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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". :-)
you just negotiate it with the agent when you hire them. then they know what effect closing costs has on their compensation. Do understand they shouldn't change the buyer's agent compensation in any way.
I promise you, good agents don't think this way. That $250, split with the buyer's agent, buys about 2 weeks of gas.
I would like to think if you rationally expressed your disappointment, and that you were really disappointed that he hadn't explained it beforehand, that he would have dropped HIS PART of it. He can't drop the Buyer Agent...but I suppose he could have paid for both if he thought it was worth it.
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.)
I too was a dummy with my first house sale, my only other experience having bought the house 33 years earlier. He low-balled me to get a quick sale and a quick commission, and didn't give a damn about my interests. With what I know today I could have easily got $10K-$20K more (on $300K sale).
After buying 4 rental properties, selling 3 of them, and countless leasing, I have become much more savvy. And also, my Realtor and I discuss the merits of various offers including buyer incentives, adjust where necessary, and aren't bothered by telling an offer to walk, or offering them what we think is a good offer and they can like it or walk.
We compare offers with and without buyer incentives, and consider a higher price with a buyer kick-back might be the better deal.
You have to have a very good Realtor who is on your side and has your best interests at heart, and it helps to be a savvy client as I have become over our repeated deals together.
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.
FSBO = Fool Selling Bad Opportunity
You get what you pay for if you choose your Realtor well. I always tell people to interview 3 agents and pick the best one. Then hope...
Quote:
Originally Posted by BoBromhal
I promise you, good agents don't think this way. That $250, split with the buyer's agent, buys about 2 weeks of gas.
Just do the math. $250K x 5% = $12.5K divided by 2 = $6,500. I've guessed the broker cut is 25% (although too polite to ask my pet Realtor) so that leaves an estimated $4,900 BEFORE taxes!
My numbers may not agree with your 2 weeks gas although real estate agents do drive a lot. That would pay for an entire year's gas for me. That's my take on what a Realtor gets for selling a house at that price. Now do it once a week and you've earned $245K/year (taking 2 weeks for vacation) and at that income level you are probably one of the top Realtors in your area. Buying or selling 50 houses/year is an incredibly productive level!
And I think that Realtors are well worth that if you have a good one! And I do! She and I have sold 3 houses in the last year, and my last house scheduled for liquidation in January.
Well... Not my dream home! I'm livin' here until I croak or need assisted living.
Last edited by Lovehound; 05-16-2018 at 02:01 PM..
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". :-)
Why would it not be allowed in any area for the seller's agent to base compensation (on the seller side) on a net price exclusive of monies such as seller's concession to the buyer?
Why would it not be allowed in any area for the seller's agent to base compensation (on the seller side) on a net price exclusive of monies such as seller's concession to the buyer?
Because there is an ER, "Exclusive Representation" form, and it states in legal terms what the Realtor agrees to in terms of commission, and in terms of the expense (advertising, MLS, Realtor dues) what they offer and a contractual agreement on how long the relationship lasts.
Because you cannot later restate this contract "on the fly."
Your shot at renegotiation lies in your counter-offer to the buyer, what terms you will agree on, and what terms their representation (and yours) can agree upon.
In practicality your deal with your Realtor is set once you have signed the ER.
Why would it not be allowed in any area for the seller's agent to base compensation (on the seller side) on a net price exclusive of monies such as seller's concession to the buyer?
I don't know. Read the post back there that followed mine , by MikeJaquish... It violates one of the rules where he lives. He might know why.
In my last closed sale we upped the price $4000 to cover a $3700 concession. Do you think it was worth it to pay the $166 in commissions?
Sure! That's what negotiation is all about. I had a similar situation in the last year, the buyer was well qualified, we took the offer. Escrow proceeded in a timely manner and I had my check about 30 days later. It could have stayed on the market for who knows how long? The house was empty but I had to continue paying utilities because you don't show houses in Phoenix without the air conditioning on.
Note that in my case (commercial property, a rental house) there was also capital gains taxes to pay on the price increase, but I wanted to sell the house and get my money ASAP.
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