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Old 05-01-2018, 02:25 PM
 
5,668 posts, read 7,258,650 times
Reputation: 3177

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Quote:
Originally Posted by MikeJaquish View Post
Wake County NC.
90% of residential resale listings offer a 2.4% co-broke to buyers agents.
Agents claw to climb over them to make multiple offers on new listings.
Just searched. 1564 of 1744 residential resale listings are at 2.4%. 89.7% of them.
(Another 1344 are at 2.5%, but the bulk of those are new construction and that is their most common split. I did see three builders offering 4%. They must be dragging at hitting their numbers.)
And, the 2.4% spills into a few surrounding counties as a most common co-broke.

Orange County and Durham County and points west still have many agents clinging to a 6%, 3%/3% model, but that is starting to erode a little.

6%, 3%/3% is the "Heritage Price-fixing" model.
6%, 3.6%/2.4% is the "Nouveau Price-fixing" model.

When buyers agency was introduced to the region 35-40 years ago, it was resisted by many large established firms.
One barrier to buyers agency was to go to a 60/40 split, and to pay agents a bonus for selling an in-house listing as subagents.
Nasty stuff, that, but I think it has gone by the wayside.

The 2.4% has stuck around, though, and is the most common split locally to me.

Here is a bit more recent discussion on the Raleigh forum:
What is the typical Realtor Commission these days?
Thanks.

Oh yeah, I think I do remember you mentioning the 3.6%/2.4% thing in the past. So are the bulk of the 2.4% listings still a 6% total? If so, I guess that answers my previous question then...your client doesn't get it, the listing agent does.

That seems crazy to me since IMO a buyer's agent does more work than a listing agent (at least in a seller's market). And it's likely only contributing to the "being a buyer's agent is beneath me" attitude that I've seen from some "top" agents.
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Old 05-01-2018, 02:30 PM
 
Location: Cary, NC
31,590 posts, read 55,295,005 times
Reputation: 30145
Quote:
Originally Posted by GoPhils View Post
Thanks.

Oh yeah, I think I do remember you mentioning the 3.6%/2.4% thing in the past. So are the bulk of the 2.4% listings still a 6% total? If so, I guess that answers my previous question then...your client doesn't get it, the listing agent does.

That seems crazy to me since IMO a buyer agent does more work than a listing agent (at least in a seller's market). And it's likely only contributing to the "being a buyer's agent is beneath me" attitude that I've seen from some "top" agents.
I don't have any way to know the listing side on any transaction other than ones I am involved in.
So, the 60/40 is still around. I don't know what percentages of listings are at 6%, but plenty of consumers still mention that it is the "going rate," "standard commission," etc.

And, I have had agents call me a discount agent, which is a training and/or ethical issue.
But, it makes me believe that they cling to a 6% model.

Back in the day, 2008--2011, listing agents worked harder than buyers agents, getting beat up by sellers for not moving their properties.
Buyers agents had it a little better, and certainly better than today, because they had a lot of inventory to show.
Now, it is hard to get into an affordable home without a carload of other agents. Those numbers of listings in my last post are much lower than they were a few years ago when the sellers' market started to rise.
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Old 05-01-2018, 02:44 PM
 
Location: Raleigh NC
7,738 posts, read 6,110,007 times
Reputation: 6867
Quote:
Originally Posted by Electrician4you View Post
I wouldnít take such paycut by choice. I donít know anyone who would. But I have in the past taken lower pay jobs to get a paycheck. I quit as soon as I got something else but overall yeah Iíll do it if i needed to. Ultimately such job isnít a long term thing. Iíll move on as soon as I can. Thatís why a long time ago I decided to place myself in a different financial situation than most people.

But the point Iím making is that agents seem to tell the seller go ahead and give that 1% additional commission to make the sale. What if the seller is basically breaking even and the 2% is all they get. I guess that doesnít matter. Like I stated for me that 1-2% additional is 15-30,000 dollars on a sale. Why should I give that up? Because the high end agent wants more. I guess 17,500 isnít good enough or a full 35,000 if youíre the broker too. If youíre a high end agent youíre most likely vetting and working with high end clients. Who have the means to buy without making you go through hoops. And even then thatís between you and your client. It doesnít concern me.

I understand how agents work. But when I as a seller state Iím willing to pay x % why are you coming to me asking for more money. I already told you what Iím willing to pay. What additional worth do you bring to the table? Again nothing. You want more money go to your client and ask for more compensation. See how that flies.

as an example .... let's say you put the $1.7MM investment property on the market, and you have your agent offer buyers' agents 2%.

And for whatever reason, 90 days later it hasn't sold.

Then an agent comes with a buyer, and their written offer is for $1,700,000 with the agent getting 3% instead. As you negotiate over price, or maybe you just get mad that they asked for something other than what you offered, another agent proclaims they have a buyer with interest.

Upon being advised of the existence of an offer, and being told to "bring your highest and best, we're not screwing around", Buyer 2 produces an offer for $1,650,000, says they've done the numbers and this is what it's worth, and the 2% compensation.

$1.7MM - 3% = $1,649,000
$1.65MM - 2% = $1,617,000

which offer are you accepting?
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Old 05-01-2018, 02:50 PM
 
8,374 posts, read 7,362,552 times
Reputation: 18229
Quote:
Originally Posted by MikeJaquish View Post

Average sale ~$300,000.
Average commission ~$7200.
1% ~$72.00

I can't say that I would ever let 72 bucks get in the way of a deal closing.
Reducing one percent commission on a $300,000 sale is $3,000 not $72.
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Old 05-01-2018, 02:53 PM
 
Location: Cary, NC
31,590 posts, read 55,295,005 times
Reputation: 30145
Quote:
Originally Posted by oldtrader View Post
Reducing one percent commission on a $300,000 sale is $3,000 not $72.
You err, sir.
1% of a $7200 commission on a $300,000 sale is $72.00.

That is the correct answer to the question that was posed.
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Old 05-01-2018, 03:07 PM
 
Location: Raleigh NC
7,738 posts, read 6,110,007 times
Reputation: 6867
the question as stated worked out to $72. The intention was certainly to say take 1% of the 3% off, but was not as stated.

At the end of the day, there's 3 questions:

What is the most common buyer agent compensation offered in the market?
What does the Buyer Agency say about compensation (and the most common rate in the market will likely be on this agreement)?
Is the Seller satisfied with the net proceeds they'll have?

The rest of it has been huffing and puffing.

the only * on changing the compensation in the original case is "What if the property doesn't appraise for the 1% higher price agreed-to?" I don't know of any state where the standard contract says the Seller agrees at execution of contract to reduce their price, and suffer the 1% loss.
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Old 05-01-2018, 03:09 PM
 
167 posts, read 72,514 times
Reputation: 371
Quote:
Originally Posted by oldtrader View Post
They are showing and selling the property with a 6% commission, and the property with a 4% commission is not being shown and no effort is going to be used to sell the cut rate commission property. It just sits there month after month.
In the old world of brokerage lists and no internet presence, this might be the case.

In a ton of markets where buyers can hop online and see whatever property they want, then send that over to their agent to set up a viewing... little bit different!

That's the part of the game that is changing rapidly, and will only begin to pick up steam. Now, if the agent is going to hold out the 6% property in a better light simply because the other is 4%? I'd question the hell out of those ethics.
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Old 05-01-2018, 03:12 PM
 
167 posts, read 72,514 times
Reputation: 371
Quote:
Originally Posted by BoBromhal View Post
the only * on changing the compensation in the original case is "What if the property doesn't appraise for the 1% higher price agreed-to?" I don't know of any state where the standard contract says the Seller agrees at execution of contract to reduce their price, and suffer the 1% loss.
No, it doesn't.. however, what's the price of time? You might be 30 days into the process now, over $7K. Do you think your next offer is going to come in at 100% of list?

Having spent the last 9 months immersed in a couple of markets that are the bubbly side of warm, 30 extra days on market starts bringing out the lowballs.
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Old 05-01-2018, 03:16 PM
 
Location: Raleigh NC
7,738 posts, read 6,110,007 times
Reputation: 6867
Quote:
Originally Posted by El Senor View Post
In the old world of brokerage lists and no internet presence, this might be the case.

In a ton of markets where buyers can hop online and see whatever property they want, then send that over to their agent to set up a viewing... little bit different!

That's the part of the game that is changing rapidly, and will only begin to pick up steam. Now, if the agent is going to hold out the 6% property in a better light simply because the other is 4%? I'd question the hell out of those ethics.
"I'm happy to show you the house - I hope it's the right one for you! I must disclose however that should you make an offer, the seller has decided to only offer 2% commission, and you and I have agreed that I earn 3%. I'll do my best to work it out so it's includedin the purchase price. But you must realize that it's possible that at closing you'll have to write a check for the 1%".

However, I do sadly agree with you that it's just as likely an unprofessional agent will find a reason to steer the Buyer away from the house. Which is completely unethical and unprofessional, and stains our profession.
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Old 05-01-2018, 03:18 PM
 
3,780 posts, read 1,721,467 times
Reputation: 2135
Quote:
$1.7MM - 3% = $1,649,000
$1.65MM - 2% = $1,617,000

which offer are you accepting?
why could it not be reversed with the 2% agent bringing in the 1.7MM offer? -- or both agents bring in the same price offer -- which one do you think they'd take?

the game of "what if's" never ends. everything being equal -- a seller will always net more when the agent takes less -- not to mention it gives them greater flexibility during negotiations.
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