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Call your agent and ask her what you asked us.
She will be flattered you want to list elsewhere if she
can't be your #1, will hate losing you but will understand and wish you the best.
You might find out she'll be back in the loop very soon
and might want to relist with her.
It sounds like Agent #1 is excellent. If she is now in a position to personally provide you with the service you need, it seems that you'd be in a good position if you stay with her. But you need to tell her that you are not happy dealing with Agent #2 (or anyone else) and that you understand her potential time constraints so you just need a straight out answer from her as to whether or not she is able to function as your agent. If she's not, then it's probably not a bad idea to interview different agents -- for instance the agent(s) who sold the comps.
But do give your initial agent the opportunity to say whether or not she really can help you. It sounds like she has a lot invested in the transaction already and that she did an excellent job until an emergency situation caught her off guard. If her life situation has resolved (or she's learned to manage it), there's no reason to think she won't do an excellent job again.
Re: the commission v. bonus, kind of depends on whether $1,500 is equal to or greater than the increased commission. If the amounts are basically equal it doesn't make a big difference which way it's presented.
She does have alot invested in our home and I felt horrible to leave her at such a bad time in her life. I will give her a call, I just felt funny because it has been awhile since we talked and agent#2 recently e-mailed me saying if I was not going to use agent #1 then she would be by to pick up her "stuff" I was alittle upset that agent#1 didn't call. But everyone is right I just need to talk to her!!
No buyer agent likes to tell their client at contract that they will have to make up the .5%-1% difference that the seller's agent isn't offering.
. . . and that's just one reason why some people get all twisted about real estate agents. There's no reason why agents can't take what's offered by the sellers in the MLS rather than lock in 3% in their Buyer's Agent agreement. Too many buyers aren't sophisicated enough to realize that they're screwing themselves when they lock themselves into such an unnecessary clause.
Quote:
Originally Posted by kickinbackfl
Question 2. Should we give 5 and 1/2 precent with 1,500 dollar bonus to the buyers agent (as we did before) or should we go with a stright 6%? Please don't say any more than that, as we are losing as it is!!
As for the offer, here's my suggestion and what I've usually done. I've always listed at a straight 5%, split 2% to the listing agent and 3% to the buyer's agent. If the listing agent also brings the buyers to the table, the commission will be 4%.
This arrangement allows a full incentive for all the thousands of agents in the region to show my property. There's no disincentive with something lower than their expected 3%.
Conversely, it is only a small percentage of sales where the listing agent also brings the buyers to the table. Even with the small chance of such a deal occuring, one might think that the lower double-ended commssion (4%) would be a disincentive for that small percentage, but I haven't found that to be the case. In the end, if my agent double ends the deal, they still get an extra 1% over showing any other agent's lisiting in the MLS. That's still an incentive for my agent to show their buyers my property over any others in the MLS.
So, that's something that might work for you. You wouldn't be causing a problem for all those contracted buyer's agents who have locked their buyers into a commission structure you wouldn't be paying. You would also be saving a little money that you can keep or allow towards a further price decrease compared against your expenses in a straight 6% listing.
It sounds like Agent #1 is excellent. If she is now in a position to personally provide you with the service you need, it seems that you'd be in a good position if you stay with her. But you need to tell her that you are not happy dealing with Agent #2 (or anyone else) and that you understand her potential time constraints so you just need a straight out answer from her as to whether or not she is able to function as your agent. If she's not, then it's probably not a bad idea to interview different agents -- for instance the agent(s) who sold the comps.
But do give your initial agent the opportunity to say whether or not she really can help you. It sounds like she has a lot invested in the transaction already and that she did an excellent job until an emergency situation caught her off guard. If her life situation has resolved (or she's learned to manage it), there's no reason to think she won't do an excellent job again.
Re: the commission v. bonus, kind of depends on whether $1,500 is equal to or greater than the increased commission. If the amounts are basically equal it doesn't make a big difference which way it's presented.
How do I find out who sold the comps, if that is the route I choose to take?
LOL, you know Linus, that might not be a bad idea :-)
I don't know what she's offering, but at $300K, 6% = $18,000. She could offer the buyers a new car... or pay their mortgage for a year... or just take $18K off her price.
How do I find out who sold the comps, if that is the route I choose to take?
Well, if your current agent hasn't provided you with MLS reports on those homes and you didn't notice the yard signs when they were on the market, you could always knock on the door and ask the new owners who had listed the home when they bought it. If you remember the brokerage name from the yard signs, just give them a call and see if they can put you through to the specific agent who listed the house.
Agents have easy access to that information via the multiple listing service, but it would be a bit uncomfortable asking your current agent to find out who those other agents are.
Alternatively, drive around your neighborhood and see if you notice any particular agent with a large percentage of listings. Many agents "farm" a specific neighborhood so they are experts in that one area. While being a neighborhood expert is only one aspect of what makes a good listing agent, it's an excellent place to start.
As for the offer, here's my suggestion and what I've usually done. I've always listed at a straight 5%, split 2% to the listing agent and 3% to the buyer's agent. If the listing agent also brings the buyers to the table, the commission will be 4%.
It's impossible to adequately market a listing nowadays for 2%. Assume you have a $250k house. 2% = $5000. Subtract 30% for the broker's split = $3,500. Subtract 45% for state and local taxes = $1,925 net before marketing expenses. I spend $500 up front on the marketing that I have ready the day the house hits the market in an effort to make sure the house sells as quickly as possible, so that would take the gross commision down to $1,425 if it goes under contract immediately. Of course, even when it does go under contract immediately, that's no where near the end of the listing agent's work. She still has to negotiate the contract and see the process through to closing, which can be a long and arduous journey, particularly now.
Unfortunately, most homes are staying on the market longer and longer -- many in this market up to a year. Quality marketing of a home for an extended period could literally cost an agent more money than you are offering them for commission. And, of course, many homes are expiring rather than ever being sold, so those agents are out every penny that they spent marketing the property.
I know there are always going to be agents out there who will accept cut rate terms in order to get a listing, but recognize that you get what you pay for. Agents are professionals with skill and experience. They expend a great deal of time and energy on their client's behalf and they deserve to be adequately compensated. Also, listing agents are the ones with the actual expenses involved AND the ones who have the lowest guarantee that their expenses will ever actually be paid (buyers are more likely to produce a closing than sellers).
If you get a listing agent to accept a cut rate deal, don't expect high quality service or marketing. What you'll probably end up with is someone who sticks a sign in the yard, puts the listing in the multiple listing service and basically "hopes for the best" while using your yard sign as a billboard to get "real" listings in your neighborhood. It might seem like you're saving money, but the odds are good that you're actually costing yourself more than you save.
. . . and that's just one reason why some people get all twisted about real estate agents. There's no reason why agents can't take what's offered by the sellers in the MLS rather than lock in 3% in their Buyer's Agent agreement. Too many buyers aren't sophisicated enough to realize that they're screwing themselves when they lock themselves into such an unnecessary clause.
Your right there is no reason, other than the agents income.
A good agent will show their clients any home that fits their needs, and if the commission is only 2.5% it shouldn't be a big deal, 2% is pushing it, agents have costs of doing business and bills just like everyone else. And I always saw the clause as helping the buyer keep their agent on their side. It SHOULD keep bad agents from ignoring great houses at great prices simply because they offer less than market commission. When you guarantee the agent will be paid for his efforts, they are more likely to do what they are supposed to do, which is represent Your best interest. Human nature....ain't it a *^&*(?
That being said, GOOD agents are unfortunately few and far inbetween, and that's how we get our bad rep.
It's impossible to adequately market a listing nowadays for 2%. Assume you have a $250k house. 2% = $5000. Subtract 30% for the broker's split = $3,500. Subtract 45% for state and local taxes = $1,925 net before marketing expenses.
That's not a good asumption in my market, or mny markets for that matter. We haven't seen an average house price at that amount for, oh maybe since 1990, maybe a few years before that. Currently, 250K won't even buy a run down house in the ghetto.
The last figure for an average house price that I saw put it over 500k, and that was for a house that I wouldn't let my dog live in. So let's take those figures for a common (not average) tract home in a decent SoCal neighborhood.
Here we go using your words to make the parrallel . . . assume you have a 700K house. 2% = $14,000. Subtract 30% for the broker's split = $9800. Sbtract 45% for state and local taxes (btw, this figure is waaaay too high for me) = $5390 net before marketing expenses.
Here's the question . . . Can you market the house, now? I think the answer is, "yes."
Those are more accurate numbers for lots of people. Personally, I can see 6% commissions in market with inexpensive housing. However, when the average price is much greater, I don't see the value. There is no difference in the job done by the two set of agents, yet one makes almost 3 x's the money for the same work.
Now, when prices start exceeding $1MM, 1.5MM, 2MM, etc., the value becomes less and less . . . and before someone thinks that such prices are rare on houses, it's really not true. It's very common for run of the mill tract homes to far exceed $1MM in some markets. Do agents in those markets deserve 6% commissions? Do they earn 6%commissions? Not in my book.
So, the commission structure I described worked well for me. It most recently sold a SFH property in the Spring of 2007 . . . in the slow market. Personally, I would have liked to have offered less, but there would have been a disincentive in place. I have to deal with that because of the effective lock the real estate industry has on transactions. There's no effective competition.
That's not a good asumption in my market, or mny markets for that matter. We haven't seen an average house price at that amount for, oh maybe since 1990, maybe a few years before that. Currently, 250K won't even buy a run down house in the ghetto.
The last figure for an average house price that I saw put it over 500k, and that was for a house that I wouldn't let my dog live in. So let's take those figures for a common (not average) tract home in a decent SoCal neighborhood.
Here we go using your words to make the parrallel . . . assume you have a 700K house. 2% = $14,000. Subtract 30% for the broker's split = $9800. Sbtract 45% for state and local taxes (btw, this figure is waaaay too high for me) = $5390 net before marketing expenses.
Here's the question . . . Can you market the house, now? I think the answer is, "yes."
Those are more accurate numbers for lots of people. Personally, I can see 6% commissions in market with inexpensive housing. However, when the average price is much greater, I don't see the value. There is no difference in the job done by the two set of agents, yet one makes almost 3 x's the money for the same work.
Now, when prices start exceeding $1MM, 1.5MM, 2MM, etc., the value becomes less and less . . . and before someone thinks that such prices are rare on houses, it's really not true. It's very common for run of the mill tract homes to far exceed $1MM in some markets. Do agents in those markets deserve 6% commissions? Do they earn 6%commissions? Not in my book.
So, the commission structure I described worked well for me. It most recently sold a SFH property in the Spring of 2007 . . . in the slow market. Personally, I would have liked to have offered less, but there would have been a disincentive in place. I have to deal with that because of the effective lock the real estate industry has on transactions. There's no effective competition.
But most people do not live in Southern California. My figures are much more apropos not only for the OP (in Florida) but for most people in the US. There are certainly times when a lower listing commission is acceptable but since the average US home costs nowhere near the price of a home in Southern California it's just not realistic to generalize from that market to the rest of the country. Therefore it behooves most buyers to understand the financial realities of the business of real estate. When they hear someone say that 2% is a reasonable commission for a listing agent it's important for them to know in what circumstances that might be reasonable. Many people feel that they need to beat down their listing agent on their commission, but the reality is that in MOST cases for most homes, the agent simply cannot do adequate marketing and make a fair living on a cut rate commission. And since only a fool would routinely accept listings where they do not make a fair living then you would have to assume that such an agent is either skimping on marketing or is not bright enough to be in business, and why would you want either to list your house?
We have multi-million dollar homes in Atlanta as well. Quite a lot of them in fact. Granted these are undoubtedly much grander homes than you'll find at the same price in Southern California where average prices may be $500k. But for these high priced listings too I would argue that less than 3% is inadequate. These homes typically stay on the market for many months and high priced listings require exponentially greater marketing expenses. Agents dealing with luxury properties typically market via magazine ads in upscale publications, host catered caravans, etc. I've even known agents with multi-million dollar listings to hire aerial photographers to take pics of the estate from above. All of these things cost a ton of money and it's money that the agent is basically giving to the seller in the hope that she will one day get it back. Many, many of these listings simply do not sell and the listing agent walks away with nothing but debts while the seller loses nothing. So while your 2% scenario may work very well in the hyper-inflated Southern California market, it's just not realistic in most of the country.
It all comes down to this. Is it worth it to society to have professionals who work full-time studying their local real estate market, and marketing and negotiating the purchase and sale of real estate. I believe that it is, just as I believe it is worth it to society to have people who practice law or medicine full time or CPAs to work with accounts full time and understand how to do taxes. Most individuals buy and sell real estate on a very infrequent basis. It's a complicated process with a tremendous amount of regulatory issues and it takes a great deal of expertise to do competently, much less do it well. (Look at all the questions on this bulletin board from people trying to buy or sell a home on their own -- and if you'll notice a tremendous number of thoughtful responses from real estate agents who are again donating their time and expertise to help.) So I would argue that if people are going to devote their time and energy to a profession that demands they incur significant expenses up front and have a completely open-ended time frame for when or if they will be paid, and where they are frequently left with nothing but expenses at the end of the day, they deserve to be compensated fairly.
There will always be agents who are so hungry (or inexperienced or simply not good enough to get decent listings or who want their name on a sign in that neighborhood regardless of the cost) who will accept a commission that is not really sufficient to allow them to do a good job. But my point is that this is generally not a good thing for a seller in the long term and it's unreasonable in MOST markets to expect full-service and complete marketing unless you are willing to pay for it in the event of the sale. Why would you want a listing agent who not only is so hampered by their potential compensation that they cannot do an adequate job but know up front that they cannot do an adequate job at that price and take the deal anyway?
And please remember, most sellers have absolutely no "skin in the game". If a seller was willing to pay for the marketing costs up front so I would know that I'd at least not be out anything but my time in case the house didn't sell, it would be different. In that case, I'd be more than happy to adjust my commission. But in most cases, sellers don't want to pay a penny up front.
I know that the general public has this concept that Realtors are over-paid. The reality is that most agents nationally earn about $40k a year before taxes and expenses. I don't dispute that the average may be different in parts of Southern California and in New York City and in other enclaves around the country, but for most of us, we're working very hard under difficult conditions in a very tough market trying to do the best that we possibly can for our clients. Our commission is intended to allow us to do what's necessary to effectively market your home and to make a fair living for the time and expertise we bring to the table. If an agent is willing to accept less than that for herself, what makes you think she'd do any better for you at the negotiating table?
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