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OP - Just keep in mind that agents presenting offers to you are incentivized to make deals work so that they can earn their commissions. This does not always equate to coming to a conclusion that is in your best interest. Place this in the hands of an attorney representing your interests and the discussion would be different. On a 250k house with a 225k mortgage, for every 1% of commission you pay - you have to give up approx. 1 year of equity building in your house if you are on a 30 year mortgage. To pay $2500 in commission you have to earn $3000 before taxes. Agents won't tell you that as they smile and hand you the pen to sign on the dotted line...
Yes, this is the way people need to look at it. Some might think that they made 150k on their house over 10 years so what's a 30k in commission? As you say, that's a load of equity in your next house (and decades of lower interest costs if you borrow less). Or buying more house - buy 30k "more house" in your next purchase and what will that 30k be worth with RE appreciation?
Anyway, whether you use it to reduce your mortgage or to invest in more house, 30k is not 30k, it could be $50k, 60k, 80k. Move 3x in your life and each time you've paid more mortgage interest and/or invested in less house, decreasing your payback on appreciation. Considering extra interest payments or less opportunity for RE appreciation, the impact on a consumer making three relatively modest home sales over a lifetime could be well over 200k. $150k-200k+ less wealth at retirement due to RE agent commissions! Yikes.
If you want help selling your house you obviously need to pay for that but you're absolutely right that for each 1% you can save, you're much better off - in multiples of the the "face amount" saved. 5-6% is ridiculous considering that many other countries like the UK you pay about 1% total for a full service agent to sell your house. No buyer's agent model to double the listing agent fees. In the US, you typically pay 2.5x to 3x more for the listing agent and then double that with the amount paid to the buyer's agent! The rest of the world survives nicely without buyer's agents and with a fraction of the commission cost.
People just accept that this is the way it is and the way it has to be but why does it have to be so different in the US?
IT's only a big issue if the buyer is trying to buy more property than they can really afford, and don't want to, or can't, come up with an extra $5,000 for the 1% I am not going to cover as seller, assuming a $500,000 offer.
Yep...we're talking $700k + ... so that 1% is not chump change.
While commissions are negotiable and we are told to say there is no "standard", what is common for buyers agents in your market? Your agent may have done you a disservice if they let you offer less than is "normal"?
Our original agent listed the commission as 3% if no buyer's agent; 4% with a buyer's agent. Other realtors that we interviewed for the listing were quoting us 4%.
Read your listing contract does it say 3% to your brokerage firm & 1% to Other Brokerage firms? Or something different like 2%/2%?
In Denver, the largest flat fee low commission brokerage puts this in the broker remarks: "Commission listed is not a fixed rate and is NEGOTIABLE. Buyer and buyer agents can request additional commission if needed by putting the following into Section 30. Additional Provisions: "Buyer requests seller pay an additional $xxxx on top of the $xxxx advertised in the MLS for a total of $xxxx"
Why would they feel they need to unless it impacts the properties being sold?
Read your listing contract does it say 3% to your brokerage firm & 1% to Other Brokerage firms? Or something different like 2%/2%?
In Denver, the largest flat fee low commission brokerage puts this in the broker remarks: "Commission listed is not a fixed rate and is NEGOTIABLE. Buyer and buyer agents can request additional commission if needed by putting the following into Section 30. Additional Provisions: "Buyer requests seller pay an additional $xxxx on top of the $xxxx advertised in the MLS for a total of $xxxx"
Why would they feel they need to unless it impacts the properties being sold?
She said it was a 2/2. The buyer agent wants 3% because she either has a buyer agency agreement requiring her buyer to pay her 1% or she is just trying to get the seller to pay her more without it being required by the buyer.
That's interesting that they do that in your MLS. That isn't allowed here. Whatever it is, is what it is. The buyer can request closing costs in the contract to cover their portion of any shortfalls, but we don't negotiate commissions in contracts here.
She said it was a 2/2. The buyer agent wants 3% because she either has a buyer agency agreement requiring her buyer to pay her 1% or she is just trying to get the seller to pay her more without it being required by the buyer.
That's interesting that they do that in your MLS. That isn't allowed here. Whatever it is, is what it is. The buyer can request closing costs in the contract to cover their portion of any shortfalls, but we don't negotiate commissions in contracts here.
The purchase contract is between buyer and seller. I don't see how you could negotiate an agents commission in a purchase contract no matter what state its in.
I will let you know when I am wrong.
Tonight? Nope.
I am goal oriented, to get my client the best transactional outcome.
Other people dabble at Real Estate Testosterone, and would rather win the point than get a great outcome.
Winning the Battle vs. Winning the War.
OF course. Bury the commission in an increased price, so the buyer can finance it.
Always give the other party the opportunity to agree to giving you a great outcome.
Ok. Where in this transaction is the buyer’s agent seeking to gain the best deal
For her customer?
There’s no testosterone involved. Only logic and math. She’s seeking for her buyer to pay $7K more than they would have needed to.
A. The seller accepts the request and pays 5% total. This means they would have accepted $7K less. Buyer is the one paying it ultimately.
B. Buyer increases the offer. Pretty self explanatory- not the best deal available.
C. Seller rejects. Buyer loses.
So. Where in any of this is the benefit to the buyer to use this agent?
All of this is completely ignoring how tacky the whole thing is.
as a previous poster stated, other parts of the world do real estate just fine for much less commission and hassle -- and it works. agents have been living high off the hog due to property appreciation and their ability to skim equity from sellers. when you have to dip into your own pocket to pay for something - the true cost slaps you in the face.
Ok. Where in this transaction is the buyer’s agent seeking to gain the best deal
For her customer?
There’s no testosterone involved. Only logic and math. She’s seeking for her buyer to pay $7K more than they would have needed to.
A. The seller accepts the request and pays 5% total. This means they would have accepted $7K less. Buyer is the one paying it ultimately.
B. Buyer increases the offer. Pretty self explanatory- not the best deal available.
C. Seller rejects. Buyer loses.
So. Where in any of this is the benefit to the buyer to use this agent?
All of this is completely ignoring how tacky the whole thing is.
The OP is not the buyer.
She did not ask for the buyer.
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