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Well, correct me if I'm wrong but that's split a lot of ways. It doesn't all go to the person that you deal with -- they've got to share it with other people.
Like who? And who's paying them in other countries?
For the remark about the UK, maybe they're selling themselves short. The "traditional" 6% here is split between a buying and selling agent, so it's actually only 3%. It's hard to compare apples to apples though when you're dealing with two different countries. There are different costs of living, different caveats in transactions, different laws, etc.
The difference is that people in the UK don't seem to use buyer's agents, so there's not that person to pay. Even then, the selling agent doesn't make 3%. So again, I'm curious as to why US realtors feel they are entitled to such a high commission. I don't think they should have to work for free, but almost everything in the UK is so much more expensive than it is in the US...but selling houses is so much cheaper. I wonder why.
First, this is the United States - not the UK. You are trying to compare incomes between two countries - and, IMO, that is impossible.
And you ask "where did the gigantic 6% come from" - first, where do you get the 6% number from? I'm a broker - I have a 1000 agents = all 100% commissioned agents - I see (and approve) each and every listing they take. A) Very few are at "6%". B) Most sales are "cross sales" - another brokerage / agent involved. C) Where cross sales are involved, the gross commission is usually split - so the listing agent does not get the entire commission. D) Many of our listings provide that if the listing agent sells the property themselves, the total commission will be less - often 1.5 to 2% - LESS than your UK example
If I look at split commission offices, the listing agent splits the commission with their broker - the broker covers the overhead (Office, utilities, Advertising, staff etc). In 100% offices, the agents pays for their own marketing costs and often (not always) a share of the office expense as well
I could go on but, the above are some examples of what I believe you fail to realize about our business.
One more thing to consider today: If one of my agents takes a listing, they are obligated to use their best efforts to market that property - and that can (and does) get expensive. Yet, if the listing expires without selling, the agent is out of pocket with those costs - that is a risk they take.
So perhaps you might want to learn something about our business before jumping up and down to merely criticize it.
Please tell me that you also wonder why some people don't like/trust real estate agents. That little diatribe is an excellent reason why.
I certainly didn't say $100K v. $5M. I said $100K v. $300K
I'm a consumer. I just relocated from Canada to Texas, and am using REALTORS on both ends of the transactions, happy to do so, and totally value their professionalism and advice.
That being said, you're full of poo. I'm using a specific example. In the community that I ultimately have purchased in the homes ranged from $200K to $400K. Same neigbourhood, same amenities, same target groups. Please explain how the value of the marketing done is worth a difference of $12,000.
And if you want to argue different rate advertising, the difference between Homes Illustrated and Town and Country isn't 50X, which is what the difference of your commission is.
One element most sellers or buyers either don't understand or don't take into consideration is the element of risk. And risk has a price. When I am a listing agent or buying agent I take most of the risk. As a selling agent I will spend thousands of dollars out of my pocket and substantial time on marketing and other related transaction expenses in order to bring a qualified buyer and close on the house. If that house doesn't sell then I have lost thousands of dollars and wasted much time(and in business, time is money). That's a lot of risk. Now if a seller wants to pay me upfront(and reduce my risk), whether or not his house sells, I would probably reduce my commission. I have actually offerred this to some sellers but have never had any takers. Risk is not an alien concept in business, but rather an integral part of doing business in any field. In general, the higher the risk someone takes, the more they are compensated if the deal is done or job accomplished.
Additionally, the naivete of some buyers who think that the buyer agent's main job is just to help the buyer find a house is scary. They obviously have no concept of risk reduction. Risk reduction is a major component of a buyer agent's job. Simply put, our job is to minimize the risk that anything will go wrong during the transaction process from offer to closing.
There are some savvy buyers and sellers out there who have had prior experience of buying and selling a house, are good negotiators, understand the process, and have the time and wherewithal to handle a real estate transaction without the help of a realtor. To those people I say go for it. However, in my opinion, this group of people accounts for no more than 10% of the buyers and sellers. I cringe when anyone tells the other 90% that they don't need a realtor, or at most, advise them to get discounted services.
Folks, you're not going out to buy a tv set that you hope to get for 10% off. You are going out to make the biggest purchase of your life that is frought with potential risk and potential catastrophe. Those that do their due diligence and hire a good full service realtor are greatly minimizing this potential risk and catastrophe.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Quote:
Originally Posted by desertsun41
What people see is that when our parents bought their home in 1950 for $15,000, the commission paid was $900.00. Todays average sales price of $400,000 the commission paid is a whopping $24,000 or more.
And a gallon of gas cost 19 cents back then. Even less when there were gas wars LOL.
Remember when gas wars were fought between competing gas stations and not nations?
You're not worth 6% unless you're selling a double-wide.
The highest I've paid is 4.5%, and I'd never do that again. I actually had one agent sit with me who said "I don't work for less than 6%". I said "Well you're not working at 6% either, at least not here. Thanks for coming and have a nice day".
3%, that's it. No more, no less. If the realtor wants more than that on a $200k plus house, tell them to hit the road.
Be realistic here. Housing prices have doubled in the last 6-8 years. That means if your percentage stayed the same, your salary would double.
Nice try, but no cigar. 2% was more than fair two or three years ago. Houses were selling in days, not weeks or months. 3% was about right for the second half of last year. MAYBE 3.5 to 4% going forward as the market crumbles, but definitely not 6.
If you don't want people to ask for rebates, then charge less.
Just my opinion of course.
The beautiful thing is that if you don't agree, you don't have to use us. However, many, many, many other people see the value in what we do. My sellers that were going into foreclosure, yet I was able to hold off the bank for 4 months and find a buyer realize my value. My buyer that I helped negotiate 30% off a 600,000 house realizes my value. The seller that had his house listed for $540,000 for over a year until I took over the listing, raised the price to $600,000 and sold it in a month realizes my value.
If you find a Realtor that knows what they're doing, they're worth every single penny. Just because you think you don't need one, don't come on here knocking our chosen profession as worthless, because many, many people realize our value. If this job were easy, everyone would do it and we wouldn't have so many people fail in this career field every year.
Like who? And who's paying them in other countries?
I don't know about other countries but, I'll take a stab at what happens in the US:
Let's say the listing commission is 6% and Broker A has the listing. Broker A's agent is on a 50/50 split commission basis.
An offer comes in from an agent with Broker B. This agent is also on a split commission basis with their broker of 50/50
The 6% may be divided as such:
3% to Broker A
3% to Broker B
Broker A pays 1.5% of the sale to their agent.
Broker A pays 1.5% of the sale to their agent.
Now, let me add a twist (fairly common one): Broker A got the listing because of a referral from Broker C in Podunk City. The referral agreement provides that Broker C will get 25% of whatever Broker A gets.
So, as a result, that 6% was divided up 5 ways.
Hope this helps
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