To me, paying out so much is wrong for many reasons. In Bucks County, the average coop is less than - 3%. There are many coops offering 2%, 2 1/4 and 2 1/2%. 3% is a lot to pay here - 3.5% is almost unheard of. I would ask the courter to pull up your competition. What are they paying out? Are homes selling any faster because of a higher coop? (the answer is no - I know my market.)
First, it is the real estate agent's fiduciary duty to show their buyers every home in the market that fits their criteria - not any home paying them a certain amount.
Second, agents are hungry. The extra point or so is nice (very generous), but are agents going to turn down a commission of $9000 or $7500 (based on a $300,000 sale price-) -because it is not enough??? I don't think so.
Third, 86% of buyers use the internet to search for homes before they even contact a Realtor. Buyers are smarter than ever - more educated because of all of the information available on the internet. It is no longer the Realtor who dictates what houses are seen - it is the Buyer.
Finally, what is this agent willing to give up? If they are asking you to pay out 3.5%, are they taking that .5 or 1% off of the commission they are keeping?
Go with your gut - good luck.
Jodi - he wasn't willing to give up anything. I had the feeling that he just wanted to squeeze another .5% out of me (what's a few thousand dollars anyway?) His car and clothes were way too nice. Thank you for being straightforward enough to acknowledge that the guy was probably trying to take unfair advantage (I know you didn't say that, but if the info you provided is true then that's the case.)
I think some great general info here about commissions from everyone else, certainly I can see the use in different markets. For us lil' old farmers here in Bucks, I think I'll keep it at 3% or under (unless you sell my home Jodi - you get the 3.5% :)
We closed in 17 days! No questions, no snags - everybody was pleased with the transaction.
Moral of the story? I listened to my professional, buyer sought professional representation - everything was kosher - and since time is money - it was a win win win!
Just as importantly to me. It tells me that the seller is motivated to sell, not just "testing the waters"
It tells me that the seller has a smart listing agent.
It tells me that the seller might be willing to do what it takes to get it sold, negotiate in good faith and do what is reasonably expected of a seller such as obtain a roof certification, a clear pest report. and maybe go the extra inch or two.
It also tells me that I can kick something in myself, such as a buyer home warranty, to make it an even sweeter deal for the buyer.
Posters that claimed the high ground for ignoring the co-broke rate delude themselves thrice, once for thinking that ignoring that piece of information is noble, second for believing that ignoring the co-broke rate somehow benefits the consumer, third for thinking that most agents think like they do.
I will concede that some agents probably look a the co-broke rate primarily out of self interest; but co-incidentally it is in the interests of their buyer client as well, so they are doing the right thing without knowing why.
After the buyer and agent have seen enough properties to compare, choices can be made on features and benefits that are most important to the buyer.
Not all buyer showings are set up two weeks in advance so that you can cull through two hundred listings to find the very five or six that best meet the buyers criteria without regard to compensation.
If a brand new walk in buyer walks in to the office on a Saturday and says "Can you show me some houses?" Should I tell her "Come back in two hours, and I'll have 3 perfect houses to take you to?"
Hmm, maybe not a good idea...might lose her .
I could ask her to sit in the overheated cramped computer room with me while we pull up the listings together on the turn of the century.15 inch CRT Tube computer .
Or I should I hand her a Coke and a cookie and say I'lll be ready in five minutes.
Are walk-ins a small part of my business? Yeah, but they have accounted for about 100K in commissions over the past decade. Do they buy any of the houses they saw the first day? sometimes when it turns out they saw the best house the frst day. I only speak from personal experience, but listings at 4, 3.5 and 3. are generally better deals FOR THE BUYER than the ones under 3. I don't think it is coincidence. The 4% commission will attract additional agents, and additional showings. The agents who don't look to see if the commission is 3 or 4% may be the overwhelming majority on Trulia, but out in the real world, a lot of agents do look at that figure.
I learned a long time ago that a higher than average commission usually meant a motivated seller who would do what it took to get a property sold and approved by the lender. Things like getting a clear pest report or a roof certification.
The extra commission is a green flag signal to go ahead and show this property. Seller really does want to sell. I won't pretend that the extra money means nothing to me, it does , and it is a significant SECONDARY motivating factor for me to show the high rate listing.
Of course my market in Sacramento may be very different than Bucks county. As Artur already explained. - We can pull up 300 good houses that meet a buyers "criteria" in our over inventoried market here.
Leaving the low compensation listings out of the first cull of showings is an efficient way to find properties that are most likely to result in a sale AND be the most suitable home for the prospective buyer.
I never said $ and % are not important. On the contrary, if you reread that last paragraph, I actually said that it is and used you as an example. Then, by your answer below, I sensed that you were upset with me because I said that. Don't, fair is fair. If $ and % is important to you, I am sure it's important to others also. Hence if you want me to vote 3.5% vs 3%, go with 3.5% or even 10% if you'd like; then you would really get attention but still dont' guaranmtee a fast sale, because if the clients dont' like your house, they won't buy it - I haven't been able to talk anybody into buying a house they don't like, actually, nor did I ever try that.
Truth is I don't know if 3.5% or 1% is common in your area, because I am not there, so I can't give you input on that either. And then you answered you own question, the comp did not show any 3.5%, but less.
So, the real answer is, the majority of the realtor will show your house regardless of the % you will be offering, but I am not making promise because I don't represent everybody.
Also, I don't understand why you think buyer agent's service is valuable and you are willing to entertain 3.5% (with some doubt, so you asked) to buyers agent, but the listing agent's service is not? - Although I am going to assume that because you think you can do it yourself. Otherwise, your realtor friends would not be very happy with you because listing agents do work very hard on listings - just ask me.
I don't know your local market situation, so let me give you an example from the Sacramento area (California). Let say, you are a Seller there and are trying to sell a 5 bedrooms, 3 bathrooms, 3500 sq.f. house you bought 3 years ago. You bought it for $400k. You were doing good (on the paper) 1.5 year ago as its value went up to $650k. It is your investment property and you were renting it out. You didn't sell it 1.5 year ago and now you are finding out that rents are not only down, but renters are hard to find. You cannot rent it out almost for year now. You looked at the current prices. You realized that you might be able to sell the house for $500k now. You looked at the forecast and it will take years for market here to recover, as developers are dumping more and more new houses, there is increasing number of foreclosures and in short - the situation is pretty grim. So, you decided to sell. You looked on current listings and the average tome to sell for a house of this type is 120 to 150 days. And then you realized why. There are at least 300 investors like you trying to sell similar houses! You found out that no-one is coming to Open Houses for weeks and weeks and if there is a willing buyer, there is no way that an agent can show him/her 300 houses to choose from. But you are lucky. Your house looks slightly better than others, has nice furniture, etc. And than you got it! You decided to give your agent 3.5% or even 4% commission to show your house ahead of other houses on the market. Is your agent driven by grid? I don't think so. If you have to sell in the market like this - there no many choices what to do.
Of course, as I said, I don't specifics of your situation. Just wanted to give you an example (by the way it is a real story) of why in the Buyers market it makes sense to lower listings agent commission (this can be painful as advertising has to be more intense and thus more expensive), but most definitely to increase the Selling agent commission. You simply give yourself a better chance to sell (assuming that your situation is comparable). Good Luck!
Will I like a 3.5% more than a 3% or a 2.5%? If offered, sure; WHO wouldn't want to get paid more. Will I only show a 3.5% house but not a 3.0% house if both fits my clients criteria? No, I will show both. My goal is to find the best house for my client.
If I withheld your house from showing (knowing that your house fits my clients needs to a T), and only show a different house because they offer more commission, but my clients don't like house B. They won't buy and I would get 3.5% commission on $0 sale price, so that's $0 commission. So, yes, for me, you get equal opportunity.
But now you just might want to consider people who really think % or $ is very important (such as yourself; trying to save some commission - I saw your answer to an FSBO seller and I can see that you know you might lose more what you try to save), they might be very few, but do they exist? I can't guarantee not as I don't speak for everyone.
I have to say that I agree with both Deborah and Jim.... let me explain.
A higher commission does reflect a motivated seller if the higher commission is partnered with a great price for the home. I do believe that incentives for the buyers can achieve that same goal. If the home is not priced to sell then it will not sell regardless of the higher commission. If a home is priced to sell it will sell regardless of the commission.
Greed is also a factor. Who wouldn't want a larger paycheck? Chances are the higher commission is going to keep your home in the agents mind so they will keep looking for a buyer to bring to your home. Additionally, I do think it sharpens the selling skills when they are showing your home. Is this right, no, but it is human nature. Your home will be highlighted to agents and there is nothing wrong with that.
With all that being said. I think an agents first outing with their buyer should be showing the homes that the agent feels are the closest match to what the buyer is looking for... not what listings pay the most. I personally give my clients the full listing print out so that they can see what my commission would be. I do this so that my clients understand that my advise and represenation does not change because of the commission amount offered. I want my clients to know that it is about finding their perfect home. I want my clients to know that I am working for them not for me!
I personally know agents that show the homes that are going to make them the most money first and some of the agents do not ever show the others. My opinion is that this is wrong. I do not think that our real estate commissions would condone this behavior and I would think that most consumers if not all would be appalled just as you are with the thought of it. I would also think that if a buyer found out that his buyers agent were choosing properties to show him based on commission that there could be the potential for some legal issues that followed.
If you are uncomfortable with offering the bonus commission then do not. Regardless, you will need to price your home right.
I keep my BAC appealing and fair. Agents will be pleased to show my listing and no one will be inclined to pass it by because of a low commission. I am doing right by my clients and the broker on the other side of the commission. Everybody wins.
In GA 3.5% is still the norm for a top agent, though there are plenty of cut price commissions. We have 72% of properties not sold year to date. Pricing and marketing are the main factors. if your home sold faster with a top agent because they used the extra comission in marketing your property todays market and did not use the old sign in the yard and pray approach, I am sure the time and money savings you would achieve would make it worth while.
Unfortunately with builders in GA hurting I am seeing 8% and $35,000 buyers incetives. Remember the 80/20 rule, if 80% of realtors have to share 20% of the money becuase they are not full time or do not treat their profession as a business, then which comission rate do you think they will show their clients?
Human nature and our present day life style has been programmed by incentives, one day sales, limited time only,instant weight loss with just a one pill while you sleep. Now the industry in new construction offers plasma TV's, Rooms to Go spending sprees and even cars???
Top 1/3 In price and Condition. If your competition is the same then 1% or .5% is not a bad way to go to seperate your self from the crowd. The more showings the better the chance of an offer. You can contact me direct if you want to know the negtiation tactic for protecting you price and incentives, I would be more than happy to share that with you.
Hi, I wonder if the agent was just trying to give you an idea of how to make your listing stand out from the others. In this market we tell our sellers there is a lot of inventory. You have to do something to make your home stand out from the others. Now this could be in staging, or pricing or incentives to get people through the door. You want the most exposure you can get. The realtor might have just been giving you some agent incentives. You could offer a bonus if a contract is brought in by a certain time???? All is up to you.
One question I like to ask people who are willing to pay a buyers agent but not a listing agent, I can see the obvious, it will save you money. Why would you be willing to pay for someone else to be represented but not yourself? Just a question. It does not mean you are not capable of handling your own sale. I can't presume to know that. Good luck with it.
If anything, add a $500 bonus to agents, but leave the commission % same as norm for your area.
Ethically speaking, an agent should present all available properties to their buyer-clients (and let them decide what to see and what to buy) and should not push listings on them that offer "above-market" compensation or hide listings that offer "below-market" compensation.
Whether you offer more than the other sellers are offering as far as compensation is up to you but it makes sense to be comeptitive with them. This removes one variable that could keep your house on the market longer than necessary!
The BAC (Buyer Agent Commission) needs to be competitive for the marketplace. Paying less than the competitive rate for your area will result in decreased showings.
Agents will find the best matches for their clients, and make those the priority. A buyers agent will not eliminate a property because a low BAC, if it is a great match. Neither will a buyer agent push a property that is not a good match. Credibility with the buyer, pride in a job well done, potential referrals, future business referrals and a satisfied client take priority over a high BAC. If you pay too low of a BAC, you will retain the perfect match showings, but loose out on some of the â€œmaybes.â€ You need your property shown to all potential buyers possible.
For all sellers, I recommend they offer a competitive BAC. If a seller was not represented by an agent, either a FSBO or FSBO that was flat fee listed, a higher BAC, I still donâ€™t recommend raising the BAC. Instead, hire yourself an agent and allocate funds to paying for seller representation.
Jodi mentions that it is no longer the Realtor who dictates which house is shown, it is the buyer. In the case of a weak buyers agent, who does not know the inventory, and is only a taxi service, that may be true. Buyers play a very active role in the researching property listings online, then discuss their findings with their buyer agent. On several occasions I have had a buyer inquire about a property as result of their online search, but, rule out viewing that property in person after our discussion. Conversely, I have encouraged buyers to visit properties that they had overlooked as a result of their online viewing. The working relationship between a good buyer agent and their client is substantially more than a buyer agent providing taxi service and lockbox access. As a seller, you need buyer agents exposed to your property and excited to share information with their buyers. If you rely solely upon your computer presence, you will shortchange yourself by only accessing a limited number of potential buyers.
Jodi also asks what the listing agent is giving up. I was not able to follow the purpose here. I suggest to sellers that they look at the expectations of each side and determine the appropriate compensation for the work to be performed as guided by a competitive fee for the area. Hiring a real estate agent is a lot like hiring for a temporary job. What the listing agent is or should be paid is not dependent upon what the selling agent is paid; and visa versa. What amount is competitive for a full service buyer agent in your market? Assign that amount as the BAC. Now, determine what you expect the listing agent to do, and meet with a prospective listing agents who provide those service levels in your marketplace. The amount paid for full service may even vary in accordance with the anticipated expenses a listing agent may incur. If my proposal as a listing agent includes multiple full color print ads in high profile magazines, the fee I assign will be different than a proposal that did not include those same projected expenses. I suggest that the seller be competitive in their BAC in order to get the most possible showings, and discuss BAC before even discussing the listing side of the commission. For the listing side, our fee may be less, more or the same as the BAC. I never suggest a seller compromise on a BAC in order to pay me more.
Paying more than the competitive rate is not necessary, but as a buyer agent, itâ€™s fine by me to get paid more! It wonâ€™t influence me to sell your property over another, but you will get a big thank you!
Sylvia - I'm looking at LSB to save on the sellers broker fees. I'm happy to pay the buyers realtor a fair commission to bring buyers into my home and help me sell my house. The service buyers brokers offer is valuable and necessary. I need my buyers brokers and I want to treat them well. Realtors are my friends.
I think I'm missing your point about $ and % not being important - selling a home is a business transaction for hundreds of thousands of dollars. If you don't look at the bottom line dollars and cents you're throwing money away. Ha, It's what is so fascinating about this business to me, how casually $10K, 20K, 30K, and more in commissions are thrown around and dismissed to sellers as "shouldn't be important."
Anyway, back to the original question.
Are you saying that 3.5% commissions are very common in this area? What percentage of the listings around here do you see offering 3.5% to the buyers broker?
If it's not going to effect how my home will be shown, should I even go that high? Maybe 2.5% will be adequate. I can even list it as low as 1%. Would realtors still have no bias if I offered a 1% commission? It has to mean something!
Patrick - yes he brought comps. None had a 3.5% commission. Very few even had a 3% commission, most were less. That with what I know about the world left my Spidey Sense tingling :)