That's the risk we take being independent contractors so that's what we signed up for and all realtors know the risks. That's why I do all my homework and try not to make mistakes. If there's a question about any part of a purchase or sell I go to my broker and make sure I'm doing what's right. But that's just me. At the end of the day I want to be known as the person that did the right thing. I hope this post isn't taken the wrong way. I'm just giving you my side of the story.
When the market shoots up so do the number of agents. It is just like eevry hot industry, everybody wants a piece.
This cuts into the number of sales.
During a hot market more homes also go FSBO which takes more homes out of the mix.
All I have to say to this is what I say every time commission questions come up.
Sellers have the choice between
FSBO and no commission
FSBO w/MLS at maybe $500 plus 2-3%
Budget Realtors at 3-4%
Full Service at 6,7,8,9,10%
Ultimately the seller always makes the choice and these threads should not degenerate into a question of what a realtor should charge because there are so many choices.
If you do not want to pay a realtor 6-8% then don't but also don't complain when you don't get the service you thought you would from the 4% realtor.
Sorry for a delayed response - been away from here due to personal issues....
First, I don't disagree - there are options for everyone. BTW, I sold real estate for a (relatively short) while (a number of years ago), so I know all the work - and out-of-pocket costs - it entails.
I sense (incorrectly, or not) that several posters are a bit defensive, but I did not intend my post as an attack. I was responding to a specific post and a specific response to that post - the original poster was commenting on the doubling of a commission due to the doubling of home prices (certainly a realistic occurrence in more than one market). The response specifically mentioned the justification of the commission rate due to the extra work needed to sell a home in current markets. Thus, I was curious what the response was to that specific issue(s) raised re: the doubling factor, and also the reality that in very hot markets much less time and/or professional assistance is needed.
I do want to thank you for the explanation of some offsetting factors, such as increased competition - FSBO was not the factor "way back when" so it didn't cross my mind.
dixiegirl, of course statistically realtors' incomes have dropped recently - as real estate prices and activity drops, so does compensation. Thing is, no one ever mentions just how good they might have it when the markets are booming. It's not easy to make a living at anything that does not have a guaranteed or even a steady, consistent amount. That's why both risk and reward are always relative. This style of career is certainly not for everyone.
IMO, the current model of pure commission basis for home sales is outdated. It is a difficult field both to (properly) enter and succeed in. An outstanding real estate professional generally requires experience to become that outstanding professional - a different style of compensation might open the field to more people that would make good agents but don't have the financial wherewithal to get established. It would also make it less attractive to those that jump in when the market is hot despite a lack of desirable experience/knowledge/ability.
I don't think realtors should work for free and I don't see how they can work for free in this market anyway ...
We're going to pay the full six percent comission to sell our house because, I want the realtor to have incentive to move it versus a seller who only wants to pay them two percent.
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just another Realtor opinion...
