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Just a little cut and paste for the 3rd time since this keeps coming up.
"I would go for an hourly rate.
If it is a flat rate per listing that is fine also. I will hand them the invoice when the listing contract is signed and get paid before I leave.
Here is how I laid it out in another post for someone who suggested this.
"That is fine by me. You pay me as we go. I will keep track of my hours and bill weekly. At say $60 an hour, just to ballpark a figure, plus ad costs you get an invoice for $1150 the first week.
Subsequent weeks probably will not be as high but for argument sake lets assume 40 more hours over the next 4 months plus ad costs so you get another invoice for $2900.
After 5 months we go to contract. In this time we will be offering, counter offering and following up. We will also be meeting appraisers, inspectors, contractors and others at the house after the contract is finalized. Lets figure about 40 hours for this. Here comes another invoice for $2400.
You are now 5 months in, have paid out $6450, we go to closing and the buyer backs out. Fine by me because I got paid. Not to good for you being out $6450 and facing the prospect of having to go through the same thing again.
Sure a higher priced home may save some money going this route if everything goes smooth but someone with a lower priced home can end up paying alot more if things don't go smooth."
Now keep in mind this is just for me the sellers agent, the buyers agent will be charging the buyer, we will figure around the same amount. So we have what works out to a little over 6% if this was a $200,000 house. If it is a $150,000 it would be over 8%. This all without the guarantee of closing.
"But... But... But.... Don't you give a performance guarantee?"
Good Stuff, Mike.
You know, plunking down a $3500 retainer and maintaining a balance with the agent might make some Sellers more responsive to issues with the property, and more realistic on pricing and negotiations.
Maybe Sellers SHOULD have some skin in the game...
Somehow lawyers manage it... and believe me, they often don't know how much time they're going to spend on a case. They do contingent work too, but that's usually for someone who can't pay an hourly rate (because they don't have any money). They generally pay WAY more than the work is worth, because they have no choice; also, if they don't win, they pay nothing. I would guess that most real estate agents have very few properties that just never sell (correct me if I'm wrong). And in those cases, an hourly fee would certainly benefit the agent!
A contingent percentage could be an OPTION for selling real estate, just like it's an option for legal work. I would just like to see more options, that's all.
Oh, and 80 hours? If the house sells for $200K, and you get 3%, you're getting $75/hr. That's more than I make as an attorney (OK, many make more, that's my choice of what kind of work to do. Still, I paid $60,000 for my education). If the house sells for $400K, you'd be getting $150/hr. Not bad, I think. How many hours do you think you AVERAGE on a property? How many hours do you think a buyer's agent puts in to sell a property (for their 3%)?
Actually it's $49/hr using my real splits on a 200 k property. Realtors don't get that whole commission, there are company splits and franchise fees. I could live with that an hour if you also paid my expenses. Of course, you assume a 200k closing...this was a 105k closing. Do you want to pay $4800 to buy a 105k home because you just did with your scenario. And it was a tough close. If we didn't get it there I'd have been owed anyway. If an agent knew he got paid anyway...well he might not would tried so hard and it might not would have closed. So you might have just paid $4,800 to not buy a 105k home.
Just a little cut and paste for the 3rd time since this keeps coming up.
"I would go for an hourly rate.
If it is a flat rate per listing that is fine also. I will hand them the invoice when the listing contract is signed and get paid before I leave.
Here is how I laid it out in another post for someone who suggested this.
"That is fine by me. You pay me as we go. I will keep track of my hours and bill weekly. At say $60 an hour, just to ballpark a figure, plus ad costs you get an invoice for $1150 the first week....
Not to mention I would say the resistance would be pretty steep to $60 per hour for a service that doesn't even require an associate degree.
I guess what bugs me is that the people who happen to have more valuable homes (which don't necessarily require more effort to sell, but result in a bigger commission), and those who are cooperative and reasonable (and thus end up requiring less work), end up subsidizing the cost of providing service to sellers with less expensive homes (who pay less), those who make life more difficult for the realtors, and those whose homes never do sell (so no commision ever paid).
In the legal world, that is how it works with contingent fees also. The plaintiffs who win big (and pay 30% to their attorneys) subsidize the expense of representing the clients who don't win their cases, or get smaller awards. This is inherently unfair, but acceptable BECAUSE the client almost always has a choice - they can elect to pay the attorney's hourly rate, and pay for only the services they get.
It is much harder to find a choice in real estate. Particularly if you like the work of one particular agent or broker, you pretty much have to take the "contingency" fee deal. You pay ONLY if your house sells, and then a percentage.
I would rather "bet" on my skill and effort at making my house presentable, being willing to accept a reasonable price for it, being willing to cooperate with the agent and potential buyers, provide truthful disclosure, etc., by paying an hourly rate plus expenses. If my house takes more effort to sell it's at least partly my fault, I'm sure. If I'm paying hourly, then I "win" if I make it easy to sell my house - less effort required, so I pay less. On the other hand, if I take the contingent deal, I "win" - get the better deal - if my house requires MORE effort to sell, or returns a lower price, than the average, in which case the commissions paid by others are subsidizing the work that my house required. I would think that the agents would be happy with a fee structure that encourages sellers to HELP sell their houses (so as to minimize fees), rather than one that penalized those owners who make the job easier.
On the other hand, as long as the poor schmoes with easy-to-sell, properly priced and clean houses are willing to pay whatever is necessary to subsidize the guy down the road who refuses to accept reality or clean his cat box, then what difference does it make to the agent. It's more "consumer friendly" to charge a contingent percentage, after all, most people don't really do the math, and they're getting a big check on closing day, so what's a few thousand that they never see, compared to actually writing checks from their bank account before that check comes?
Not to mention I would say the resistance would be pretty steep to $60 per hour for a service that doesn't even require an associate degree.
I used $60 an hr because that is what the courts here usually use for an amount when an agent needs to testify as an expert witness.
I am sure in other areas it would be higher.
I made a little over $275 per hour last year. Sure, I took six weeks of vacation, but I worked normal hours the rest of the time. I also sell over 50% of my listings direct without another agent, so that saves the seller half of the commission. What sellers are getting is many years of experience, very deep connections in the local market that yield a higher percentage of direct sales, and one-on-one representation.
Wow, i have been watching this thread for ages and there have been some very interesting points raised. The problem is, and i dont think enough people realize this but risk is a big part of the game. If you go and buy a car, and have bad credit, the lender will offer you a loan but at a much higher rate. Why? because you are a risk. It is exactly the same in real estate. We are taking a risk. If the property doesnt sell, we loose all of the costs we have incurred in listing that property. I would be more than happy to charge a set fee to sellers and i have often used this example on my listing presentations. If you want me to list your home but you dont want to pay the 5-6 % or whatever it may be for my services as the sellers agent, and payment to the buyers agent, and this is paid when the house sells, then assuming i would have earned $11,000 based on a commission, i am more than happy to cut this down to $6000, so you have essentially $5000 discounted. This would be valid for a 6 month listing contract and then would be renegotiated if the property hasnt sold and you want to relist it. However, this fee has to be paid over a 2 month time period regardless of whether the property sells or not. You can consider the discounted $5000 the charges for the risk. When people realize they have to pay upfront and their property may not sell, they soon realize what a good deal they are getting, particularly considering all the costs incurred to market their property. I work in the Central Florida market, and as i am from the UK originally i market alot of properties in the UK. So consider my marketing charges are higher because of the exchange rate also, but that is why sellers use me because i do market internationally. Its a tough one to call, but unfortunatly you cant have it both ways, either pay upfront for our services and you assume the risk, or let us take the risk and accept our charges accordingly. You would if you had bad credit and bought a car on financing.
The comparrison to buying property in the UK to be honest, doesnt hold water, because real estate doesnt work the same here as it does there. There property is not listed for all realtors to see. people go to different realtors to see what they have listed and the realtor automatically works for both sides, but consider as he had the listing first, his first priorty is to the seller. There really are no such things as buyers agents, but there are also other charges to sell in most cases upfront which you dont see over here. It just simply isnt an apples to apples comparrison and cannot be used as such
I used $60 an hr because that is what the courts here usually use for an amount when an agent needs to testify as an expert witness.
I am sure in other areas it would be higher.
I don't doubt it is higher, for many at least. What I was saying is I think if the industry were to try and covert to a strictly hourly wage and the "avg" billing rate was $60, I think the resistance would be intense. Doesn't matter if that (or higher) is what is actually earned - if it is spelled out that black and white, I think more sellers might balk.
As to the OP that averaged $275 per hour, good for you. However, it is a rate that IMO proves the point that compensation is often quite high in relation to services delivered - even for an outstanding agent.
I don't doubt it is higher, for many at least. What I was saying is I think if the industry were to try and covert to a strictly hourly wage and the "avg" billing rate was $60, I think the resistance would be intense. Doesn't matter if that (or higher) is what is actually earned - if it is spelled out that black and white, I think more sellers might balk.
As to the OP that averaged $275 per hour, good for you. However, it is a rate that IMO proves the point that compensation is often quite high in relation to services delivered - even for an outstanding agent.
Yet most people have no problem paying a plumber or electrician that much or more.
I don't think there would be resistance to the amount per hour but I do think people will see that they are better off with the current method which is that they don't pay if the home does not get sold.
Edit: Actually just checked my last bill for my rental when I had the AC guy out. $85 Hr. I may have been lowballing on my $60 an hr.
I made a little over $275 per hour last year. Sure, I took six weeks of vacation, but I worked normal hours the rest of the time. I also sell over 50% of my listings direct without another agent, so that saves the seller half of the commission. What sellers are getting is many years of experience, very deep connections in the local market that yield a higher percentage of direct sales, and one-on-one representation.
Over here the seller agent takes 100% if there isn't a buyers agent. So you aren't taken the 100%?
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Hi there
