@ Patrick, How in the heck can you assume that because the seller has a low commission on the house that he will be difficult to deal with. What if I list a house with my sweet great aunt Millie and I decide she needs a break and will lower the commission. You could be losing out on the best kept house on the block but you won't show it to a buyer because of your greed. All I can say is that is a bad attitude. That one house with a small commission can turn into some large sales.
I have to leave now and show a homes to a buyer.
Are it, now?
- On a real estate forum agents should be held- to a higher standard regarding how they deal with the general public.
By whom, Joan, by whom? Should the State Licensing Department have a Real Estate Blog watchdog?
Everybody doesn't like real estate agents, which is fine; everybody doesn't like architects or contractors or developers, the last two subject to more general castigation than real estate agents. So for someone to write, "As a developer, I think real estate agents should be happy with whatever co-brokerage is offered," carries about as much weight in our lives as a fan behind the plate has on an umpire's decision.
The important thing for sellers to determine is this: are they getting value for their money. If they are, good; if not, they shouldn't spend it.
Percentage-based commissions are not limited to the real estate business, BTW. Auction houses charge a piece of the action; last I looked, I think Christie's took 25% from the seller on a piece under $50K, and 15% over that - and then nabbed the buyer for an additional 10 or 15%.
Many contractors mark up materials, too, on a - surprise - percentage basis.
C'est la vie.
Anyway, Stu didn't ask what a perfect world looked like, he asked if we would not show a house if the commission is too low.
I, for one, wouldn't call up one of my uncommitted "C" buyers if the commission was too low.
What do you think of that?
If you can't afford to hire an agent and your house isn't selling because you owe too much on it, maybe you should think about a short sale. If that's not the case and you don't think an agent is worth what they cost, then I suggest you sell it your self. I'm not a public utility and as such am not obligated to provide my services for free.
To answer your question--If you want to find out if that's too low--Try it and see :)
In Washington State, where this question originated not all agents are Realtors. Here you can work for an office which elects not to be a member of the NAR and we are required only to join our Multiple Listing Service.
A code is like a law, it may or may not be enforced across the board evenly and if the violation is done without being apparent, who would know to report it? The fact that listing A with a 1% selling office commission isn't getting shown as often as the neighbors listing with a 3% commission could be because of the paint color, marketing material or any other number of credible reasons beside the commission difference, but you can never know for sure.
A few years back I took over an expired listing that had been offering 2.5% selling office commission in an area where most of the competing properties were at 3%. I did a better job of staging and marketing the home but we also addressed the commission issue too. I had multiple offers within a few days and it sold for 103% of list price. Was it the staging, the clean up, better marketing and photos or the commission that got it sold? No one knows, but the results were all that mattered to my seller.
Thanks for the comment. I want to be honest in my information here. Many agents will say in this public forum that they wouldn't consider not showing it, that's great. I've shown and sold many homes without paying attention to what the SOC offered is as well. Unfortunately we live in a less than perfect world where the most qualified and interested buyer may not be working with an agent who adheres to or may not be bound to the Realtor's Code of Ethics.
My advice for Stu is to make every aspect of the property as appealing as possible to buyers and agents who may or may not send it to their clients for consideration and may not have a buyerâ€™s agency agreement protecting their commissions.
Home selling is competitive and buyers and agents have choices where they look. My simple advice is be competitive to win.
As per too low...lets be realistic here, when industry norm is 6%, each agent getting 3% it is really an insult to have a seller offer less than 1.5% to a buyers agent. At that level it almost isn't worth entering in the transaction as an agent as your $'s per hour can drop below the average wage of a Mcdonalds worker depending on the difficulty of the transaction. In my experience sellers offering that low of a commission are just looking to save money and usually do the same with their lawyer etc... which makes the transaction even more complicated which takes more time for the agent who is earning that low commission...nothing but trouble!
From a sellers perspective, i know you want to save money but keep this all in mind when negotiating on that commission...and one more piece of info for thought...a really good agent will spend 1% of his 3% commission on marketing for you property, the other 2% remaining gets split between him and the office. So if you demand to list you house at 4% vs 6%, where do you think the cut backs will be made? IN THE MARKETING! Your shooting yourself in the foot!
It is not that far out of someones mind when they are scanning through listings and see that name whether they are skipping over it, or checking the button to include it in their search.
I just love the listing agents who discount their commission in order to "buy" a listing, but then expect the future buyer's agent to share in that discount. YOU took the listing for 4% because you didn't think they'd hire you if you asked for more...And now you want to do a 2/2 split. You're greedy, but you're also doing your client a disservice AND you're selfishly trying to take money out of the buyer's agent. Real Nice. If I take a listing at 4%, I STILL pay out 3%.
Yes, I understand that EACH TRANSACTION is DIFFERENT. Before some of you start acting shocked and attacking me, you should know that once in a while I actually work for nothing or close to it--Sometimes a particular transaction warrants this. But if you want to attract Buyers--You make your property attractive to buyers--And their agents.
No matter the commission or the price someone will always do it for less. Will they do a better job, provide a better level of service, be there when things get rough and troubleshoot the difficulties which invariably occur whenever human beings are involved and if necessary make things right? Maybe, or maybe not.
Iâ€™m grateful to be in a competitive field where I can bring my knowledge and experience to the table, to anticipate and react to different circumstances and bring value to a transaction.
The reason the commission question is ever asked is because some agents have not â€œearnedâ€ what they were paid and the client was left dissatisfied. If you expect a bad meal from a restaurant, you donâ€™t want to compound the matter by paying full price. But when you have a great experience, your goals were met and or exceeded and any surprises that developed along the way were handled with professionalism and integrity, you forget about the bill and remember the experience.
We are all entitled to run our own business in the way that is consistent with our values. If you are a full service, full commission agent your clients better be treated well or youâ€™ll never see them again. If you are a rebate or discount broker, you better properly prepare your client for what they are getting for their money or they too will be dissatisfied and never provide a referral.
There are some very good agents in this forum, but there are also some who may not be. Truliaâ€™s standards to post as an agent are not strict and they do not warrant our work product. For the clients reading these posts, remember full price agents do not always mean full service or experience. Discount and rebate companies are not all good or bad either. Interview us as if you were going to trust us with $500,000 or more of your hard earned money, because you are. Get past the hype, slogans and self promotion and figure out who you are willing to trust with this awesome responsibility, because when itâ€™s all done, you will be living with the result.
You really lose credibility making claims like that. I've not seen a 2% commission in a long time, but 3% is clearly more common than 2.5% in most areas. I just did a search of $1,000,000+ homes selling in the Queen Anne area since the first of the year. The lowest SOC was 2.5%. 11 of 21 were 2.5%, and again that is for over 1M. Under 1M the percentages of 2.5 are probably much lower (but the number of listings much higher, so I haven't counted them).
On the active side, the low was again 2.5%, but roughly 37 out of 55 were 2.5%. I wouldn't jump to the conclusion that they aren't selling because of the 2.5%. Other factors could be at work, like a seller concerned about a half percent commission over-pricing their house by 5%.
As Alan stated there is no "overwhelming outcry in this forum is that any seller would be stupid to offer less than 3% to the buyer's agent" although that number may have been mentioned because most agents know discussion of specific commission amounts in a public forum is a big no-no.
I am going to repeat what I stated in a prior post:
Stu, summing up all the answers: should agents show or not show a house based on commission? Absolutely not. Do they? Obviously some do.
But even more pertinent (I think) is what is fair compensation to a buyer's agent? .5% split in half (at least in my case) with a broker comes to .25% gross(before taxes, expenses, blah, blah, blah). A few hundred dollars for what may be months (or more) of work frankly sucks. So, if you are a seller, do what is right for you by realizing that realistically speaking, you need to pay a competitive commission but also do what is right for the agent who needs to be fairly compensated.
Now, as you stated, a lot depends on the price of the home. I am in absolute agreement that 1% on a $720,000 property is substantial enough compensation. Stu hasn't made clear the price of his home. Maybe knowing that would change up the answers some.
However you made some generalizations that in all honesty weren't fair. Make sure you read ALL answers before making your reply. It may be time-consuming and tedious but then you can give a reply that is based on more accurate information about what you read.
Don't forget to make that statement, when the DOJ knocks on your door. I'm sure they'll find that argument persuasive.
There is no norm for Realtor commissions. It is against the law. That said, I would not list a home where the owner is not willing to pay a reasonable commission, because of the cost involved in marketing a home.
What I'd like for the General Public to understand, it this is only a subset of the entire marketplace.
Seller's can't rely on the Joan Braunschweiger's of the market to bring buyers to their properties, they have to also appeal to the agents who are not providing full - or any - service to their clients, except on a transactional basis. The agents who see a nicely priced property come up and start dialing their Roladex, trying to make something happen. Agents working with relocation buyers, where they only have one weekend to show houses and figure, why show this low-paying pooch?
I want people to understand that real estate services are not a public utility, and that buyers and sellers do need to choose carefully, and understand what their agents will and will not do for them.
Not every buyer signs up for full service, and not every seller is serious about co-brokerage. The lower the co-brokerage, the less likely the property is to be co-brokered.
That said, hats off to Dan for pulling the curtain back a bit to show -- at least implicitly -- what happens in reality: Buyer agents will not show your house -- at least not without a specific request from the client -- if you offer a less-than-typical commission. As Dan astutely notes, why would an agent encourage a client to buy a house if that transaction nets the agent about 1/6th the fee (.5% vs. 3%)? Agents would not, and typically do not, show the home with that sort of commission.
On the other hand, about 3/4 of buyers find their own home using the internet. For those buyers, I would hope that, when requested to show the particular property, the agent would do so -- although I am sure some agents would try and get out of doing even that (hey, who wants an 83% pay cut?).
The bottom line is that, under the current system, the old adage "In for a dime, in for a dollar" adage holds true. To have the best chance at selling the house, you need to offer at least 2.5% At least until the system evolves such that buyer's pay buyer's agent fees.
If they want to see it, I show it to them.
I don't look at the co-op commission, until after we've written the offer. It is against the code of ethics that Realtors must agree to, to put the Realtor's needs ahead of those of the client. And showing (or not showing) homes based on the co-op commission is a direct violation.
I think most agents want to get the Buyer into a good home and worry first about completing the sale. I lose enough sleep worrying about all the things that can screw up a transaction without worrying about a commission reduction.
As the song says; "You never count your money while sitting at the table. There will be time enough for counting when the dealing is done."
Each agent has to answer for themselves, but let's turn it around and ask you. If you were working hard to make a living as an agent and 10 homes appeared to meet your buyerâ€™s criteria, 9 of which offered 3% selling office commission and one offered 1/3, 2/3rds or even less commission, which would you pick to show your clients?
You are competing with other properties, most of which will offer a 3% commission. Further, with some limited service and rebate companies, you are removing the incentive the buyers are seeking in using them. If there isn't an adequate commission to rebate, they either don't show the homes or don't have any commission to rebate if they do.
I strongly advise my sellers to do everything to motivate buyers and buyerâ€™s agent to show and sell their homes. Cleaning, decluttering, staging, making showings easy and selling profitable only makes sense.
There are homes with reduced selling office commissions which sell, however unless the selling price is radically below market or the home is exceptional most of these languish for extended periods of time. This nearly always results in a lower net to your pocket.
Your best bet in my opinion is to take the focus off the commission and hire the most qualified representation you can to maximize the value of your home. Knowing how to prepare, market, negotiate and anticipate are key skills you need in an agent to achieve what I suspect you are looking for, the best bottom line on your sale.
No surprises just deliver and get paid.
Its always a good thing to sit down with buyers and have a face to face meeting before going out anywhere to try to answer some of the questions you brought up.
Doing a great job for buyers, regardless of the initial payoff, would hopefully lead to more business in the future through referrals. If buyers know that you are looking out for THEIR best interests, not just what is in it for us, that makes a good impression, correct? Conversely, if buyers see that you are avoiding certain properties and they ask why and you tell them those aren't worth my time, what kind of impression are you making?
So, the way I see it, putting the buyers' needs before our own, if it really comes down to that, comes back to us in a positive way. Maybe its just good karma.
Scott, I liked your answer but presently we don't use buyer broker contracts so I'm afraid we are still at the whims of whatever happens. To be fair, I've never seen anything less than 2% but I haven't been in the business that long.
Betsy, no agent I know works for free. My issue that I have repeatedly brought up (ad nauseum at this point, sorry) is that the above question regarding how low is too low would be dependent on how much the house is listed for.
Have a great 4th everyone! */%#!!!
property,specially in a competitive market.
Fortanately most buyer brokers have a contract with the buyer, in that contract the buyer agrees to pay the buyer broker say 2.5 for their services. The agent goes over the contraact with teh buyer, expains it to the buyer and lets them know how commissions are split as part of going over agency disclosure, that buyer can say they still want to see fsbos per say that are offering 0 for buyer brokers and the buyer will pay the 2.5 as contracted. If on any house the listing broker is only offering say 1.5 under that contract the buyer would pay the 1 to the buyer agent to fullfill their contract, The buyer can also say they are not comfortable or have no ability to pay anything extra to the buyer agent, only show me homes that the listing agent covers your fee.
So most buyer agent contracts cover this problem eliminating the need for that agent to stay away from homes offering a low cobroke or can create a situation where the buyer agent doesnt give the info to the buyer because the buyer can not or will not pay the extra buyer broker fee.
The bottomline is that offering the low amount can hurt you by keeping buyers away whether deliberatley or undeliberately. Whether or right, wrong, moral or immoral it happens in this workld and hurts the seller in the end.
In the real world, agents do discriminate based on commission offered. I am in a small rural area, and I listed a $15,000 home (yes it is move in ready). Another agent called to show it and outright asked, "What is the commission offered to me and it had better not be 3%."
That kind of agent is NOT one I would ever want working for me. So it happens. But it is not supposed to.
Dan selling a home is mor ethan just 3 hours in a car looking at properties and finding one a buyer likes. once they find that house that is the easiest part. Assisting them with their preapproval, Writing the offer, negotiating the offer, getting documents to the mortgage company, attending the home inspection, negotiating the results of the home inspection, getting mor einformation to teh bank, attending the appraisal, getting comps for the appraiser, getting more paperwork to the mortgage company.
Now that is with things going well, putting out the fires in between adds tiem and stress. this is not a physical job but a mental job, it can be very stressful but very rewarding.
I am lucky that the majority of my business is listing homes, i work with sellers more than i do buyers. So when i do work with a buyer as their agent i can see the other side as i know the listing part of it very well and can guage the amount of work a listing agent puts in and the amount of work a buyer agents needs to put in to get a deal, keep the deal together and close the deal.
You can not get involved with any deal, no matter if 50k or 1 million and say that will only take 3 hours, 4 days or 2 months and this is what i will charge. You never know how long it will take until the time as wizzed by you and teh deal is done and you are looking back thinking where did time go or i cant believe this took 3 moinths.
You get what is offered, a good buyer agent asks the listing agent BEFORE even showing the property if they split 50/50. If they say no, it is negotiated before showing, not after and certainly not after writing an offer. With the good comes the bad, as with high comes low and hot comes cold, in the end they all balance each other out.
If you have been a Realtor for a long time and you love your job, like i do... you are not worried about pinching commission but making the buyers and sellers happy enough they will refer you to their friends, family and coworkers. Taking a little less here pays off over there by the new customers you have earned for life.
if you need to figure out how much you earned hourly on a deal becuase you had to cut your commission, you are probabily in the worng business.
I would not take a listing where I didn't feel adequately compensated, and where I couldn't offer a co-brokerage that would make the listing competitive.
Now everynow and then the need arises to respond to something in a manner a little elevated, when you just feel teh need to correct ssomthing or respond to something absurd. however in one of my last recertification class when the topic of social media came up, the response was if you would say it there face, hit the enter button, if you would not say standing next to them, then hit the delete button.
Where is that darn thumbs down button, boy i wish it was back when you needed it.
This is a profession where a cool head is utterly essential.
Only partially, Joan. This is a profession where the ability to mediate is also essential, as it the ability to inject balance into a potential confrontation. Simply "being calm" doesn't always solve problems (although, it certainly beats exacerbating them!)
Joan, I don't have the ability to get you to understand, but in my experience, people who are "always" nice or arrogant or gentle or tough don't accomplish very much. What is important, in my experience, is to have strength when it's needed, gentleness when it is needed, and the intelligence to use your skills judiciously.
For a young agent, it's more important to just get involved in negotiations, and do the best you can and learn from them. But with experience, at least I have learned that every individual in a transaction has an individual need, and that treating them with a "one-size fits all" act of "professionalism" simply doesn't work.
- Obviously people listen much better when a point is well made and well reasoned.
- is that it is NOT unreasonable for the commission percentage to go down as the price point of the property goes up.
It is not "unreasonable," the fact is, commissions are negotiable. Christie's has a variable commission, too - 25% under, I'm not sure what, and 15% over. Plus the buyer's premium. And, I'm sure they "negotiate."
But there's a big difference between whether you or I provide enough value to warrant a $50,000 commission on a piece of luxury real estate, and whether another agent does. And they're going to have to defend themselves on this one!
All the best,
Joan, I've been in this business for twenty-two years, and what I've learned is that everybody has to figure out for themselves who they are and how they are going to best serve their clients and the public.
However, we "professionals" have become a bunch of absolute wimps when it comes to dealing with bloggers who denigrate us and our profession.
The fact of the matter is that at least 15% of the residential public is going to buy and sell without us, and an uncertain portion is going to badger us into lowering our fees. And we are not going to turn that around by being smiling gladhanders. In the field, we're going to turn that around by demonstrating value TO THAT PARTICULAR CLIENT; in public, we can turn that around by being willing to stand up for ourselves and for each other.
So. We need to realize that some people don't really want or need our services; many do but know they can get us to work at a discount; the rest realize that we bring real value to THEIR transaction. And to them, that's all that really counts.
And, we get to choose which segment of the marketplace we want to serve.
Obviously everybody should treat each other with respect, kumbaya and all that good stuff.
My point was (is) that we are on a real estate website and as representatives of our somewhat bashed profession we should do our best to act in a professional, reasoned manner even if we disagree.
That wasn't always happening on this thread and all I could think was this is just making us ALL look bad and allowing our architect/contractor/developer friend to justify some of his jabs at this profession.
The fact of the matter is a lot of what he said makes sense, regardless of how it was sometimes stated.
Doesn't matter what part of the country you are from, a 1% commission on a 1M+ house is just fine and dandy compensation. On a 200k house, not so much.
And by the way, apparently my name is also Steven. Sometimes Stu. I guess it depends on my mood.
I also don't know I have a profile here.
I'm just so confused.....
I just don't know who I am anymore.
With that in mind, I, for one, am even more interested in how agents in New Jersey answer this question than my local colleagues.
With warmest regards,
I am still wiping my tears from laughing so hard.
So... Steven, Stu, my apparent alter egos.....do we live in a nice house? How many children do we have? I would like to know details about my life. I seem to have forgotten everything.
I've always wanted to live back on the left coast.
If you review the extent of my participation in this thread, you will note that I have made sound logic statements (while aggressive at times), I was met by Mr. Patrick Beringer with unprofessional ad hominem attacks, and childish taunts. i.e.
"Ohhhh burn!!! You got me good!!!"
" I don't care what dbags like you think..."
"unless you know wtf you are talking about..."
this is not how a professional represents himself or his clients. I offer sound advice on how to save tens of thousands of dollars to people like Stu. Of course that advice will be met with hostility from people like Patrick Beringer who are threatened by my approach to this business. However, I can honestly say that I have never offered SOC below 1% or below $5k on any transaction I have been a part of. A far cry from asking anyone to "provide my services for free."
Kary, Whether you believe what I have to say is unimportant, I know it to be the truth.
Its just that the way Patrick did it was not professional and doesn't reflect well on his ability to deal with stressful, emotional situations and it also doesn't reflect well on this profession in general.
Why would you focus on Steven and his claims and yet not call out Patrick for his less than professional demeanor?
As a fellow agent, are you actually okay with what you've seen here???