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It is hard to find an agent you feel comfortable with, so if you do, then go with him. If you want someone more experienced, ask him if there is someone in his office mentoring him (usually is if he is in a big office), also he has a broker in charge (BIC) that will give him guidance along the way.
As far as commission goes, in wake county, generally (because there is NO set commission) new construction commission is 2.5 percent of the contract price on the house, and resale is 2.4 percent. The seller pays the agents COMPANY the commission, and then the commission is split up. So, the agent really may only receive 60 percent of the 2.5/2.4 percent. Some agencies the split is higher, and it is also higher if you have been in the business for a while. So realize that he is not going to "get" all of that money. On top of the commission split, he is also going to pay taxes on the money, and pay for many other things with the money that are for work........so realize all of that if you asking him to discount the commission.
I have had friends who have decided to work directly with a builder on a new construction house (and the sales agent) and the builder gave them 2 percent off of the price of the house, instead of giving commission to an agent. For them, it worked, because they knew a lot about construction and felt comfortable with their knowledge both of the area, and the process of building a house. They knew the builder and the sales agent were technically not on their side, and they handled their situation with that knowledge. Now, that doesn't always work for people, but for them it did.
Anyhow, there is much more to the real estate job than the commission, which in the long run after all is said and done, doesn't end up with a huge paycheck per client.
Leigh
Great Post Leigh! Thanks for explaining all that. One question .... why is there a difference between the typical commision for a buyers agent for new construction (2.5%) vs. resale (2.4%) ? I know every little bit helps when it comes to making a living, but it seems like such a small difference. I remeber when we bought our house our agent got 2.5% even though it was a resale. Of course in our price range that extra 0.1% didn't amout to a whole lot. I was still happy to see him get that extra 0.1% though ... he earned every penny of it!
Great Post Leigh! Thanks for explaining all that. One question .... why is there a difference between the typical commision for a buyers agent for new construction (2.5%) vs. resale (2.4%) ? I know every little bit helps when it comes to making a living, but it seems like such a small difference. I remeber when we bought our house our agent got 2.5% even though it was a resale. Of course in our price range that extra 0.1% didn't amout to a whole lot. I was still happy to see him get that extra 0.1% though ... he earned every penny of it!
You know, as I said, there is no set commission, but generally resales are at 2.4 percent, although some agents/homeowners will list it at 2.5 percent, it just depends. In orange county and durham county it tends to be 3 percent, on average. It just seems to be the norm for new construction to be 2.5 percent, to both the sales agents and the buyer's agent.
I know this is a vague sounding response, but the whole commission thing is vague! Seller's can decide what commission they want to give the buyer's agent, but generally it is 2.4 percent.
Thanks for your responses, everyone. I really appreciate it.
And actually, I should correct my original post. He doesn't have a couple of years of experience. It's less than that. He just applied to join the Durham Regional Association of Realtors a couple of months ago. But we feel so comfortable with him & he's done such a great job showing us what he can do, that I think we'd like to keep him. Everyone's got to start somewhere, right?
One other thing with new agents, they're hungry. They will jump through hoops for you. And like LisaTriangle said, you'll get a lot of attention since he's probably not busy. Another thing is that they sometimes have more current training and are willing to try new things where someone who has been doing it for 20 years may not.
From an email to all Realtors by the Raleigh Regional Association of Realtors, 2/26/2007:
ANTI-TRUST AND COMMISSIONS
The “fixing” of commissions between companies is absolutely prohibited under anti-trust legislation.
Triangle MLS does not fix, control, recommend, suggest or maintain commission rates or fees for agent’s services or for the division of commission fees between cooperating agents.
Agents are reminded that discussions resulting in a conspiracy or restraint of trade regarding commissions, costs, marketing strategies or sales policies are illegal.
Hinting in ANY way to prospective clients that there is a “going rate” of compensation is to be absolutely avoided. Words and phrases that should NEVER be used:
“This is the standard commission everyone charges.”
“I’d lower the commission, but then no one would show your property.”
The MLS won’t allow me to lower the commission.”
“Everyone charges the same commission.”
Avoid discussions at general meetings or social gatherings relating to commission rates, pricing structures, listing policies or marketing practices where there are REALTORS present from other companies
No discussions or action of boycotts or other negative actions pertaining to competitors.
Individual companies may determine commission rates or fees ONLY FOR THEIR OWN FIRM, and discussions of such topics must only occur within the strict confines of that firm.
A criminal violation of the Sherman Anti Trust Act is a FELONY punishable by IMPRISONMENT FOR UP TO THREE YEARS, and fines not exceeding $100,000 for individuals and $1,000,000 for corporations! Damages in civil actions are automatically TREBLED!
Last edited by MikeJaquish; 03-29-2007 at 06:45 PM..
Reason: Credited to RRAR
Fascinating information, Mike. Thank you for posting that.
I must admit that one of the reasons why I - as a buyer - am curious about commissions for Realtors & the impact it has on the final sale price is because of a certain incident that occured during our home search. We spotted a FSBO house recently & heard that the house cost $X. When our potential realtor called to schedule an appointment, suddenly the price increased by approximately 5%. In that instance, it seems obvious that the seller is passing along the extra cost of the commission to the buyer. But then again, this is a FSBO situation, so we'll never know what his motivation may be for raising the price.
We spotted a FSBO house recently & heard that the house cost $X. When our potential realtor called to schedule an appointment, suddenly the price increased by approximately 5%. In that instance, it seems obvious that the seller is passing along the extra cost of the commission to the buyer. But then again, this is a FSBO situation, so we'll never know what his motivation may be for raising the price.
Sounds like you hit the nail on the head. Most FSBO's are savvy enough to price their home and take into account the commission already for a seller's agent and they are just looking to save the cash on the listing side. This one obviously didn't plan ahead and a 5% increase is ludicrous. It's probably for the best that you didn't get involved with them.
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Why agent commissions are "vague"
