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Realtor story. Fellow lists his house with a realtor and is told 6% commission but if she is also the selling agent, it will be 4% commission.
Open house scheduled. Problem arises and the realtor says she cannot make it. She says they can reschedule it or she can he have someone else from her office cover it? Seller says let the other person cover it
Out of the blue a buyer comes through the open house and makes an offer.
Sellers agent says the person covering the open house was a fellow realtor and is claiming a split commission as she "found" the buyer.
Seller thought as the person was just covering for his agent, it would be a 4% commission. Wrong. It was 6%. Defend it as you will but he says they screwed him out of 2% by not explaining. I agree with him.
Realtor story. Fellow lists his house with a realtor and is told 6% commission but if she is also the selling agent, it will be 4% commission.
Open house scheduled. Problem arises and the realtor says she cannot make it. She says they can reschedule it or she can he have someone else from her office cover it? Seller says let the other person cover it
Out of the blue a buyer comes through the open house and makes an offer.
Sellers agent says the person covering the open house was a fellow realtor and is claiming a split commission as she "found" the buyer.
Seller thought as the person was just covering for his agent, it would be a 4% commission. Wrong. It was 6%. Defend it as you will but he says they screwed him out of 2% by not explaining. I agree with him.
I really don't disagree, am not defending, but I also don't know the details. The devil is always in the details. Regardless, it has an aroma.
What was the exact wording in the listing contract?
Did the listing contract refer to the Agency/Firm with the listing agent being a firm representative and commission owed to the firm, or did it say that the specific agent would lower commission to 4%?
Not allowing dual agency or designated agency is one good approach to avoiding such misunderstanding, however.
Another would have been to confirm with the agent what the cost would be.
Yeah, it smells, but the documentation is of interest.
It took six months to sell your house.
That's not saying much, except to suggest that you got lucky that someone finally liked your home for the listed price. It's possible you would have had to wait a year or more if that buyer didn't come along.
At the time, what was the average Days on market for houses in your area?
If your agent knew you weren't in a hurry and didn't need to sell, she could have waited 6 months too.
There's always that one sucker with odd tastes who pays full retail price.
This would be a more compelling argument if the agent actually did her work. No tours for realtors. I had to do our own flyer. She just slapped a listing online and then started pressuring for lowering the price within two weeks, despite a couple of near misses.
When we didn't lower the price to suit her tastes, she basically stopped trying all that much. Part of the issue, I suppose is that we put the house on the market in November rather than peak season. But even when interest started picking up in March, she just didn't lift a finger. Yet she got the same commission at closing. She basically pocked $15,000 in commission (Her cut after the realty company got its pound of flesh) for entering some data into the MLS, answering some questions over the phone, looking at the contract, and sitting in the closing.
What isn't readily apparent is the just how often the Realtor saves the day... sales closing on time are not news worthy.
My friend lived in her home to age 101... a widow for the last 20 years... home well maintained... she was sharp as could be.
Anyway... physical limitations made it inevitable that she would have to move and sell her home of 60 years.
Home was in Escrow with many overbids... everyone is happy.
The morning of the signing, my friend has a heart attack and dies...
I see the buyers and mention how sad we are to learn of her passing... the buyers went into a panic... their loan docs expired at the end of the week and it was struggle for them to get approved.
The Listing Agent knew the seller/family for 50 years and had a 30 year business relationship with the Title Officer... a meeting took place and the Title Company agreed to Close on Schedule ONLY DUE TO ASSURANCE of the Selling Broker...
There would have been no sale and no close and the buyers would have been back to square one...
The end result was the only child and heir was allowed to sign for her Mom... and the Title Company was taking a risk to make it happen and only because of the personal relationship built over the decades...
]Happened a lot here also with Investors[/b]... the sales at the court house steps were found to be shams... clearly documented in some cases... a core group would get together and each would say I want this one and so on... the others would not bid up property someone in their group wanted... Alameda County CA...
Making it impossible to view is another... so to be successful you had to go in blind and rely on your best assessment...
Not for those faint of heart or without resources...
Not for those who are not in "the club." is more like it.
You could have cash money sticking out of your pockets but with no "invitation" just plain, "no! Not for sale" But those (Alameda, CA "investors" you mentioned) were investors, not realtors with a "For Sale" sign, "Century 21" "call this number" thingee. That's different and that's what I'm talking about. With that sign out there in front of that house, it's now a business, supposedly open to the public, purchaseable by whoever can afford it. This realtor thing was like having a store where you let your buddies buy that pot roast advertised in the window for $1.89/lb, but when anybody else walks up to the counter and inquires about the pot roast, the response is "Oh...we've run out of that; can I interest you in this sirloin tip/whatever? It's $4.59 a pound...."
I'm pretty sure there's some "ethics" violation there, not to mention the open housing laws that I presume affect realty companies, wouldn't you think?
Last edited by TwinbrookNine; 01-14-2018 at 11:11 AM..
As the OP noted, in the extremely poorly written Economist article, "average" commission is somewhere around 5% or 5.4%.
And, that is because it is a negotiable fee. And because lower fee structures pull the average down.
What searching have you done in SLC for alternative models?
They are pretty easy to find.
I am not a fan of price-fixing by agents, nor by government. I don't want to see a gratuitous "cap" intrusion into the market.
Every house we have bought and sold has been with a 6% commission, so I can't address other areas that may have slightly lower (and frankly, even at 5% it is still a huge hunk of money on any upscale house). The only time I ever even tried to ask if a lower commission was possible I was told in no uncertain terms that 6% is the non-negotiable company rate. I never bothered to ask again.
We are still a couple years from retirement so haven't looked into any selling methods, typical or alternative. When you say alternative models, do you mean things like fsbo or Redfin?
Regarding "gratuitous cap intrusion," I wasn't suggesting government mandated. I was thinking more just realtors choosing to set a cap for themselves. I mean really, isn't $20K or $30K more than enough to cover the costs and still have a fabulous profit on just about any home sale? I would think realtors would rather try to sell an immaculate million dollar home with $30K commission, than a run-down $100K house at 6%. But that isn't how the system works. Why not? I truly don't understand the system, other than "that's just how it is."
You didn't answer my question about if it is twice as much work to sell a million dollar house as it is to sell a $500K house, or how $120K commission on a $2 million house is justified. Perhaps there's a general mindset that "Hey, if you can afford a $2 million house, you can afford $120K commission." But that's crazy.
Maybe when it's time to sell, I'll see if I can negotiate a lower percent this time.
Every house we have bought and sold has been with a 6% commission, so I can't address other areas that may have slightly lower (and frankly, even at 5% it is still a huge hunk of money on any upscale house). The only time I ever even tried to ask if a lower commission was possible I was told in no uncertain terms that 6% is the non-negotiable company rate. I never bothered to ask again.
We are still a couple years from retirement so haven't looked into any selling methods, typical or alternative. When you say alternative models, do you mean things like fsbo or Redfin?
Regarding "gratuitous cap intrusion," I wasn't suggesting government mandated. I was thinking more just realtors choosing to set a cap for themselves. I mean really, isn't $20K or $30K more than enough to cover the costs and still have a fabulous profit on just about any home sale? I would think realtors would rather try to sell an immaculate million dollar home with $30K commission, than a run-down $100K house at 6%. But that isn't how the system works. Why not? I truly don't understand the system, other than "that's just how it is."
You didn't answer my question about if it is twice as much work to sell a million dollar house as it is to sell a $500K house, or how $120K commission on a $2 million house is justified. Perhaps there's a general mindset that "Hey, if you can afford a $2 million house, you can afford $120K commission." But that's crazy.
Maybe when it's time to sell, I'll see if I can negotiate a lower percent this time.
I don't really care what others do. Everyone has their own value proposition.
I'm not here to justify or defend anyone's commission, have not charged 6% in more than a few deals in 12 years, and have little interest in trying to defend anyone's model.
Can I cap my commission? You might ask, "Mike, have you ever done so?" I may not answer, though....
And, I am glad you are not looking for government to set fees. Thanks for that.
Is there more work in higher priced sales. Yes. No. Maybe. Every deal stands on its own.
Absolutely, factually, higher priced listings at higher commissions, subsidize lower-priced listings.
It is one reason that I don't turn down any listing on price point. I think service includes taking the lower with the higher.
And, all closed transactions cover the expenses of the ones that don't close. Real estate agents don't work in a vacuum on each deal, but look at revenue overall.
You can find people that work for much less than 6%. I did the search on SLC, and there is no shortage of agents. What you won't be able to do, and shouldn't be able to do is unilaterally compel someone to set their fee where you want it.
I've noted here in the past, overheard two realtors shooting the breeze unaware that others could hear every word. I don't recall her exact words but she was admitting to ignoring the FSBO listings when looking for available properties for her buyers. And that despite almost the 'standard' cut offered by the seller.
I would be concerned if I hired an agent to sell my house at a reduced rate, never knowing if any similar things were taking place. Tough to read minds as you ponder that 90 day listing agreement.
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