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I am preparing to sell my house. I have talked to one agent so far, and he declared he charges 6% commission on the sale amount.
I find that amount absurd.
Buyers' agent does an extensive amount of legwork that may take months or even years (in my case), and deserves to make money on that.
OTOH, sellers agent does far less - why should he earn the same as buyers agent?
I am prepared to pay 4% commission on the sale, the split of that amount to be negotiated between both agents.
Since FSBOs typically involve 2 to 3% of BAC, I am willing to pay an extra 1 to 2% not to go the FSBO route.
RE agents are dime a dozen, and I suspect if I shop for a while, I will find one who agrees on 4%. However, I'd prefer to hire a quality agent.
I expect to make only a bit of extra money on the sale, the market in my area is strong - high demand and low supply (~3 months inventory)
You may be able to find a 5-percent commission, but, do you really want the 'cheapest' agent you can find? IMO, you would be better off looking for the most competent agent you can find at a reasonable market level, than trying to find a Broker/Agent willing to settle for 4-percent! This is particularly true if your market isn't 'red hot' and aspects of your house don't 'sell themselves.' Plus, of you can easily negotiate them down to 4-percent, how hard do you think they are going to work to negotiate the best sales price on your behalf? (In this case, 'cost' vs 'price' are an important difference!)
Your comment about RE Agents being 'a dime a dozen' is only true ... if you only count folks who took a RE course and then hung their license with a broker as more of a hobby than a business. But, you are kidding yourself if you imagine that selling real estate is as easy as you portray it. If your market is so hot that you only need to put a sign in the yard to attract multiple bidders (as it was at the market peak in 2005-2006), then put up your own sign -- or sell your house for enough more to cover the RE fee.
The commission split between the selling/listing agent and the buying agent is not really part of your negotiation with your sales agent. If you want to get other agents interested in showing your house to their clients ... the best way is to pay your sales agent enough to offer 2.5 to 3-percent split. Otherwise, you are undercutting your own potential market (Why should an agent show their clients your house ... where they only expect to make 2-percent, when they can just as easily show them houses where they make 3-percent??)
Good grief, if you don't know how to negotiate a commission, how in the heck do you expect to be able to negotiate a sales contract?!
If you are going to be buying a house in the same area, then many agents will happily give you a small cut on your own sale if you agree to use them as a buying agent. Ask.
Otherwise, some hungry agent may take you up on the offer. Or, they may negotiate back -- and indicate that there are certain things that will not be included in a lower price (i.e., newspaper ads, flyers (they may give you a format to print yourself), etc. They may also choose not to 'showcase' your home on certain websites, as that is often an added cost. You want a Mercedes, but you only want to pay for a Kia.
I find it interesting that you feel that "sellers agents do far less". Perhaps you've seen agents that make it LOOK easy. It's far more than slapping a sign in the yard. What does a Realtor do?
How do you think the buyer's agent finds out about a listing? Because a listing agent has invested in MLS memberships, specialized certifications, marketing, signage and website development, sent out announcement emails to other agents, hosted an agent caravan, sent just listed cards to your neighborhood, scheduled and manned open houses, has made sure the home was posted all over the internet and in the most-read local media outlets (which is just as often internet-based instead of print based.) How do you know the price is right? The agent has done a comparative market analysis, and knows the sales from around your area and how they compare to your home. They've done walk-throughs on your home and suggested repairs and staging advice to make the home look its best, and probably have decent workmen to suggest if you don't have anyone. They network constantly - they've talked the house up with other agents in their weekly office meetings, and they even made sure other agents know it's coming on the market in case there are clients looking in your neighborhood. Your property has probably been featured in a newsletter or an email announcement to their clients. They respond to calls from people driving by who see the sign in the front yard, and may do some pre-qualifying for unrepresented buyers to make sure they can qualify and not waste everyone's time. They coordinate showings, and are calling showing agents to get their feedback and reporting back to you what the market is saying about your house. When you DO get a buyer, you have a seasoned negotiator who has negotiated contracts just like this for years -- not just once every 10-15 years. They manage expectations, and work with you and the buyer's agent during inspections, due diligence, following up on mortgage application. They are invaluable when the appraiser begins their work by providing comps and pointing out issues that will support the sales price. They follow through with the closing attorney/title company to make sure everyone is on the same page, and they show up at closing to make sure that it goes smoothly -- and it almost always does, because a good agent makes sure that problems are addressed and that everyone is satisfied BEFORE they show up at closing. Plus, because you aren't a FSBO, you won't be having other agents calling you every day to try to convert you from a FSBO to a represented listing. :-)
You assume that the agent is merrily going home with the full proceeds in their hot little hands. They wish :-) On any commission, half is generally going to the buyer's agent. Of the half that's left, a percentage goes back to the brokerage, in some offices 25-35% of that half. Then there's the money spent on marketing the property. The rest, after taxes, is left over to the agent.
A 4% commission is shooting yourself in the foot in most markets. Most buying agents expect 3% -- 2% is going to raise eyebrows, and yes, there are some agents out there who will steer clients away form low-ball commissions. Not as many as you might suspect -- but yes, it's a red flag that this is going to be a difficult transaction. Also, consider that every single person that comes to you as a FSBO is expecting that THEY will save the commission amount -- not you. You are trying to sell it at market -- they are mentally subtracting 6% and figure that's the "real market". The people who are going for FSBO's want A Deal, so they can feel good about the great deal they got.
Figure that if you are selling a $100,000 home, buyers automatically figure, "Oh, it's really $94,000" and often try to bargain from there. If you want $100,000 for your home, then you might think, "Oh, I'll tack on an extra $5-6,000, and take that off. Bad move -- you've just overpriced your home, and homes that are overpriced tend to sit stagnant on the market. The higher the price, the more pronounced the effect. Around here, badly priced homes generally sit for 112 days. Homes that are priced right tend to get snapped up in 21 days.
You may be able to find a 5-percent commission, but, do you really want the 'cheapest' agent you can find? IMO, you would be better off looking for the most competent agent you can find at a reasonable market level, than trying to find a Broker/Agent willing to settle for 4-percent! This is particularly true if your market isn't 'red hot' and aspects of your house don't 'sell themselves.' Plus, of you can easily negotiate them down to 4-percent, how hard do you think they are going to work to negotiate the best sales price on your behalf? (In this case, 'cost' vs 'price' are an important difference!)
Your comment about RE Agents being 'a dime a dozen' is only true ... if you only count folks who took a RE course and then hung their license with a broker as more of a hobby than a business. But, you are kidding yourself if you imagine that selling real estate is as easy as you portray it. If your market is so hot that you only need to put a sign in the yard to attract multiple bidders (as it was at the market peak in 2005-2006), then put up your own sign -- or sell your house for enough more to cover the RE fee.
The commission split between the selling/listing agent and the buying agent is not really part of your negotiation with your sales agent. If you want to get other agents interested in showing your house to their clients ... the best way is to pay your sales agent enough to offer 2.5 to 3-percent split. Otherwise, you are undercutting your own potential market (Why should an agent show their clients your house ... where they only expect to make 2-percent, when they can just as easily show them houses where they make 3-percent??)
I disagree strongly.
Co-broke is integral to marketing and getting showings and offers.
There is no possibility I would list my house for sale with any agent and not know the exact co-broke amount/percentage, and demand that it was a common amount in my market.
The co-broke amount or percentage is specified in our listing agreements in NC and can not be unilaterally revised by the agent without breach. That seems fitting to me.
A 4% commission is shooting yourself in the foot in most markets. Most buying agents expect 3% -- 2% is going to raise eyebrows, and yes, there are some agents out there who will steer clients away form low-ball commissions.
Unfortunately, that is how the business works. If an agent sees the commission is only a few hundred bucks after splitting with the listing agent, they are going to try their best to talk that buyer OUT of buying your house. And they will talk them IN to buying a house with a better commission. That is the sales business.
Yes the system is terrible and everyone knows it, but thats the current system right now.
Realtors, at some point, say $1m+, why don't commissions decrease? I understand for a very expensive house (say $5m+) that a lot of networking and work is required (only certain circles are interested and that is expensive).
But to charge the same % for a $200k house as a 1,000k house sounds absurd to me.
Unfortunately, that is how the business works. If an agent sees the commission is only a few hundred bucks after splitting with the listing agent, they are going to try their best to talk that buyer OUT of buying your house. And they will talk them IN to buying a house with a better commission. That is the sales business.
Yes the system is terrible and everyone knows it, but thats the current system right now.
Of course, we can again offer factual remedial instruction regarding the "sales" baloney...
Consumers have a 100% financial stake in the cobroke, as much as agents do.
If the seller will not compensate the buyers' agent as agreed between buyer and buyers agent, it falls to the buyer to actually pay the agent directly.
Most buyers decline to do so, and when informed that they will owe a commission on top of the purchase price and may not be able to finance commissions as usual, they decide to not even view.
Some go as far as to instruct the agent to not show homes without an agreeable level of co-broke. As is their right.
Realtors, at some point, say $1m+, why don't commissions decrease? I understand for a very expensive house (say $5m+) that a lot of networking and work is required (only certain circles are interested and that is expensive).
But to charge the same % for a $200k house as a 1,000k house sounds absurd to me.
The higher end subsidizes the lower end..
Commissions are negotiable.
<Tongue in Cheek, somewhat>
Heck, go out and earn yourself a million bucks. Everyone wants a bigger piece of it, to subsidize the 99% who live in abject poverty.
Are you just another One Percenter who shirks responsibility and rebels against paying your "Fair Share?"
</Tongue in Cheek, somewhat>
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