[airics]

Originally Posted by Michael2016

Hi,

no we don`t have a septic tank. All houses around are also connected to sewer system, maybe more north, but not exactly where we are. As for the road, I am now on business trip and don`t have all papers with me, but as far as I remember, the road belongs equal to the 4 houses in the cul de sac, and therefore any maintenance would be the responsibility of the 4. I would look it up once I have time to see detailed stipulations. And yes this was a unique situation that saved us the commissions. Also unique was that the house owner put in more than 80.000$ in making the home "smart" and when selling he never got the many upgrades he invested in back... So we got a lot of stuff almost for free. The homeowner build his home for his retirement but had to leave overnight due to his job in another state, and sold at a big loss compared to what he has put in the house... So we are pretty happy with the price paid.

If you were the buyer, you don’t pay commissions. The seller does.

[Michael2016]

Originally Posted by airics

If you were the buyer, you don’t pay commissions. The seller does.

I think the seller would always add closing cost to his price tag and the buyer pays it finally all. I would do so as well. In my case, the seller told me the last price they would accept, and the last price they would accept if I had no agent. The difference was 3% without agent. Don`t get me wrong. I am sure generally Realtors are great and helpful, and I am not talking against them at all. What I don`t quite understand is why they insist to work on a percentage of the house. The work is the same if the house is 200k,300k or 800k, so why would you need to pay for the same service 400% more on the higher end and not just agree on a fixed fee that corresponds to the work involved case by case.

[jet757f]

Originally Posted by Michael2016

I think the seller would always add closing cost to his price tag and the buyer pays it finally all. I would do so as well. In my case, the seller told me the last price they would accept, and the last price they would accept if I had no agent. The difference was 3% without agent. Don`t get me wrong. I am sure generally Realtors are great and helpful, and I am not talking against them at all. What I don`t quite understand is why they insist to work on a percentage of the house. The work is the same if the house is 200k,300k or 800k, so why would you need to pay for the same service 400% more on the higher end and not just agree on a fixed fee that corresponds to the work involved case by case.

Good point there. Why do agents charge the same percentage no matter what the price? The equity a seller has in a house will vary from house to house. Just because it is an expensive house doesn't mean there is a lot of cash equity and in fact the seller could go negative just because of the commission added on to the closing costs.

[SportyandMisty]

Originally Posted by airics

If you were the buyer, you don’t pay commissions. The seller does.

Yes and no. The best way to analyze the incidence of a sales commission is as if it were a tax, and one of the fundamental lessons of Economics is that the incidence of a tax (sales commission or other form of compensation for a real estate agent) is completely independent of who actually bears the burden of the tax.

The burden of the tax is a function of the price elasticity of demand and price elasticity of supply. In economics, that is the slope of the demand curve and supply curve.

At the end of the day, in a seller's market, most of the burden of that 6% commission falls onto the buyer in the form of a price higher than it otherwise would be.

Similarly, in a buyer's market, most of the burden of that 6% commission falls onto the seller as the seller cannot raise the price to account for the commission.

[ragabnh]

So for a $700K house you pay $42K in commissions to buyer and seller agents, that is a lot. Could this be negotiated for expensive homes? If so what is a reasonable rate?

[lvmensch]

Michael's house is a somewhat unique situation. It is basically a semi-custom from a major builder that is well known for high pricing their product. This is however the second sale and the home has been augmented significantly. The agent owner effectively kills half the commission.

You can try and arrive at a rational competitive price but you won't get anywhere. You will end up stuck in the impact of the new home premium and the augmentation and such.

So if Michael is happy he did well.

The commission thing is not nearly as clear as many see it. It is much more difficult to sell an expensive house than a low cost one. The time to sell for instance may be a year or more as opposed to the 2 or 3 weeks for a $200,000 sfr. I would much rather have a half dozen little condos than one $600,000 home. Far less effort.

[Cold Warrior]

Originally Posted by airics

If you were the buyer, you don’t pay commissions. The seller does.

That, too, is negotiable.

[airics]

Originally Posted by ragabnh

So for a $700K house you pay $42K in commissions to buyer and seller agents, that is a lot. Could this be negotiated for expensive homes? If so what is a reasonable rate?

In a hot market. Do the 1% to seller. 3% to buyer agent. Otherwise figure it into price of house

With this market, there are tons of cash offers. I’ll take a lower cash offer over finances anyday

[foundapeanut]

Originally Posted by lvmensch

The commission thing is not nearly as clear as many see it. It is much more difficult to sell an expensive house than a low cost one. The time to sell for instance may be a year or more as opposed to the 2 or 3 weeks for a $200,000 sfr. I would much rather have a half dozen little condos than one $600,000 home. Far less effort.

I know agents who specialize in high cost homes, they would say just the opposite. BUt you have to have the reputation and marketing budget to make these happen. If a home is priced right, their is a buyer.

We sold a 2.5M home in one day, the buyer lived across the golf course and sold his 6.5m in two hours. (2005) Agent had customers waiting for this area and price range.

BTW, he came in the front door, went outside and looked at the view. He was looking to downsize and views are important to people in this price range. When the view passed, then he looked at the house. If the view hadn't been up to his standards, he'd of moved on. Said our view was better than his. Why we bought the house and the one we live in now.

[lvmensch]

Originally Posted by foundapeanut

I know agents who specialize in high cost homes, they would say just the opposite. BUt you have to have the reputation and marketing budget to make these happen. If a home is priced right, their is a buyer.

We sold a 2.5M home in one day, the buyer lived across the golf course and sold his 6.5m in two hours. (2005) Agent had customers waiting for this area and price range.

BTW, he came in the front door, went outside and looked at the view. He was looking to downsize and views are important to people in this price range. When the view passed, then he looked at the house. If the view hadn't been up to his standards, he'd of moved on. Said our view was better than his. Why we bought the house and the one we live in now.

And I know a number of agents who worked the high end...my brokerage has a set of people who specialize in it. I would also note they tend to be the powerful salesman type...not the technical RE type. And they often have a very high BS quotient.

The facts however are quite clear. Normal homes have 1.6 months of inventory. Condo Townhouses have 1.2 months. Houses above one million however have 11 months. So about 10 times as long to sell as the low end.

We are about to list a nice super view home in Sun City Summerlin. We expect it will eventually sell for around $750,000. But it may well still be with us next fall.

There were many strange things in 2005 and 2006. But they do not exist in this or most normal markets. And this is a strong seller's market. When things go to a more normal one the time to sell an expensive house will grow.