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the buyer's side in a sale in Wake county is only 2.4%, not 3%. I was not around when this started, but I understand that the big agencies of that day (Fonville Morissey, York Simpson Underwood, etc.) in Wake county decided some years ago that this was the way to go since listings cost them more money. Funny since the agencies pay very little, if anything. Advertising costs are paid by the individual agents. I have never heard of this anywhere else. Any opinions on this system?
Commissions and commission split percentages are not hard fact. It is widely known that they are actually negotiable and have variables within viable, and less viable, business models.
That is an important distinction that should not be glossed over.
The system is fine. There is consumer free choice among services.
I have found that some realtors get quite offended when discussing the topic of their commissions. I've read and heard plenty of opinions on this subject.
As a buyer and seller, my experience has been that pretty much everything in real estate is negotiable. This includes commissions for the listing (which include the co-broker amount) as well as the rebate (as a buyer). Shopping around for a mortgage loan is similar--many fees are negotiable. You get what you pay for, but paying more doesn't always mean getting more.
commissions are negotiable, Mike, but as you look through MLS, you will see that close to 100% of the listings have the buyers side in Wake as 2.4%. It is occasionally more, most often a whopping 2.5% for new construction, and rarely less. Like the law, the standard of practice is a dominant factor and shapes the reality, no matter what the rules allow.
commissions are negotiable, Mike, but as you look through MLS, you will see that close to 100% of the listings have the buyers side in Wake as 2.4%. It is occasionally more, most often a whopping 2.5% for new construction, and rarely less. Like the law, the standard of practice is a dominant factor and shapes the reality, no matter what the rules allow.
Interesting - But in VT this is not the case, the offerings vary widely here.
the buyer's side in a sale in Wake county is only 2.4%, not 3%. I was not around when this started, but I understand that the big agencies of that day (Fonville Morissey, York Simpson Underwood, etc.) in Wake county decided some years ago that this was the way to go since listings cost them more money. Funny since the agencies pay very little, if anything. Advertising costs are paid by the individual agents. I have never heard of this anywhere else. Any opinions on this system?
Quote:
Originally Posted by House Lady
commissions are negotiable, Mike, but as you look through MLS, you will see that close to 100% of the listings have the buyers side in Wake as 2.4%. It is occasionally more, most often a whopping 2.5% for new construction, and rarely less. Like the law, the standard of practice is a dominant factor and shapes the reality, no matter what the rules allow.
Those highlighted remarks impart significantly different connotations.
The first statement is in absolute terms and refers to a commission rate, i.e., a standard commission. Actually, it stipulates two possible standard commission rates. Either reference to a standard rate flies in the face of current guidelines from NAR, NCAR, and RRAR..
The second statement is more accurate as it contains modifiers of the previous absolute citation of price-fixed commission rates as standard.
The prefaced recognition of the truly negotiable status of commissions is also helpful, since that negotiable status of commissions was not noted in the first statement.
I think of "standards of practice" as ethical and legal requirements that are applicable to a broad constituency, i.e. all licensed agents, all Realtors, etc. Those ethical and legal considerations are enforceable by governing bodies, i.e., NCAR, RRAR, NAR, NC REC, and courts of law.
"Standards of practice" does not apply to local commission rates, IMO, other than my BIC's legitimate authority to set an office standard.
When we listed our home a year ago in Johnston County we advised the realtor that 6% was too steep and she immediately offered to list and sell for 5%. If I recall the buyer's agent received 2.4% of that sale. Let's face it, 5% and 2.4% of something is much better than 6% and 3% of nothing!!.
By the way, both were nationally known realty firms.
Those highlighted remarks impart significantly different connotations.
The first statement is in absolute terms and refers to a commission rate, i.e., a standard commission. Actually, it stipulates two possible standard commission rates. Either reference to a standard rate flies in the face of current guidelines from NAR, NCAR, and RRAR..
The second statement is more accurate as it contains modifiers of the previous absolute citation of price-fixed commission rates as standard.
The prefaced recognition of the truly negotiable status of commissions is also helpful, since that negotiable status of commissions was not noted in the first statement.
I think of "standards of practice" as ethical and legal requirements that are applicable to a broad constituency, i.e. all licensed agents, all Realtors, etc. Those ethical and legal considerations are enforceable by governing bodies, i.e., NCAR, RRAR, NAR, NC REC, and courts of law.
"Standards of practice" does not apply to local commission rates, IMO, other than my BIC's legitimate authority to set an office standard.
The last time I did training to sit on an arbitration panel, one of the trainers made an interesting point: Not only do members of the public not have to abide by The Realtor Code of Ethics, (nor should they, not being licensed, or more to the point - Realtors) but in fact most members of the public aren't aware of the NAR standards of practice, or indeed of the finer points of Real Estate law. Fortunately, it's becoming more and more common for Realtors to insist upon discussing "Agency" - in fact, since July 1, it's been required by law in VT.
This is just to say thanks for helping to make some seemingly small distinctions, which it seems to me are very important indeed, and getting more important by the day...
I think that the average consumer doesn't realize how little the agent makes in each transaction. Remember that if you are listing at 6%, the agent doesn't get 6%. On a $200k house the commission is $12,000. Well, the buyer's agent's OFFICE gets 3% and the listing agent, the one doing all that work for you (and marketing is NOT CHEAP) has to split his/her 3% with his/her brokerage. So he/she gets 1.5% ($3.000). Then taxes (take away another third) and expenses, and all those hours come down to a couple thousand dollars MAX.
Obviously these numbers change depending on the brokerage and position of the agent (owner of the biz, etc.), but always keep in mind that those "huge" commissions are split and that it's not like your agent sees more than a fraction, and works very hard for it
The thing that kills me however is that my selling agent invested approx. 3 hours to earn her commision. No Open Houses, as at the time in TX it was a relatively slow time of year. If not as part of a relo, no way would I have gone for 6%. Looking back, I would have asked how many hours she would plan to put in....
Last time I checked $1000 / hour is pretty good. So what if she only makes 1-2k / month. For a few hours work, still way too much...
On the otherhand, if she makes $50/hr, and puts in 60-120 hours, that I can live with. But that never happens...
The thing that kills me however is that my selling agent invested approx. 3 hours to earn her commision. No Open Houses, as at the time in TX it was a relatively slow time of year. If not as part of a relo, no way would I have gone for 6%. Looking back, I would have asked how many hours she would plan to put in....
Last time I checked $1000 / hour is pretty good. So what if she only makes 1-2k / month. For a few hours work, still way too much...
On the otherhand, if she makes $50/hr, and puts in 60-120 hours, that I can live with. But that never happens...
Don't you pay for results? That's what a commission-based compensation is all about.
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It is true that....
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