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Old 05-15-2018, 12:13 PM
 
Location: Cary, NC
31,694 posts, read 55,531,149 times
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Quote:
Originally Posted by Diana Holbrook View Post
That is doable. We somewhat frequently see a clause in the MLS agent remarks and closing instructions, that "commission will be based on purchase price minus any seller consessions".

These are stipulations that can and should happen when it is listed so it does NOT interfere with buyer negotiations.
Yet that provision would be in violation of our local MLS rules and regs. "At Least Where I Am."
Co-broke can be either a percentage of the gross sales price or a definite dollar amount.

MLS's that are REALTOR® association owned, have the right locally to allow a net sales price cobroke, but that is something that can vary locally.
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Old 05-15-2018, 12:14 PM
 
Location: Rochester, WA
3,852 posts, read 2,089,074 times
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Dang... I forgot.... "At least where I am"! Indeed!
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Old 05-15-2018, 02:34 PM
 
Location: Raleigh NC
7,834 posts, read 6,187,633 times
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Quote:
Originally Posted by SFBayBoomer View Post
I agree with you. The work isn't more difficult on a $2 million dollar property than a $1 million dollar property or a $500,000 property, certainly not to the degree to which commission-based fees on expensive homes here in the San Francisco Bay Area have escalated.

I think there ought to be an absolute cap on the fee paid to the agents, so that the homeowner gets to keep all the profits above a certain figure, and the real estate agents do not get more.

In my case—as an owner of a small house that is easily sold here—I have seen sales prices escalating month over month, with growth in the neighborhood of $80k - $110k just this past year.

Especially if someone lives in a large subdivision where homes are selling faster than hotcake and sales prices can be easily compared, I just don't see the value that percentage-based payment makes sense.

Why should the agents in this market make four times the commission than agents in less expensive markets?
why don't Sellers negotiate the commission then?
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Old 05-15-2018, 02:44 PM
 
Location: Raleigh NC
7,834 posts, read 6,187,633 times
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Quote:
Originally Posted by SFBayBoomer View Post
Actually, I have. I was the executor of my mother's estate and worked closely with the then premier real estate broker in this area to sell her house. Houses were not selling like hotcakes then. They were only in the $250,000 range and he definitely added value. However, one thing has always bothered me about that sale, namely being required to pay commission on the full price of the house which included help with the buyer's closing costs. My listing agent never even prepared me that such a thing was possible. Since he didn't offer to remove that portion from his commission, even when I was clearly not pleased with paying commission on that part of the deal, I have never recommended him to anyone, and will not use him again. He has probably forgotten about that, and when we chat, it is always friendly. I learned a lot from that deal, though, and I won't pay to help "needy" buyers again with their closing costs, nor will I pay a commission based on the full price of the house if that includes any further cost to me (for example for repairs, closing costs, etc).
I'm pretty sure the agreement you had said commission was based off Purchase Price. I'm 100% positive that you could have tried to negotiate it to be "The net of Purchase Price - Concessions", and if the agent refused and you continued with the deal, then you could have factored that $250 difference (5% of $5K seems conservative) in when you accepted the deal. What is the Seller's NET - I had the feeling you understood this. To get that up in arms says more about your state of mind than some agent trying to backhand cheat you.


Quote:
Paying a 5% commission would amount to $50,000 out of my pocket when I sell, and more if I wait longer, because this area is increasing significantly faster than areas that have high-end, larger, homes.
Therefore, paying a 5% (or more, as is usually quoted around here) commission to sell this house is not going to happen.
Or is it out of the Buyer's pocket?

One could make a decent argument that it wasn't really your $50K, if you enjoyed far more than the $50K in appreciation. I mean, if the value doubled from 500K to 1MM, you're still clearing 450K. And some would remind you that there's such a high % of Buyer agency, you could have only saved $25K anyway. Right?

Just thinking outside the box you painted here.
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Old 05-15-2018, 02:46 PM
 
Location: El Pueblo de Nuestra Señora la Reina de los Ángeles del Río Porciúncula
14,123 posts, read 14,202,666 times
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Quote:
Originally Posted by BoBromhal View Post
why don't Sellers negotiate the commission then?
Sellers can before they sign the representation agreement. If... their agent is willing to go for it.

My favorite Realtor is so good I'm happy to do 5% and get her 2.5%. Some people just have no idea how good a Realtor can get. Mine is totally worth it.

One more house to sell, one last big deal...

I have her put in the MLS that I insist on my specific escrow officer and company. I'm good friends with him (professional friends) because he is accurate and attends to details, and ensures that both parties get fair representation. I also get a professional discount because of my multiple deals as a landlord.

Negotiate all you want but be careful you don't end up with a do-nothing Realtor. Mine earns her 2.5% commission. Way!!!
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Old 05-15-2018, 02:47 PM
 
Location: Raleigh NC
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Quote:
Originally Posted by 2bindenver View Post
How much are we talking?
I'm thinking $5K in cc's on a $250K house, but I'm not in CA.
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Old 05-16-2018, 03:07 AM
 
Location: San Francisco Bay Area
4,203 posts, read 2,187,620 times
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Quote:
Originally Posted by Diana Holbrook View Post
That is doable. We somewhat frequently see a clause in the MLS agent remarks and closing instructions, that "commission will be based on purchase price minus any seller consessions".

These are stipulations that can and should happen when it is listed so it does NOT interfere with buyer negotiations.
Thank you. That is what I will do in the future, if I use a listing agent and if there is no way around some sort of percentage-based commission (regardless what that percentage is), rather than a flat-based fee or combination of flat fee and percentage, for example on the likely overbid amount on list offer price.

It is unfortunate that my own agent at the time did not either write the phrase you mentioned into the contract or else simply subtracted the closing costs from the sales price. Had he done so, I would have been happier with him. As it is, I never referred him to anyone over the many years after the sale. He lost a lot of referral business, and I won't hire him in the future.

Last edited by SFBayBoomer; 05-16-2018 at 04:21 AM..
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Old 05-16-2018, 04:50 AM
 
Location: San Francisco Bay Area
4,203 posts, read 2,187,620 times
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Quote:
Originally Posted by Lovehound View Post
SFBauBoomer, it's not quite clear to me what you mean.

You should understand that your agent has nothing to do with how fees are calculated or distributed unless stated in the sales contract, which you were privvy to in advance of your agreeing to the therms and accepting the offer. After that the accounting and funds distribution duties fall upon the escrow company and escrow officer handling your transaction.

I have never seen a single instance of the agent commissions calculated off anything but the raw sale price that appears as the first item on your escrow statement, the same number that is reported in the MLS as the sale price.

In theory your agent could write a counter-offer that changes the terms regarding how any of the fees are allocated and who pays them, but it appears yours didn't. Again, you are a party to all such contracts and you are a free agent in how you negotiate, and what you accept and sign.

Before agreeing to a contract it was your job to fully understand the terms, and now that you are dissatisfied I can only assume you misunderstood the actual deal or maybe you didn't read the details.

I hate to tell you, and I've been there too, once a contract is signed you are bound by what it says, not what you wanted or what you expected.

And again, it is customary for agent fees to be calculated off the full sale price. No Realtor would voluntarily change that because it would cut their fee. That stands to reason.
This was many years ago. I was the executor of my mother's estate on behalf of myself and my sibling, was dealing with Mom's death, and had never worked with a realtor or sold a house before. I trusted my friend, a broker/agent with his own rather large firm who had a standard form and he told me where to sign, etc. and the contract between us stated 6% commission. There was no discussion about additional closing costs we might have to pay (concession to the buyer) either upon listing or later, and while I believe that when the offer was presented I could have counter-offered successfully to remove the closing costs, my sibling (on the phone) begged me not to change a word of the contract as the sibling had house sales fall apart on counter-offer before. My hands were then tied. (Sibling had already "spent the money" and was very worried the deal could fall through if it was not left intact.)

But my agent/friend could have agreed (either at initial contract with him, or once the surprise request for buyer's closing costs reduced our profit), to reduce his commission (on just that closing cost portion), and he chose not to do it. So he got some more money then (in the hundreds only) and has subsequently lost tens of thousands of dollars over the years from business from me, including a future fee or commission on this house I own which, when I sell, will likely fetch $900,000+ and be on the market for no more than a couple of weeks. (Actually, many are selling in mere days...)

If real estate agents are professionals, I believe they have a duty to educate their clients about such things as buyers who might request help in the form of seller paying buyer's closing costs, etc. so that such things do not spring up at offer, but maybe agents don't educate their sellers in order to get their own highest commission, even if it leaves a very bad "taste" in the mouth of their unaware seller. And if they don't prepare their seller, they ought to offer to reduce part of their own fee when that happens.

Last edited by SFBayBoomer; 05-16-2018 at 05:08 AM..
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Old 05-16-2018, 09:01 AM
 
Location: Rochester, WA
3,852 posts, read 2,089,074 times
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Quote:
Originally Posted by SFBayBoomer View Post
Thank you. That is what I will do in the future, if I use a listing agent and if there is no way around some sort of percentage-based commission (regardless what that percentage is), rather than a flat-based fee or combination of flat fee and percentage, for example on the likely overbid amount on list offer price.

It is unfortunate that my own agent at the time did not either write the phrase you mentioned into the contract or else simply subtracted the closing costs from the sales price. Had he done so, I would have been happier with him. As it is, I never referred him to anyone over the many years after the sale. He lost a lot of referral business, and I won't hire him in the future.
No problem with it when that is the arrangement here. Do realize though, from the posts that follow mine, what is common in our area is not even allowed in other areas. The rules in real estate vary quite a bit, and the only ones that matter are the rules "in your area". :-)
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Old 05-16-2018, 10:15 AM
 
Location: NJ
502 posts, read 683,827 times
Reputation: 467
There is a house across the street from me that was sold FSBO. It sold within a day or two of listing, but I estimate it went at least 75K lower than it should have (15% lower based on comps and lack of inventory). If it listed on the open market, it might have sold even 100K higher than it ultimately sold for.

I'm sure the owner might think he did great and saved on commissions, but objectively, I think he made a bad call.
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