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This isn't news, either. Commissions have always been negotiable. However, I agree with Brandon - if your agent rolls over and gives up on his own paycheck, how well do you think he or she will negotiate on your behalf?
What? Negotiate on who's behalf? Give me a break.
When I sold my home the realtors I interviewed (the best in my area because of the price of the house) did nothing but try and get me to list it as low as possible for a quick sale. My house was perfect in every way and my listing agent still talked it down when the first offer came in. She tried so hard to make it seem that this was it. I will never see an offer like this again. Take it, take it, take it now!!! Again this was the highest, most respected and in my opinion, best realtor in the area.
When I was buying a home I asked for referrals from the real estate franchise that I used and was given a very experienced and very good realtor. When we looked at houses that needed work she tried to make every house seem like a castle that had very little room for negotiation. I was told that I needed to make an offer very close to list price or someone else will get the house. In a buyers market! I got feed up with all the nonsense and bought a new construction home without a realtor.
I highly doubt realtors would charge just $30 an hour. I'm surprised you didn't pick something more ridiculous like $5/ hour to try to make your erroneous point.
Some people spend months looking for homes with a realtor. Hourly charges and retainers can rack up pretty fast when you use more realistic rates.
Nonsense. If the Realtors where going to get hit by the internet they would have been...ain't gonna happen. Simple fantasy
Its a fantasy to think that the internet is going to change the way real estate is bought and sold? Are you serious? I mean really? It already changed matters, people can now go online and look at listings without a Realtor. This makes it difficult for the Realtor to cherry-pick listings to show clients.
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I am easily worth 100 an hour and cheap at the price.
Well I'm glad you think so, but I would never pay someone that much to sell a house. Its not rocket science, its selling used houses. Nor would I even come close to paying someone that much to simply open a door so I could look at a property.
Anyhow, there are already real estate agents out there that are charging either very low commissions, a flat fee or by the hour. As the internet becomes a more powerful real estate tool these low service agents will be all that is required.
In response to the original post about negotiating commission, it's what I did as a seller. Most got between 5-6%, I made sure to ask if they split that evenly.
When we had an offer, my agents help screwed the contract up, we'd negotiated 5 1/2% commission (IIRC), 6% was the norm, it was not changed in the contract. The buyers agent bitched about it a few times, I could hear them getting loud over the phone. My agent said he'd handle it. Next thing I know he says he spoke to the agents broker who also yelled even though he had proof the commission was not 6%. He calls me to say they pulled out and we'd have a letter from their attorney. Yes, even in this market agents wanted every bit they could get and would kill a deal.
IMO, commissions are too high and something really needs to be done about how agents get paid. I'm not saying they don't earn payment because most do, but the amount of compensation has gotten ridiculous. I do not think it is fair that sellers should pay agents for work they do for other people that does not result in a sale, which is how I feel as a seller paying high commission.
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Originally Posted by Humanoid
Its a fantasy to think that the internet is going to change the way real estate is bought and sold? Are you serious? I mean really? It already changed matters, people can now go online and look at listings without a Realtor. This makes it difficult for the Realtor to cherry-pick listings to show clients.
I know people that bought houses they found themselves. They were working with a buyers agent that did not show them all of the listings that matched their search (for what ever reason). They went to realtor.com and found houses themselves.
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Originally Posted by Humanoid
Regardless, Realtor will have to change the way they do business if they want to compete in the modern world.
I agree and think that in the next few years there will be some sort of change.
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Originally Posted by North_Raleigh_Guy
Let me put it to you this way. I wish my auto mechanic got paid by commission per reapir job and didn't charge and hourly rate. His $85 an hour crushes me.
Mechanics daughter here..
Now that my dad is gone, paying the hourly rate hurts.
I know that there is a lot of over-head, insurance is high (think if a car gets damaged, worker gets hurt), rent is high. Then there are utilities, it was also the phone bill was higher for a business, don't know if that is still true, my dad used to get pounded every time he picked up the phone. Advertising in the yellow pages was also high. You have tools, depending on what the mechanic is buying, tools are not cheap. These days you can buy tools every where but you get what you pay for.
The next expense is the machines. I remember when my dad bought the machines he needed to do inspections, it was a bank loan. lol The thing about the machines is that they get old fast, new ones are always coming out. Then you have special tools, doubt we could do our own brake job on my Mazda because some special tool is needed.
Do ALL realtors deserve the 3% commission? Hell, no; only good ones do!
But I was very happy with my realtor and would have gladly given him 3%. But after all, everything is a business, so we negotiated a 2% commission for selling my house since he was going to get 3% when I would purchase a new house (within the next 6 months).
I see nothing wrong with that and I saw no difference in his service...it was the same fabulous level of service he had provided me in 2002 when I bought my first house.
If you can haggle with your mortgage lender, handyman, roofing contractor, landscape company, what's wrong with doing the same with a realtor? You will only hear the real estate industry spelling out myriad, but inane reasons why the 3% commission is justified. Grow up, you whiners, if you cannot negotiate a %age for yourself and be happy at the end of the transaction, how can you negotiate a real estate sale/purchase for me?
You just explained why the hourly pay for a Realtor wouldn't be too high. Why do I want to subsidize the work they do for no money for other people. That is what you are doing when you do commission based pay. The hourly pay wouldn't be too high either, what exactly do you need to become a Realtor? A car? A clip board? The mechanic has hundreds of thousands in equipment, rent etc etc (not to mention more skill....) As someone else said its pineapples to papayas. If the Realtor worked for $30/hour, based on your commission they would've worked a total of 110 hours. Did they really spend almost 3 weeks full time selling your house? I doubt it. You merely subsidized the work they did for other people that didn't result in any $$$.
Regardless, Realtor will have to change the way they do business if they want to compete in the modern world.
I have cut and pasted this a few times in all the other "commission/why can't we charge by the hour threads."
"I would go for an hourly rate.
If it is a flat rate per listing that is fine also. I will hand them the invoice when the listing contract is signed and get paid before I leave.
Here is how I laid it out in another post for someone who suggested this.
"That is fine by me. You pay me as we go. I will keep track of my hours and bill weekly. At say $60 an hour(what the courts here have used when we are called in as experts, would be higher elsewhere), plus ad costs you get an invoice for $1150 the first week.
Subsequent weeks probably will not be as high but for argument sake lets assume 40 more hours over the next 4 months plus ad costs so you get another invoice for $2900.
After 5 months we go to contract. In this time we will be offering, counter offering and following up. We will also be meeting appraisers, inspectors, contractors and others at the house after the contract is finalized. Lets figure about 40 hours for this. Here comes another invoice for $2400.
You are now 5 months in, have paid out $6450, we go to closing and the buyer backs out. Fine by me because I got paid. Not to good for you being out $6450 and facing the prospect of having to go through the same thing again.
Sure a higher priced home may save some money going this route if everything goes smooth but someone with a lower priced home can end up paying alot more if things don't go smooth."
Now keep in mind this is just for me the sellers agent, the buyers agent will be charging the buyer, we will figure around the same amount(maybe more if they viewed alot of homes. So we have what works out to a little over 6% if this was a $200,000 house. If it is a $150,000 house it would be over 8%. This all without the guarantee of closing.
When I sold my home the realtors I interviewed (the best in my area because of the price of the house) did nothing but try and get me to list it as low as possible for a quick sale. My house was perfect in every way and my listing agent still talked it down when the first offer came in. She tried so hard to make it seem that this was it. I will never see an offer like this again. Take it, take it, take it now!!! Again this was the highest, most respected and in my opinion, best realtor in the area.
When I was buying a home I asked for referrals from the real estate franchise that I used and was given a very experienced and very good realtor. When we looked at houses that needed work she tried to make every house seem like a castle that had very little room for negotiation. I was told that I needed to make an offer very close to list price or someone else will get the house. In a buyers market! I got feed up with all the nonsense and bought a new construction home without a realtor.
That is my problem too, I know that a realtor always will negotiate so the deal will get done or it must be a deal which is impossible, or otherwise they have to and start the searching for a buyer or a house all over again...and IMO that isn't the best interest for the buyer and/or seller. There is always the realtors best interest involved specially when the commisions are higher.
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