Real estate commission rate - system broken (dual agency, sale, fees)
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You should at least take the time to understand his viewpoint and why he said what he did. He can do anything he wants - it's his house.
Bravo. The push back I assume you will get from agents here is that they aren't going to show your house until they have something in writing first saying that you'll pay them a commission if they bring you an acceptable offer - before they show it... cause that's what it's all about - them getting paid.
While he sounds like a rather droll sort of fellow, I will show his house to my client anytime it appears to be a fit.
His commission worry hardly matters to me.
The OP cannot control that the buyer may agree to a commission rate minimum upon engaging me, and that the agreement between buyer and agent states that minimum, and it is the buyer's choice to see his house, and to decide whether they want to proceed and pay any difference.
In a transaction fueled by buyer money, the seller may well be excluding a large market segment with his behavior. That is his right, but he should recognize that the final choice also belongs to the buyer.
While he sounds like a rather droll sort of fellow, I will show his house to my client anytime it appears to be a fit.
His commission worry hardly matters to me.
The OP cannot control that the buyer may agree to a commission rate minimum upon engaging me, and that the agreement between buyer and agent states that minimum, and it is the buyer's choice to see his house, and to decide whether they want to proceed and pay any difference.
In a transaction fueled by buyer money, the seller may well be excluding a large market segment with his behavior. That is his right, but he should recognize that the final choice also belongs to the buyer.
I agree with this and since I am in a sellers market I will call the shots.
This thread isn't about what I'm going to do, i have that covered and have had great success doing it my way. This thread is about sellers not paying the same commissions as they did 30 years ago when the realtors actually had to "sell" and the prices were half as much.
Last edited by Familyman6; 07-17-2016 at 04:13 PM..
Bravo. The push back I assume you will get from agents here is that they aren't going to show your house until they have something in writing first saying that you'll pay them a commission if they bring you an acceptable offer - before they show it... cause that's what it's all about - them getting paid.
No, the issue is for agents that have buyer agency agreements. Most of them state that they will inform the buyers of any fees that they would have to pay to the agent before they see the property. That way the buyer can make an informed decision about whether or not they want to go to see that house.
You would really want an agent to show you a house and then say, oh the seller won't pay me so per our agreement you get to pay me 2.5%? No, any decent person discusses these things upfront with their client so everything is clear and transparent.
Really interesting statemeny, Brandon. Would you expand on this, please? How would you propose to structure a guaranteed payment?
I'm doing my fourth hourly rate listing contract this year so far. I love doing them, and it works well for sellers. One of my clients choose to grossly overprice his home and it cost him more in services which is how it should work.
Lets look at a few facts of the Real Estate Business.
1: Today it is recommended that a buyer and seller each have their own agent. A buyers agent and a sellers agent.
2: The typical sale, splits the sales commission 4 ways. Half is held by the listing office, and half by the selling office. Then it is split again, so that the selling agent and their brokerage each get half, and the same thing happens at the selling office where each gets half of the half.
3: The agent and the broker, both have heavy business expenses to pay, which they have to pay with their portion of the commission from the sale. It is not all profit as so many seem to think.
4: If the commission is say 3% total as some think is right, that would mean the agents would get such a small commission on the sale that they would about cover expenses, and get nothing for all the time they have spent learning how to do the best job for their client, and staying in business.
5: The agents look at the amount of commission that is prevalent in their area of the country. If it is 6%, it means their gross share of the commission is 1.5% of the sale. If it is a 3% commission they end up with only a .75% of the sale, and it is not worth their time to work for so little money, when they can double it selling another property. If you are working for $30 an hour, which is $60,000 or so a year, how much would you want to work, if your boss one day announced that for the next 3 weeks, we are cutting your salary to $15 an hour or $30,000 a year. You would be looking for another job. The Realtors do the same thing. They look for a property paying a 6% commission, and actually steer potential buyers away from your property, which is very easy to do. The usual thing is, they only bring you low ball offers if any at all. In the end, you will probably end up with less money, than if you were paying a normal commission.
6: Eighty percent of all real estate is sold by the top 20% of the agents. That group that sells property, and gets you the best prices, does not work for a sub par commission. I know as I was an investment real estate broker from 1972 till I finally retired. I never once sold a property with a low commission. As I was selling harder to move properties that required a lot more knowledge than most Realtors have, I got 10% on over half of my sales and never worked for lower than 6% commission. I often moved property quickly that had been for sale 1 to 2 years and more, as other agents did not know how to move them in 30 days as I did.
7: Only the lower caliber Realtors work on cut rate sales. The ones that are not the Realtor that knows how to get the seller the higher price, and make the best transactions for the sellers. The good ones, don't waste their time on them.
Remember the average sales by a Realtor in a year, is 3 sales (total sales divided by agents). Of course this is misleading, as 80% of sales are made by 20% of the agents. There are a lot of agents, that never even make a sale in a year. 80% of agents that enter the business will fail out of the business, when they run out of operating funds they have saved up.
Since retiring I have put together several profitable deals, acting as a principal. Made more than I would as an agent, and every time I sell a property I do not sell it myself. I make a deal with the agents in the area the one that brings a buyer, will get the listing and the full 6% or more commission. In addition I would often offer a weeks vacation in Hawaii (a package that included hotel and travel for two) to the office that sold it conditional on the broker giving it to the salesperson, if the selling agent brought me a full price offer that closed. Average selling time was less than 3 days. Cost me a lot less for those vacations, than what I might have sold it for waiting to fool around with counter offers.
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This is a tough question.
We are considering selling our home. It is an absolutely gorgeous house that backs to woods, it has been professionally decorated, it is immaculate, maintained, landscaped and it is up to date. The neighborhood has quite a few homes that have sold this summer, most sold at full price within 2 days of listing.
6% realtors fees seem really steep for this situation. I suspect this house would sell itself. Yes, MLS would be incredibly beneficial. Still, 6% of almost $500K for selling something that kind of sells itself seems just ridiculous.
I am not sure what we will do, but I do think we will negotiate a lower commission rate.
No, the issue is for agents that have buyer agency agreements. Most of them state that they will inform the buyers of any fees that they would have to pay to the agent before they see the property. That way the buyer can make an informed decision about whether or not they want to go to see that house.
You would really want an agent to show you a house and then say, oh the seller won't pay me so per our agreement you get to pay me 2.5%? No, any decent person discusses these things upfront with their client so everything is clear and transparent.
I respect your opinion.
I understand this issue quite clearly. A buyer should be able to go see a house they want - by themselves - and not have to pay a buyers agent - simple as that. Even if they have a buyers agency agreement with an agent - that should be an option. If they want to call in the agent to help on the deal - fine. I understand this flies in the face of an agents desired buyers agency contract - but that is my opinion.
90% of real estate agents do nothing outside what you can do yourself and the internet. that is FACT. there are RE superstars, who can bring you a quick buyer, but for the most part, they do the random open houses and list on mls and just wait. there is nothing special that they do. if you live in a hot seller's market, you don't need a broker. that's a waste of money.
I understand this issue quite clearly. A buyer should be able to go see a house they want - by themselves - and not have to pay a buyers agent - simple as that. Even if they have a buyers agency agreement with an agent - that should be an option. If they want to call in the agent to help on the deal - fine. I understand this flies in the face of an agents desired buyers agency contract - but that is my opinion.
I understand that from a consumer perspective it makes sense, but from a business perspective it makes no sense to do that. Either people want and value your service or they don't. If they don't value your service, that's totally fine. Just call random listing agents up to see houses. Then you aren't bound to a buyer agent.
You can get exactly what you want service wise, 100% no commitment to a buyer agent, if you just call the listing agent to see homes. Then a consumer can view all the FSBO's they want as well.
Columbia, SC has about 2500 agents selling about 9200 properties. That means the "average" agent will have 7 closings/yr. Our average price is ~$170,000 so the average gross commission per side is ~$5000. The average net is ~$2500. That means the "average agent closing 7 sides makes a net of $17,500 per year. Not so great after all, is it?
Now in reality, about 900 of those agents have sold 1 or no properties and another 600 have sold only 2-3 properties. So I think it's feasible the average full time professional should do at least 20 transactions with the average net, using the same math, of about $50,000 per year. Still not great, is it?
Atlanta:
33,000 agents in metro area
79,105 sales in 2015
*sigh*
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