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We have a house we've been rehabbing since September 2014. This is Silicon Valley, prices are sky high, listings are scarce and we're coming up on nice weather.
I can have the house done in another 3 weeks. There are numerous agents who live in the neighborhood and of course they have all come by to get a foot in the door over the last 29 months.
The latest is offering me a discount on the commission. He texted me and said he would list it for 1% on the listing agent side. I was over at the house yesterday -- of course he came by -- and I said I was confused by the offer, what would be the total commission percentage? He said 3.5%.
Obviously that sounds good but you know what they say about "If it sounds too good to be true..." I've talked to many agents who weren't willing to budge from 6%. But if it sells for $900k, that's a difference of $81,000 vs $31,500. $50k is nothing to sneeze at, so I want to believe.
Doesn't he have to split that $31,500 with the agent that brings the buyer?
He just wants the listing. In a hot market he knows he's gonna make a fast sale, so why not undercut others to get it.
You live in a one-of-a-kind market and let's face it, you probably won't need much marketing. You know you will get multiple offers in a short time. When a buyer's agent sees your listing they can also see what they will make percentage-wise. As long as it's the market rate you probably won't be blacklisted. If you have it all in writing it could work out well for you. But if that extra money doesn't matter compared to the risk go with a different agent.
Don't mean to side-track, but is the typical total commission in your market 6%? If so then in most of those 89% of listings does the listing agent make more than the buyers agent (or the buyer has to pay out of pocket)? I'm not a RE agent so may be misunderstanding but I'm in the other big market in your state and have been under the impression that 6% total is the standard here.
Which brings me back to the OP, which said that "some agents weren't willing to budge from the 6%" (I assume being split 3% each to the buyers and sellers agents), but basically said that the offer for the buyers agent was 2.5%. So as you said, would want to make sure that 2.5% to the buyers agent is realistic.
When working the buyer side, I see less of the listing side. Along with other incompetence, the CFPB says that commission is only a seller's expense and none of the buyer's business.
But, when I do get to see the listing side commission, it is not uncommon to see a 3.6%/2.4%, 60/40 split.
By "not uncommon," I don't have the ability to put a number on it, but 60/40 is very much present in the local market.
It is astonishing to me, in a red hot market, that sellers place a higher value on listing than on buying, when new listings are often swarmed before the marketing is in place.
Oh, and buyers agents do turn themselves inside out to get into those 2.4% listings. Definitely.
When working the buyer side, I see less of the listing side. Along with other incompetence, the CFPB says that commission is only a seller's expense and none of the buyer's business.
But, when I do get to see the listing side commission, it is not uncommon to see a 3.6%/2.4%, 60/40 split.
By "not uncommon," I don't have the ability to put a number on it, but 60/40 is very much present in the local market.
It is astonishing to me, in a red hot market, that sellers place a higher value on listing than on buying, when new listings are often swarmed before the marketing is in place.
Oh, and buyers agents do turn themselves inside out to get into those 2.4% listings. Definitely.
Is it sellers placing more value on listing, or sellers' agents?
I see the real estate agent business as ripe for "competitive disruption". I have used agents and bought and sold w/o agents. Using an agent has always felt like working with a cartel. Most of us hate working with cartels.
I believe some clever people will put forth a new business model that shreds the industry just like Uber is doing to taxi companies and streaming media is doing to cable.
Is it sellers placing more value on listing, or sellers' agents?
When you see listing agents disparaging "discount brokers," you can bet that they are pushing an agenda that assumes their commission rate carries intrinsic value.
I see the real estate agent business as ripe for "competitive disruption". I have used agents and bought and sold w/o agents. Using an agent has always felt like working with a cartel. Most of us hate working with cartels.
I believe some clever people will put forth a new business model that shreds the industry just like Uber is doing to taxi companies and streaming media is doing to cable.
That is not productive long-term disruption. It is just ruinous pricing, as long as the cash holds out.
Ruinous pricing to disrupt an industry will not result in long-term price reduction. At some point, Uber will need to turn profit, or raise prices significantly. When they burn their cash, where will pricing be?
Where is the IPO? Or, will that only happen after the venture money boys figure out that the Uber Emperor is nekkid?
Real estate brokerage has its issues, and there are plenty of folks pumping money to get their spoon into the soup. But, an "Uber-like" resolution is nearly immoral, IMO.
Compete with an eye on profit, whether ride-sharing, selling widgets, or offering brokerage services, not just because you have billions of dollars to burn to destroy a targeted industry.
We have one here charging 1%. He has seminars in CA about LV and how we are tax friendly to business owners etc and brings busses of people over here. Very succesful, selling agents still get 2.5%.
The rate realtors charge has not changed for decades yet housing prices have sky rocketed. It time someone shakes up the market.
We have one here charging 1%. He has seminars in CA about LV and how we are tax friendly to business owners etc and brings busses of people over here. Very succesful, selling agents still get 2.5%.
The rate realtors charge has not changed for decades yet housing prices have sky rocketed. It time someone shakes up the market.
You contradict yourself.
You give a great example, and then say it doesn't happen?
That is not productive long-term disruption. It is just ruinous pricing, as long as the cash holds out.
Ruinous pricing to disrupt an industry will not result in long-term price reduction. At some point, Uber will need to turn profit, or raise prices significantly. When they burn their cash, where will pricing be?
Where is the IPO? Or, will that only happen after the venture money boys figure out that the Uber Emperor is nekkid?
Real estate brokerage has its issues, and there are plenty of folks pumping money to get their spoon into the soup. But, an "Uber-like" resolution is nearly immoral, IMO.
Compete with an eye on profit, whether ride-sharing, selling widgets, or offering brokerage services, not just because you have billions of dollars to burn to destroy a targeted industry.
Mike, your going to through around words like morality??
There is plenty of illegal and immoral activity within the realtor world and you know.
This is about business.
Realtor pricing only exists through collusion and monopoly. it does not exist on fair play and competition.
The industry fights tooth and nail against discount brokers.
I could care less if Uber makes money or not. I only know I pay 1/3 to 1/2 what a taxi charges. That's ALL that matters for the commodity of going from pt A to pt B.
I would think good realtors (i.e. those that truly add value for their customers) would be happy with tiered pricing. They could make more $. Why would they be afraid of that?
All your comments above are really just about maintaining the status quo.
Good luck with that. The world can change pretty fast these days.
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