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Old 03-31-2021, 09:02 AM
 
Location: DFW
40,936 posts, read 49,025,568 times
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I don't understand why people don't just do a FSBO. Save money and use your expertise to get the job done.

Good luck exposing it to the maximum amount of buyers, multiple offers and appraisals.
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Old 03-31-2021, 09:13 AM
 
867 posts, read 2,102,532 times
Reputation: 1075
So, it may be "easier" to be a listing agent in this hot market, but hot markets eventually cool off. There's still a lot of homework if you're serving your client well, which includes getting top dollar.

So, to play the OP's game, what would a better way of compensating a listing agent if not commission? (Let's keep the buying agent commission at 2.5-3.0% for now.)

1. Flat fee. As pointed out, this would likely be too high for a "cheap" house or a bargain for a premium listing. However, I could also see it like car sales. Here's the base package. You want photos? It's in the upgraded package. Video tour? More. Open house? Ditto. Pre-listing advice on what needs to get done in order to best sell the house? $$$. Answering phone calls, texts, and emails other than 9-5? There's an add-on for that, too. Need a professional cleaning before the house is officially on the market? That's available, too. (All of these except the video tour were done by our agent without us asking. And she paid for all of the outside services out of her commission.)

2. Hourly. Do people really think sales would be better if agents were like lawyers and keeping billing hours? Can you imagine the haggling at closing over whether the agent really spent 100 hours on the deal, on whether the photographer rate is padded, etc? How would you feel as a buyer if a sale was postponed due to arguments over the bill? Not to mention, what is the recourse if no sales occurs? An agent gets a lien on the house, making it harder to sell in the future?

If you really don't like the 5-6% model and wouldn't "need" the services offered by a quality agent, use redfin or do FSBO instead. Those exist for a reason. However, there are real drawbacks to them, too.

That's not to say that there aren't many agents/realtors who essentially mail it in a market like this and put in the least amount of work possible. The agents on this message board probably can name quite a few. However, the ones who last a long time in this business are the ones who go the extra mile repeatedly without getting burned out, which is a story for another day. In addition, if a seller is using the same agent to find the new home (ie, not relocating outside the area), any windfalls from selling one house should be compared to the work necessary to find a new one. Overall, I think it balances out.
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Old 03-31-2021, 09:54 AM
 
Location: NJ
1,860 posts, read 1,234,786 times
Reputation: 6027
We are in a hot market right now and therefore you can negotiate with way more leeway than normal. But never underestimate the value of a good agent.

An agent who knows the law. An agent who answers their phone for all the showing requests to make sure youre getting maximum exposure. An agent who shows up on time and prepared for all meetings and showings. An agent who knows how to communicate with everyone such as lawyers and title companies. An agent who hires a professional photographer to make an amazing listing and 3D model of your house. An agent who can answer any and all of your questions with knowledge and confidence.

And when its not a hot market more expensive houses that dont sell themselves take a lot more time and money and work than a house that is "average price". The clients expect higher quality brochures, better signs, drone footage, a beautiful open house spread, a team of agents available around the clock and often there is auxiliary staff that has to help such as secretary/administrative assistants etc. A good agent is worth their rate, but only you and agent can decide what the appropriate rate is
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Old 03-31-2021, 11:51 AM
 
Location: Gilbert, AZ
1,647 posts, read 1,245,117 times
Reputation: 3590
Quote:
Originally Posted by Rakin View Post
I don't understand why people don't just do a FSBO. Save money and use your expertise to get the job done.

Good luck exposing it to the maximum amount of buyers, multiple offers and appraisals.
Some people just like to constantly complain to strangers on the internet.
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Old 03-31-2021, 01:15 PM
 
110 posts, read 75,023 times
Reputation: 115
Quote:
Originally Posted by Mike From NIU View Post
2. Hourly. Do people really think sales would be better if agents were like lawyers and keeping billing hours? Can you imagine the haggling at closing over whether the agent really spent 100 hours on the deal, on whether the photographer rate is padded, etc? How would you feel as a buyer if a sale was postponed due to arguments over the bill? Not to mention, what is the recourse if no sales occurs? An agent gets a lien on the house, making it harder to sell in the future?
I don't get why people call it "sales". It's not like the seller's agent is chasing you down the driveway saying, "Let's make a deal!" Most of the time you don't even interact with the seller's agent. If anything you interact with an associate who is literally opening doors and handing out brochures. And sure the agent is contributing subject-matter knowledge and preparing materials, but all professionals do that. If anything, it's just marketing.

I can't imagine that type of haggling occurring. If an agent really spent 100 hours on a deal, and was able to support that time with a detailed billing, why would you haggle over it? Just roll it into the closing costs and be done with it. If they charge a standard rate commensurate with their level of experience and education, say $75 an hour, then you'd only be paying $7,500 on a $500K sale rather than $30K. Do the same for the buyer's agent and combined both parties realize a 50% savings.

If no sale occurs, or you decide to change realtors, either consider it a sunk cost and pay them, or have the next realtor assume the liability and pay them out of closing costs. It doesn't seem like an overly complicated contractual arrangement.
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Old 03-31-2021, 01:27 PM
 
Location: Columbia, SC
10,940 posts, read 21,914,344 times
Reputation: 10571
Quote:
Originally Posted by Cubby60611 View Post
...
I can't imagine that type of haggling occurring. If an agent really spent 100 hours on a deal, and was able to support that time with a detailed billing, why would you haggle over it? ...

If no sale occurs, or you decide to change realtors, either consider it a sunk cost and pay them, or have the next realtor assume the liability and pay them out of closing costs. It doesn't seem like an overly complicated contractual arrangement.
I did a very complex commercial deal a few years ago. 2+ years on the market and another 1-2 years to close. I really did have, by the end, probably 100+ hours in the deal.

...
Second part, yes. If I'm being paid hourly then I should be paid for the time and not the result. If a house didn't sell, it wasn't my fault anyway. Seller priced it to high, wouldn't do work and / or wouldn't come down on the price. I can't control those actions of the seller. But I agree. I said that earlier and it got glossed over. Commissions are high because we have all the skin in the game. If pay was guaranteed price would come down but time and time again it's been proven the buyers and sellers don't want to assume the financial risk of guaranteeing pay.
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Old 03-31-2021, 01:34 PM
 
Location: Rural Wisconsin
19,649 posts, read 9,192,474 times
Reputation: 38048
Quote:
Originally Posted by City Guy997S View Post
I draw the line on this type of mentality..........if you think like this, stay home/make your own burger/serve your own drink and save all the money!

Wait staff makes a nominal wage (it was $2 a hour for years, I think it is $5.13 in my state now). The tips also routinely get shared among hostess/table bussing/barback staff (lesser percentage).

Going out to a sit down restaurant is a luxury, everything costs more than fast food or cooking at home. If you don't feel you should tip, then stay home because that server didn't show up to work that day to work for you for FREE!

I eat out nightly, the tip starts at 20%.......I went to a new place the other night and basically ordered everything the waitress recommended, she was 100% spot on, the food I ordered was excellent. I think I tipped 35%.


If the 20% holds you back, just stay home.

Being this thread is based on real estate, I do have an issue with 6% of the gross sale. Plenty of people in the last slowdown came to the closing with a check and the only ones leaving with a profit was the realtors!

But again, like restaurants if you don't want to pay the commission then sell it yourself!
To clarify, we DO tip and don't mind doing so. What I meant is that the 20% tipping is not fair to the SERVERS, imo, in some cases. Maybe it all evens out, maybe not. But I always felt bad that breakfast servers make less because the cost of breakfast is less (usually) than the cost of dinners.

And thanks for the info. I had heard that busboys (and cooks?) get a percentage, but I didn't know any of the details.
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Old 03-31-2021, 01:51 PM
 
1,731 posts, read 1,057,854 times
Reputation: 2603
Quote:
Originally Posted by katharsis View Post
To clarify, we DO tip and don't mind doing so. What I meant is that the 20% tipping is not fair to the SERVERS, imo, in some cases. Maybe it all evens out, maybe not. But I always felt bad that breakfast servers make less because the cost of breakfast is less (usually) than the cost of dinners.

And thanks for the info. I had heard that busboys (and cooks?) get a percentage, but I didn't know any of the details.
Breakfast servers make it up in volume. Generally breakfast is a one course meal unlike dinner with appetizers, soup/salad, main course and dessert. Plus they have the luxury of being home at night.
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Old 03-31-2021, 03:42 PM
Status: "Made the Retirement Run in under 12 parsecs!!!" (set 22 days ago)
 
Location: Cary, NC
43,176 posts, read 76,815,786 times
Reputation: 45533
Quote:
Originally Posted by MortonR View Post
Mike,

For informational purposes, would you be willing to outline those "other alternatives"?

Understand that I have no problem paying a commission to the agent who earns it, but I retain the right to negotiate that commission as I see fit. It's then up to the agent to decide if that's what they want to work for or not. Our transactions are relatively hassle free, as we've done it many times over and always have our ducks in a row when we're ready to buy or sell, so the agent's job for us is a relative'y easy one. I realize that's rarely the case, however.

Thank you,

RM
In almost any market, there are many agents who don't support the legendary 6%.
That is why average commissions have been in the 5% area for years.

There are flat fee agents, 1% agents (who are only advertising their side of the transaction), FSBO/MLS listings that sellers can get for $199--$499.
Some agents offer to work on an hourly basis. I won't consider that.
There are buyers agents who advertise returning an amount of their commission to the buyer client.

Most of these alternatives are easy to find in most markets.

Where the issues arise is when sellers want to select an agent and dictate the payment and plan, but agents won't agree.
"They won't negotiate!"
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Old 03-31-2021, 06:48 PM
exm
 
3,713 posts, read 1,765,533 times
Reputation: 2836
Try redfin.com
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