Agent2Agent in Denver>Question Details

Trulia Denver, Home Buyer in Denver, CO

Is it standard practice for agents to charge different commission rates depending on the work necessary?

Asked by Trulia Denver, Denver, CO Mon Apr 15, 2013

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Answers

20
Yes.
It is STANDARD practice to advise all consumers that professional fees are negotiable. These fees and the terms and conditions will be explained.
The professional AND the consumer are FREE to NOT accept the fees or conditions presented.
The pro can choose to NOT engage the consumer also.
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It is, and has always been a two way street.
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That is what is so great about real estate, There is a mind-boggling number of business models.
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A big brand like Remax allows their agents the latitude to construct their business in a manner suitiable to the agent. Even trying to place all 'big brands' into a common defination is faulty. Even more problematic when one attempts to predict the response others may make. Such practices of disinformation can be indictive of the currency some choose to use.
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Professional fees are negotiable. They have always been negotiable.
Now, you should realize, the question may get more accurate responds if it were reworded:
"What brokerages do not allow agents to negotiate their professional fees?"
2 votes Thank Flag Link Tue Apr 16, 2013
Trulia,

There is no standard practice or standard commission rate. This something negotiated by client and broker before services are provided. In my practice, I have chosen to be a 'full service' broker and do everything I can do on each transaction to make it successful for the client. In my experience I have found the old adage applies here - 'you get what you pay for'. And in this tight market where you need a broker who is experienced, savvy, full time, and available it applies more than ever

Robert McGuire ASR
Broker/Consultant
Your Castle Real Estate
Direct - 303-669-1246
Search Denver Homes
http://about.me/robertmcguire33
1 vote Thank Flag Link Mon Apr 15, 2013
This is an interesting question and could require a very long answer, but I'll keep it short. There are real estate companies that are minimal service, i.e.: They will load your listing into MLS for a certain fee and then do nothing from there (Owner has to schedule showings, open the home, etc.). These companies have come and gone, and work on volume alone. As a Broker, I'm convinced that one must choose who they want to be and be consistent with it! Typically Brokers focus on an area and depending on size, it can be a neighborhood of friends. I work in a neighborhood of 1,600 homes and 5,500 residents and I can tell you that gets small at times! I know for sure that if I charged a success fee of 4% to one client and 6% to the next client, and they started talking at a party and compared notes, I wouldn't last long as a Broker getting referrals in this neighborhood. I made a decision a long time ago that I never wanted to take a call with a past client questioning why their friend got a break on commission pay-out on the HUD Statement and they didn't. I chose to be a full service Broker @ 6% (or 7% if I bring the Buyer!). Whatever you want to be, stick to it and memorize your "full service elevator speech" and be willing to walk away from a potential client who wants to negotiate your paycheck. I feel empowered by saying no to these no-potential clients. Best of luck~
"Where There's a Will...There's a Way!"
0 votes Thank Flag Link Tue Dec 10, 2013
Standard? I don't know. Common? Yes. I know agents who are very strict in their offerings and their commission rates no matter what, and they do amazing business. I know agents who seem to be all over the map, charging whatever they're feeling in the moment for commission, and they also do great business. I'm somewhere in the middle and it seems to be working for me as well. I think the bottom line is knowing what you're worth and being firm about what you offer and for what rate. No one is going to respect you as a valuable asset to them if you're wishy washy and uncertain.
0 votes Thank Flag Link Mon Dec 9, 2013
Some agents create a nice little "menu" that prospects can pick from.

With the "Silver Plan" you get X, Y, and Z services and the fee is 5.5%.

With the "Gold Plan" you get X, Y, and Z too but you ALSO get A, B, and C and the rate is 6%

Of course with the "Platinum Plan" you get all of those (A, B, C, X, Y, and Z) and you also get the home filmed by a professional videographer with a recognized celebrity from a local news station standing in presenting the home in the video itself! That runs 7.5%

This is a very effective tactic when presented smoothly at the end of the listing presentation. It is actually the most powerful closing technique that has ever been devised.

It is the "Alternative Choice Close".

This is an advanced form of the "Assumptive Close" and comes in forms such as the following:

Furniture Sales: "I can tell you really like this sofa and from what you've shared with me today I can tell it's going to be perfect for your family room. Would you like me to check and see which days are available for delivery or would you rather save the $99 delivery fee and pick it up here on Monday?"

Restaurant: "It's clear that you've enjoyed your meal. Most people tell me that they love the cheesecake here more than their dinner. Would you like to have a piece now or would you like me to put it in a to-go package for you?"

Truila: "This advertising package is going to really help earn you some sales as an agent by putting your face in front of people in the Denver area. Would you like to be featured on EVERY property that shows up or would you like to start slow and be featured on just 35% of the listed homes here on our site?

New Car Sale: "This Ford Fusion has just about everything that you've told me you like. Style, power, durability, longevity, made-in-America....would you like this turbo EcoBoost version you've been test driving or would you want to go with the Hybrid?"

Back to Real Estate, "Would you like the Silver Plan, Gold Plan, or Platinum Plan?"

In each of these scenerios the sales pro ASSUMES that you're going to make a decision today. They present choices. No matter WHICH choices is made, the sale is closed. If an objection is raised, then one can address the objection with the "If I - Will You" close.

Thus...

Seller: "Well Bob...we really like what you've shown us today. We don't need Lucy Brown over at Fox7 TV on a video tour of our home so we'd probably prefer to go with the Gold Plan. But 6% seems rather high. You've told us that the home IS worth $750,000 after all."

Bob: "I hear what you're saying Mr. Seller and I appreciate it fully. After all, we all want to get the most for our money. We all want a little more value. Let's see if we can meet in the middle. If I reduce my fee to 5.75% - could we do business today?"

Anyway...you get the idea. Creating a "menu" of options allows one to smoothly move into a non-confrontational Alternative Choice close and from there move to a commitment. Any commitment at all is usually preferential to none...even if a concession on the part of the sales pro must be made.

That being said, established agents can pick and choose who they work with. Some may only want to take on so many listings per month because they have lifestyle goals that they want to see achieved each and every week (like fishing) and so they may only take on 5 listings each month. If they are in high demand then they may charge 7% or more and never cut their rate.

After all, if an agent only wants to take on 5 listings each month and 8 people call and ask to list their house each and every month and the agent knows that 3 of them are going to go with someone else because they don't want to pay a premium price for the service of getting their home sold by Mr. Super-Agent...then that agent can just go with the 5 that ARE willing to pay a bit more to have him list their house. It's good to be the King.
Web Reference: http://plymouthhomes.tv/
0 votes Thank Flag Link Sun Dec 8, 2013
All commissions are negotiable and there is no "standard" price.
0 votes Thank Flag Link Sun Dec 8, 2013
Absolutely! The reality is if you walk into a listing and the home is picture perfect and the owners are realistic about price and marketing time, your job becomes much easier. This may make sense to reduce your commission.

On the other hand, if the home is going to require staging and the owners think 'our home is the best', it may require additional time, education and services to get the home sold. Thus, higher commissions.

David Rudd
Kindred Real Estate
CA BRE# 01402946
0 votes Thank Flag Link Sun Dec 8, 2013
Standard? I don't know. But it's relatively common. And it's certainly acceptable.

Just like anyone else providing a service, an agent can (and is smart to) adjust what he/she charges based on the amount of work involved. So if less work is necessary, it's reasonable for someone to charge less. If more work is necessary, it's reasonable for someone to charge more.

Same as if you took your car into a shop. If all it needed was an oil change, you might be charged $45. If you needed new brakes, new muffler, an oil change, and new air filters, you might be charged $800. More work means more time involved means a higher payment as compensation.
0 votes Thank Flag Link Sat Dec 7, 2013
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Since commissions are negotiable there really is no standard.
0 votes Thank Flag Link Sat Dec 7, 2013
Commissions are always open to negotiation, the standards are 6% on sales and 5% on leases.

Negotiations usually arise when the price of the property is either too low or too high. Properties that will generate a very low commission on percentage are marketed on a flat commission rate, for example; list price $50,000.00, commission $5,000.00 instead of the typical 6%.

Commissions are also adjusted depending on the Seller's motivation, location, condition or desirability of the property, a higher than standard commission or a bonus can certainly drive more attention to one particular asset.
0 votes Thank Flag Link Fri Dec 6, 2013
Yes every agent sets his/her individual commission rate and yes it is a standard practice to set different commission rates depending on a verity of factors, the cheapest is not always the best that is why you should interview several agents before you hire anyone, research the questions you will ask and the answers you should get compare apples to apples.

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0 votes Thank Flag Link Fri Dec 6, 2013
Yes it is standard practice. Some property needs quite a lot of "help" in order to sell. There are times when the owner is out of state, and needs the Realtor to handle everything about the property. There are also probate and distressed property that need work.
This might include
Paint
Landscaping
Junk Removal
Handyman Services
New Window Screens
Heavy Duty cleaning
It all depends upon the listing and the owner requirements.
0 votes Thank Flag Link Fri Dec 6, 2013
There is no "standard" commission rate rates are negotiated between the agent and client.
0 votes Thank Flag Link Tue Apr 16, 2013
There is no standard commission rate or practice -- they are negotiable and should be stated as such. I'm subscribe to the belief that you get what you pay for and saw that in action at the listing appointment I went to last week. The potential seller had his home listed for over a year with a flat rate brokerage and had only a handful of showings. The Seller was unaware that the listing had never been posted on the MLS that serves his area.
0 votes Thank Flag Link Tue Apr 16, 2013
Commission rates are something that are between the agent and there customer. Realtors are running a business so therefore it is up to them to determine what rate they plan to charge there customers. Note that in this market that is tight "you get what you pay for". Years of experience is what your paying for in many cases! Best of luck and if I can be of any help feel free to reach out to me.
0 votes Thank Flag Link Tue Apr 16, 2013
There is no standard practice as far as commissions go, and most agents will guard against saying anything that may create that impression. The services different agents provide, and what they charge for them, can and will vary. Some only provide "full service" while some will offer more of an a la carte menu. Remember also that in the majority of cases (although not all) both agents share the commission paid by the seller, so there is actually no cost to the buyer.
0 votes Thank Flag Link Mon Apr 15, 2013
Some brokerage firms do not allow to negotiate the commission, but some do and then it's up to the agent to decide how much to charge and for what. I've seen agents charge a small flat fee for just writing the contract between 2 parties and help with closing. YVProperties.com
0 votes Thank Flag Link Mon Apr 15, 2013
Commission is negotiable so it can vary for various reasons.

I don't know that agents change their commission based on work expected. You usually don't know how much work will go into a deal until you're in the middle of it. And some agents take on difficult deals for reduced commissions (short sales, REOs, etc)
0 votes Thank Flag Link Mon Apr 15, 2013
Per Diane's answer, every agency is different. In my experience, many of the larger shops will not bend on commission with the "you get what you pay for" logic attached as a defending argument.

Many smaller agencies will try to accommodate the will of the customer while still receiving fair market compensation for the work provided.

Rick Janson
Employing Broker
Denver Lifestyle Real Estate
http://www.DenverRealEstateOffice.com
0 votes Thank Flag Link Mon Apr 15, 2013
There is no 'standard'. Commissions are all negotiable, so it really depends on what you and your agent work out. It can vary widely. I personally will offer a flat fee, or other options, that fit a particular situation. I hope that helps!

Diane King
Broker
Front Range Poroperties
303.237.4848
0 votes Thank Flag Link Mon Apr 15, 2013
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