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I'm trying to sell my first house - so I'm a little clueless and could use the advice of those of you that are more experienced at this kind of thing. I haven't put my house on the market yet, but will be sometime in the next few weeks.
I just met with a woman that seems like a good agent, but when she hit me with her commission ... which was 7%. I asked if that was more than normal, that I thought 6% was the most common and I'd even seen 5% out there. She held strong to her quote of 7% and she told me that if I saw an agent quoting me 6% to sell my house, she wonders what they're not giving me that she is at 7%. I gave her three different opportunities to tell me her rate was negotiable, but she didn't bite.
I know this is all my choice, but I'm curious what you all that have more experience at this thing can tell me. I'm in a suburb of Buffalo (NY) and my house will list for right around $200K ... so we're obviously talking about a $2k difference between 7% and 6% ... let alone anything lower. So far, she's the only agent I've met with - but that's why I want to hear what you all have to say. If the standard rate is really 7% in my area - I don't want to be forced to be a bottom feeder to find an agent that will charge lower and then pay for that 1% with a lesser representation and maybe a lower sales price or maybe a longer time on market, etc.
sam, your last three sentences, were meaningful, very insightful, a credible agent, will help you get the highest price for your house,
its one thing, attracting a buyer, quite another a qualified buyer, on good terms, and conditions.
my neighbor, tried to sell his house by himself, he got some interest, and one couple made an offer, it was 40k less than asking price, he countered, they agreed on 20 less than asking price. while i was mowing my lawn, he comes over, just a grinnin, and proudly said he sold his house himself, i congratulated him, and asked a couple questions, asked when was the closing?
he said within 60 days, i asked if they had to sell to buy(did they have a bank=statement qualifying them? his voice sunk, and he said, yes they do have to sell, i asked if he is still going to market his house? (just in case), he said, welllll, no i promised them i wouldnt, then asked him, how long thier house has been on the market? he said he didnt know, i also asked if thier was any inspections,,,he said he wasnt sure.
to make a long story short, he ended up losing well over 25k, compared to if he used a broker, a good broker
the old adage, you get what you pay for, applies to real estate
i can give you sad stories all night long about discount brokerage companies
not properly representing and protecting thier clients.
to answer your question, commissions are negotiable (by law)(anti-trust laws, price-fixing, etc) however, a brokerage company can set a minimum
To answer your initial question about commission rates -- it's going to vary from area to area, from company to company, and even from agent to agent. (As mainebroker mentioned, it would be considered price-fixing and a violation of anti-trust laws if an agent discussed a "standard" rate for agents in his town.) It is true that you generally get what you pay for, but unfortunately that isn't always the case. That's why it's important to interview a potential listing agent just like you would interview any other professional. A home is probably the biggest investment that many folks make, so it only makes sense to make sure you hire the best person for the job of selling your home.
First of all, I'd suggest you interview at least two or three agents. That way you'll get to compare their services and expertise. Some questions you may want to ask are: What will you do to market my home to local buyers? Out-of-town buyers? What websites will feature my home? Etc. What are some other ways you (the agent) will market my home? How long are homes taking to sell in this neighborhood? How has the market changed in the last few months? Etc, etc, etc. A good agent should be able to answer all these questions and show you examples of their marketing strategies.
Keep in mind, that in a slow market it will take longer to sell a home for a reasonable price, and it will take more marketing to get it sold (thus more expense to the agent). Be cautious if an agent wants to charge a discount commission and do little marketing. Perhaps he or she will suggest an undermarket price in order to sell the home. On the other hand, be equally cautious of an agent that simply asks how much you want for your house and then says, "I think I can get that for you." That agent may be trying to buy your listing by telling you what you want to hear. A really good agent is going to show you comps (homes that are as similar to yours in sq ftg, age, condition, amenities, as possible) that are within a 1 to 2 mi radius of your home. These should be homes that have sold within the past 3 months (no more than 6 mos). A good agent should be able to market your home so that you will get a similar price in as short amount of time as possible.
When you interview an agent, make them show you what they will do to earn their commission.
When we were presented with the contract as a sellers agent for the sale of our home here in VT, we were SHOCKED to see a 7% figure as the typical commission is 6%. Since our goal was to sell the home as quickly as possible, we negotiated a time clause to the deal. If the realtor sold the home (accepted offer) within X number of days, he would be entitled to the 7%. After that period he would only get 6%. Sort of puts the pressure on the agent to get the deal done. We also offered an additional bonus to the selling agent if it was a co-broke. It didn't do us any good but at least we don't have to pay the additional 1% when (if) the home sells.
When we were presented with the contract as a sellers agent for the sale of our home here in VT, we were SHOCKED to see a 7% figure as the typical commission is 6%. Since our goal was to sell the home as quickly as possible, we negotiated a time clause to the deal. If the realtor sold the home (accepted offer) within X number of days, he would be entitled to the 7%. After that period he would only get 6%. Sort of puts the pressure on the agent to get the deal done. We also offered an additional bonus to the selling agent if it was a co-broke. It didn't do us any good but at least we don't have to pay the additional 1% when (if) the home sells.
Sounds like a fair deal to me! As I Realtor, I may ask for a higher commission if extra advertising/marketing, or anything above and beyond, is requested, but to present a higher than standard commission in a "normal" situation? Sounds like that agent stumbled upon a good negotiator!
Sounds like a fair deal to me! As I Realtor, I may ask for a higher commission if extra advertising/marketing, or anything above and beyond, is requested, but to present a higher than standard commission in a "normal" situation? Sounds like that agent stumbled upon a good negotiator
Not to start a war but why do agents require extra commission just because there is a little more work involved ?. Sometimes you get an easy sale and sometimes you don't. When the typical commission is 6% and the agent presents the contract with a 7% figure it tells me "I will try very hard to sell your home at 7% but if you demand 6% then I won't". What additonal services, advertising, etc do I get at 7% that I don't get at 6% ?. If agents would lay out a comprehensive marketing plan with ACTUAL SPECIFICS and then say to the client "If you help with the advertising, I'll stay at the 6%" it might put the client a little more at ease. Basically, show me the difference between what you're going to do for 6% and what you're going to do for 7% and be prepared to back that up with actual costs.
In a buyer's market, many sellers are opting to pay a higher commission to help get a property sold. When a listing agent can offer a higher cooperating broker commission, other agents are more likely to show and possibly sell the home. When you've hired a true real estate professional, someone who will represent you throughout the transaction and hold out for the best deal for you, then a 1% difference in commission is not that big a deal in the overall picture. On a $300,000 house, that's $3000. Would you rather have a great agent who will get you close to full price or one who just wants you to accept the first offer you get, which could mean a huge cut off the price. Most agents are on a split with their broker, as well as splitting with a cooperating selling broker. We are self-employed and have to pay our own health insurance, federal taxes, self-employment taxes, insurance, etc...What sounds like a big fat paycheck to sellers actually is not as much in the pocket of the agent as it sounds up front. And, when you factor in that agents pay for all their marketing expenses up front and don't get paid until a transaction closes, you realize that this is a tough and expensive profession. How many other types of professions can you hire to work for you for months at a time and not pay them until the job is finished?
Hi Wendy and thanx for the reply. When we interviewed brokers for the listing on our home, one particular broker quoted 6% for normal marketing and 7% for "enhanced" marketing. When pressed for what "enhanced" meant, he was reluctant to disclose the details. Obviously we did not use that broker. If brokers or agents would lay out EXACTLY what they plan to doand the costs associated with doing these things and provide proof that they have done it most sellers would have no problem. I do understand that brokers have expenses in conjunction with listing a property. You mention that in a buyers market agents should get an additional percent to get the home sold. With that being said, in a SELLERS market should the agent get 5% rather than 6% ?. Would any agent take that deal. I think not. There are good times and bad times for every profession.
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How many other types of professions can you hire to work for you for months at a time and not pay them until the job is finished?
Doctors will not go months before being paid. They get your co-pay, and your insurance info. Plus your insurance company gives them a monthly fee, just for being your service provider.
Lawyers only if they work on contingency...and then it's 20-30% of your take.
Real Estate licensees only get paid if you win, meaning the deal closes. There is no money for coming in second.
I actually offer a flat fee, hourly fee & sucess fees...not once has a seller elected to pay only for certain services, or pay me hourly. Sometimes they go for the 6, vs 6.5 or 7.5 plan, but in Denver, where the market has been steady for 6 years, a lot of the fee is going to the selling broker.
If brokers would lay out to prospective clients exactly what their costs are with respect to listing a property my guess is that sellers would less likely to complain with respect to the commission. Basically, all the seller sees is a big, fat paycheck going out to someone without any breakdown as to where that money went. For example:
Show the client what it costs to place a property on the local MLS.
Show the client what newspaper advertising costs.
Show the client what the desk fees are.
Show the client the newspaper ads that you have placed in markets that the client doesn't normally have access to.
Also, maybe you can shift some of the advertising burden to the seller.
In my case, we created a glossy brochure with circles and arrows explaing what each one was (apologies to Arlo Guthrie) and mailed them out to out-of-state brokerages that we knew of but the agent did not. We put the property on Yahoo! real estate. We are advertising in out-of-state nespapers. In each case, we are footing the bill. None of these methods are expensive.
Make sure sellers understand that a co-broke will result in lower fees to the listing agent.
Costs of doing business such as Federal, State and local taxes, self-employment taxes and insurance are really not the clients problem or concern.
With all that being said, I await the slings and arrows of the real estate community
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As I Realtor, I may ask for a higher commission if extra advertising/marketing, or anything above and beyond, is requested, but to present a higher than standard commission in a "normal" situation? Sounds like that agent stumbled upon a good negotiator! 
