Realtor commissions; any realtors out there? (Marina, Del Rey: real estate, broker, buying a house)

[G Grasshopper]

I haven't noticed any real estate agents participating in the SF forum, but I thought I'd ask this question just in case there are people with some insight.
It seems to me that the 3% commission on selling/buying a house is strange in that it doesn't take into account the relative home values in different parts of the country. A house that sells for 1 million in this area may sell for $500 in another state. Both realtors, I suppose, would receive their 3% commission, but the CA agent receives twice as much. I know it is more expensive to live in CA than in most states, but not twice as expensive. I also know that, on average, the CA agent has not worked twice as hard as those in other states. So how is this rationalized? It would seem that there would be more realtors in CA willing to take discounted commissions because home prices are so inflated (although some aren't as much as they used to be.) Any thoughts on this?

[justNancy]

Well, I don't live in CA but I'm up at 3 in the morning (since my broken toe is killing me) so I'll throw my 2 cents in. I used to have a real estate license and, unless things have changed since then, it is illegal for a licensed agent to discuss commission rates. I assume this extends to an internet board.

However, commissions are negotiable. There is no law AFAIK that dictates a licensed broker can't sell your home for 1/2 as much as the agency down the road. There is even a web site for buyers/sellers called Hungry Agents where you can shop for a lower commission rate.
[URL="http://www.hungryagents.com/index.html"][/URL]
Just keep in mind one thing. When you hire someone to perform any service for you, that person has to consider her own costs and personal time invested. Of course, a Realtor has a duty to market and show your home to prospective buyers if there is a binding contract, but money is a big motivator in any field. An agent with ethical business practices doesn't only look at the $$$ signs, but we all have to eat.

[plenty]

Hello,
All real estate agents get 3% commission, correct. This is the basic start. Also what percentage would you accept
working with a real estate investor.

[justNancy]

Originally Posted by plenty

Hello,
All real estate agents get 3% commission, correct. This is the basic start. Also what percentage would you accept
working with a real estate investor.

Maybe this discussion belongs on the Real Estate forum where there are professional agents. However, the OP mentioned selling, so I was thinking of the listing broker when I used the word "negotiable." I've known sellers who told me they paid anywhere from 4% to 7%. I've also known on-site agents who make 2%, but that was during the housing boom. Many years ago I owned a manufactured home in NH and real estate agents quoted me over 10% to list it. So, although I hate to use the word "assume" I am guessing there is no fixed rate, although there are regional averages. Listings average anywhere from 5% to 7% and then the commission is usually split between the listing and selling brokers who then pay the agent. It is my understanding that, although 7% used to be the standard in the industry, many brokers in upscale areas began to list homes for less. In the end, I think you get what you pay for, so I'd rather pay a little more for experience and good service.

[ferretkona]

They way I see it, if I try to sell the house myself I will not get anywhere near what a agent will sell it for.

Same with filing taxes, my accountant does this everyday, he will get more returns for me than if I try it myself. A professional will always get it done quicker than the layman.

[DMenscha]

ALL real estate commissions are negotiable. I ask for 6% (which may be split with another real estate broker) but if we sell a home quickly and in the same office, I am willing to discount my fees a bit in that situation.

It's not illegal to discuss commission rates in CA, here or anywhere else.

I think CA leads the nation in the amount and complexities of disclosures (and the resulting liability for not properly making such disclosures). When I first started in real estate back in the 1970's up in WA state the usual commission was 7% on homes and the entire contract was on 1 11x14 sheet of paper.

I admire those agents that will offer to work for less, they seem to know what their services are worth.

[stuffavail]

Originally Posted by G Grasshopper

I haven't noticed any real estate agents participating in the SF forum, but I thought I'd ask this question just in case there are people with some insight.
It seems to me that the 3% commission on selling/buying a house is strange in that it doesn't take into account the relative home values in different parts of the country. A house that sells for 1 million in this area may sell for $500 in another state. Both realtors, I suppose, would receive their 3% commission, but the CA agent receives twice as much. I know it is more expensive to live in CA than in most states, but not twice as expensive. I also know that, on average, the CA agent has not worked twice as hard as those in other states. So how is this rationalized? It would seem that there would be more realtors in CA willing to take discounted commissions because home prices are so inflated (although some aren't as much as they used to be.) Any thoughts on this?

-------------------
Ack! I just lost my long response to you. Nutshell:

CA agents work harder beause the system of 3rd party escrow companies, the numerous of local Boards of Realtors and MLS services, make it seriously harder to show property and therefore do business.

Agents on average in the USA make about $67,000 a year. BUT we get no benefits, are self employed so pay higher taxes, and have many professional fees and marketing requirements that are quite costly.

So, once the listing agreement has been signed between seller and listing agent that is that. By putting the property into the MLS, the listing agent contracts to pay the buyer's rep a % of the realtor fee. Often that is 50%.

Hope this helps.

[batransplant]

I paid 4% split between 2 brokers to buy and sell my townhouse in Marina Del Rey, CA. The both came out quite well since the home was both bought and sold over a 30 day period. Each agent made 2% or 4% total. Since I found the house, my buyers agent did kick back 50% of the commission to me so I got a check at the end of escrow for 7K. Yes, this is legal in California.

My sellers agent already had a buyer lined up before I listed the house so we had it sold within 5 days of listing, with each agent making 16k on the transaction. Not too shabby.