I am unsure what you are asking given all the responses below. When I first read it I thought you were asking whether the listing agent splits their commission evenly with the buyer's agent evenly. The answer to that question is yes. The seller's agent is required by the MLS rules to split their commissions with a cooperating (buyer's) agent. Generally it is an even split.
If you are asking whether it is fair to ask for a rebate of the buyer's commission as a buyer, the answer to that question is also yes. It is fair to ask but as you can tell you will generally be met with resistance and those agents that offer rebates will be represented by many "full price" agents as providing poor representation, reduced services, and will even be labeled as "discount" brokers. I am one of these "discount" brokers and am very proud of my program and the services I provide. Not only am I an experienced broker but I am also a licensed California attorney. I do very well and am a full-time, full service REALTOR. I offer a 1% rebate for buyers and offer an hourly rate to market, list, and sell a property.
The best advice I have seen below is that you should interview 2-3 agents and hire the one you feel the one that makes you the most comfortable. Selling and purchasing a home is a big deal and the person you hire to represent you should be someone you trust. Do not be afraid to ask for a rebate, it is a fair request.
Cappy D. Myers
TIMELINE Real Estate Services, Inc.
It is not fair to ask for your agent to split the commission. While you might think a commission check is a lot of money - if you stop and think about the number of hours and expertise provided, and divide those hours into the commission check, I'd be willing to bet most agents really earn less than $10/hr1
You are quite a character you have 2 jobs, a law degree, you work very hard and have saved enough to "strategically foreclose" on your current home and purchase another home for 900K and you wish to put your hand into your realtors pocket?
The bank is solely the middle man collecting the rents so to speak. There is another entity who fronted the money for your purchase. Just remember what goes around comes around.
I personally wouldn't do it. Its not because "I don't make enough money so thats not fair" but more because of "supply and demand".
For me its always been easy to find buyers to work with. I am very active in the field, knowledgeable, personable, and outgoing.
Lets put it this way... If you were looking for a job and -
Job A paid $35/hour
Job B paid $17.50/hour
Job C paid $17.50/hour
and you were a shoe-in at all of them... which would you take?
If you feel comfortable going discount and doing a bit of it yourself, I say go for it! I encourage you because I have a do it yourself attitude also.
For the agents who disagree-- There are PLENTY of buyers out there! Don't sweat it.
Cappy, who is also a real estate attorney, will be more familiar with the legality of this. I would also caution anyone who wants to enter into a transaction to also look at your other question of "strategic foreclosure" and how the banks may scrutinize your current and future transactions.
I don't spite you for wanting to save money and even ask and choose a rebate agent who will facilitate your goals. There is nothing wrong with that. I, however, after reading your other question I would choose to run from someone like this as a client because there appears to be a lack of ethics and morals. I know I may get a lot of slack from this comment but clients expect agents to be honest and ethical and it is reciprocal for me to want to work with like minded people. I usually do not stand on - nor display - a negative band wagon, to do a "strategic foreclosure" solely because you can, not because you need to... in my opinion is highly questionable. And you will further contribute to the fall of home prices. You are treading on thin ice and I highly recommend you find a trusted real estate attorney.
I wish you much luck, and I really mean that.
What an interesting thread for this conversation. To be frank, like Cappy below, and as I mentioned previously, I do work for only a 1 percent commission, which means that if there is a commission offered of higher than 1 percent, the buyer or my client will get the rebate. This is permitted by California law, and there is a section in the buyer/broker agreement in which the agent stipulates his/her commission and directs how any overages will be credited to the buyer. These are not "kickbacks" (which I agree with Mack are not normally legal), but contractual stipulations that allow the return of excess commissions to the buyer.
Unlike comments below which might lead you to believe that I have less experience or will offer less assistance, like Cappy, I, too, will perform all the work of the full-service agent. I've worked in fields from development of communities (with more than 25 different developers) through sales of homes and have worked closely with of the Building Departments in cities from Palo Alto to Gilroy. I hold a BS degree in accounting, have CPA experience, and have written a book in the field of HOAs and real estate. I was the San Jose Mercury News expert and real estate panel writer for years. I would challenge anyone who reads my posts here on Trulia to say that my discounted commission makes me less knowledgeable, capable, earnest and prepared to work for clients. In fact, most of my clients are thrilled with my services, and I have recently negotiated a price for a Sunnyvale home for one of my clients that is fully $50-75K less than its probable market price.
While I can understand that many real estate agents are reluctant to negotiate their commission--and that's perfectly fine since each Realtor is his/her own "business--there are many of us who have different commission models that do allow us to provide some much needed cost savings to our clients. That does not make any of us who offer lowered commissions less qualified to do the same job--it just makes our commission and often our business plan different. For those of us who do offer lower commissions, we utilize the internet and the talents of our clients to navigate more cost effectively through the same obstacle course, and that's all we're offering. For many buyers and sellers, they prefer the full-service Realtor, but those who wish to try a discounted fee, let's all agree that the commission and plan is different, but that the fee does not necessarily mean the product or service is defective or deficient.
So, Jovana, whether you choose a discount agent or full-commission agent, as with all transactions, talk with a few to see who you feel can work best toward your housing goals. Good luck!
Grace Morioka, SRES
Area Pro Realty
San Jose, CA
Tel (408) 426-1616
Commission rebates are not legal everywhere, either, and where they are legal, you can run into logistical problems with your lender if you're looking for the seller to contribute to your closing costs, and it may be worth allowing your agent to keep more of their fee if they can help you navigate that trail.
What is often lost in the discussion is whether home buyers are actually getting their money's worth with discounted services. As Warren Buffet is frequently quoted, "Price is what you pay, Value is what you get."
Assuming a rare and unusual 6% commission, 3% to the buyer's agent, essentially the buyer can pay 98.5% if they're willing to guide themselves through the process, with the agent merely standing by and watching the whole way along, or the buyer can forego that 1-1/2% and use that money to shop for an agent that will truly add value to the transaction.
To me, that's like spending $5000 on a vacation to an exotic land but not wanting to spring $50 for a tour guide once I got there.
You can certainly ask; however, while going through the interview process I think you will find most of the experienced Realtors you would like to work with will not offer this. If you are confident you know what you are doing (meaning you have Real Estate investor experience) you should be â€œfineâ€ using a limited-service provider (some are better than others, so perform your due diligence).
I do not offer rebates because I commit 100% to transactions and treating every step as if I were investing my own money (I have advised Clients to cancel a contract based on findings without hesitation). I would simply rather work on improving myself personally and professionally instead of offering rebates because in the long run I believe doing so provides a better "ROTI" (return on time invested).
Many don't realize the expense as an agent include the following:
1. Office dues
2. State dues
3. Broker dues
4. E & O insurance
6. Auto maintenance expense
7. Phones ( office/cell/fax)
8. Websites, and emails accounts
9. Pass Key
10. Board Dues
11. Annual State Fees
12. Yearly education classes mandated by State
14. Office Supplies
16. Computer equipment - printer, print cartridge
17. Auto gas
18. Personal expenses (housing, food, and etc)
Would you like for me to continue. these are monthly expenses PRIOR to any agent "getting up out of bed"
Realtor is not a "cheap" profession
Would you like to provide your employer 50% of your earned income .
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
It's about the knowledge.
When you hire a professional (whether it's a lawyer, doctor or real estate licensee), you are not paying so much for the time they spend doing this or that (unless you have an agent you've hired on a fee-for-services basis) as for what they KNOW.
Your agent should know the contract (in our area there are two - the PRDS set of forms and the CAR set of forms - do you know where they help or hinder you?), know the disclosures, know the area, know how to negotiate, know how to get you the best deal.... There are many subtleties which can make an enormous difference in your negotiations and ultimate sales price.
The best agents would be insulted by your asking for half their commission. The rest would just say no.
And my law degree is from UC Berkeley, thank you very much. Where is yours from???
You and your other pompous colleagues are of no interest to me.
And as I said already, if you do not want to share, then good for you. Thank god we live in a free country so I don't have to settle for someone who clearly does not fit my personality.
Jovana: "Kickbacks are not illegal at all. If my employer asked me to give them a portion of my paycheck, I'd go for for another employer. So if my real estate agent, doesn't want to kcik back to me, I go find the one who will. This is free market, my dear. ;) A legal agreement can be drawn re: the kickbacks which would make it legal. Again, no need to get upset. There are agents who will not kick back and there are agents who will. I understand the pros and cons of each. If they don't want to kick back, they don't have to work with me. I am sure the good ones get plenty of customers anyways."
Jovana: Where did you get your law degree? It's possible to write a legal document to make an illegal action legal? Well, you learn something new every day.
Jovana: You also write: " I am one of those people who doesn't need much hand-holding. I will look for the house, find the house, visit the house. I do not need an agent to drive me around every weekend. So I was wondering if it is reasonable for me to get some money from my agent, since I am willing to do lots of legwork." If that's your impression of what an agent does--and what the money goes for--then you may want to try finding your home yourself. Sure, you can find a property online, and you can call up the listing agents yourself.
[Hey, everyone, stop laughing!]
Now, others here will point out correctly that the listing agent isn't permitted to share a commission with a non-licensed person such as yourself. And that's correct. But if you're convinced that kickbacks can be legal, I probably can't talk you out of believing that you can get a listing agent to share his/her commission with you either.
Or why not get licensed as a Realtor. [Stop laughing, folks!]
You can take the course in a matter of weeks. Maybe less. Just taking the courses and getting licensed isn't all that expensive. Then you'll be legal. You won't have to split the commission with anybody. Do the numbers. That's really the best move, dollar-wise.
Hope that helps.
Again, no need to ge upset. There are agents who will not kick back and there are agents who will. I understand the pros and cons of each.
If they don't want to kick back, they don't have to work with me. I am sure the good ones get plenty of customers anyways.
A good buyer nroker can save you more than the fee they get paid from the listing broker well worth teh little they do make.
In full disclosure, I used to be one of those agents who would rebate a portion of my commission to buyers. I no longer do that for two reasons (1) With the number of short sales and Bank owned Properties those rebates, if not disclosed on the HUD can be construed as fraud and my license and my clients are too important to open up that type of liability. (2) My time and skill is valued by my clients so to offer one service to one client and not be equal to the other isn't fair to the client or my family. By not spreading myself thin with volume I can be on top of the market and give the much requested personalized attention to the client.
Commission to a Buyer Broker, is split with the Agent. Let's say that the house price is $500,000 and the Seller is offering 2.5% commission to a Buyer Broker. The split to the agent may be anywhere from 50% to 80% based on the agents volume, (this equates to skill and knowledge as well) that could be $3000 to $5000 per agent. That agent then needs to pay ALL of their real estate cost, fees, income taxes, etc. Not much is left over.
Now there are a lot of agents in the area, some good, some not so. Some offer rebates, and others not. What I would be doing is interviewing agents, getting referrals from friends and family, and then really focus on the agent who will make sure their i's are dotted and t's are crossed, they know the local market, will negotiate the most favorable contract for you, an agent listing agents want to work with so that your offer is the offer accepted, an agent you trust who will still be in business long after your transaction is closed. Just read through the many horror stories on the Q & A in Trulia to get an understanding of the consequences of choosing the wrong agent.
Cambrian is a very desirable neighborhood (I know it very well). You need an agent who is going to take the time you need to find and secure the best value for you.
Eliosa Torres, agent, San Leandro, CA
How would you feel about going to work for half the earnings you are currently being paid?
We work incredibly hard for our money. Your questions displays a lack of respect for your knowledge and skills.
@ Seattle Realtor Mack, many states allow Realtors to share the commission. Looks like Washington absolutely allows it see here:
You've received a lot of good advise here. Naturally, you may feel that you don't need much hand-holding when it comes to finding your perfect home. However, they key is having an agent who can get you into contract on that home should there be a lot of competition. Also consider that not all homes have open houses on weekends. These ones require specific appointments per the seller's request. You will need an agent to view these types of properties and get the appointment for you and if you like the home, hopefully, gte your offer accepted. Along with this, your agent will be helping to negotiate a fair price for you. And your agent will be reviewing the necessary disclosures with you and advising should issues arise. Disclosures such as, title report, property inspections, roof inspections, property disclosure statement, title insurance, homeowners insurance, appraisals, etc. Wouldn't you agree that an agent doing all this work and more deserves their fair compensation?
This question comes up a lot, so I'm curious as to what you are taking into consideration when asking someone to take half their pay.
Rather than ask for a rebate, it may be a better strategy to negotiate the compensation with the buyer agent. For instance, if you were to agree with your agent that they are entitled to a 2.25% commission, then any amount paid by the seller' broker above that amount would be your 'split'. However, if only 2% CC was offered, then you owe your agent .25%.
You could also negotiate a flat fee plus a % of the negotiated amount off of the listing price. Ex. You agree to pay your agent $10,000 + 5% of money saved. If you buy a $500,000 home for $400,000, then you 'saved' $100,000 and you owe another $5k in commission. I think most agents would be happy to give you a deal so long as it is still fair to them. The bottom line is that just about everything in real estate is negotiable.
- My question was about my (buyers) agent splitting their commission with me
Thank you, all of us didn't understand.
I don't know if it's fair or not, I don't think agents prefer that you ask, so maybe it isn't "fair," but, what the heck?
What might be fair is if you make an agreement whereas, if you do not buy quickly, or engage in a particularly difficult transaction (contingent, short sale, that sort of thing), that you pay the agent, out of your own pocket, more than they'd otherwise receive.
Basically, the agent would get 50% if you bought quick and easy, but 150% if you dragged them through hill and dale.
What would you think of that arrangement?
So I was wondering if it is reasonable for me to get some money from my agent, since I am willing to do lots of legwork.
I suspect requesting a 25% commission split would expand the pool of agents willing to do so however. Many agents happily kick back in the range of 25% to other agents for a "referral fee", so obviously their business model can afford rebates at that level.
If you are asking about buyer rebates the concept is alive and well in many broker's business models. There are some pit falls and things to keep in mind though. There is a great article on Discount Brokers vs. Full priced brokers that explains some things to keep in mind... It's called "Do You Get What You Pay For?"
Just as not all Full-Priced brokers are equal, there is an even bigger divide between the many types of Discount Brokers.
Some have a significant reduction in services and it is important to know going in the types of questions to ask especially if this is your first home purchase.
Ciao for now,
Yes. It all depends on your listing agreement, but usually it's a 50/50 split.
Will many listing agents split with the SELLER (YOU) 50/50?
No. It's all negotiable, so certainly ask. But most won't. Essentially, you're asking for a 50% discount or reduction in the commission you'll pay. Again, that's negotiable and you can ask. But most agents won't reduce their commissions by 50%.
So: Is it fair to ask? Yes. Is it likely an agent will agree? No.
Hope that helps.
The 50% of the commission you get may be lost 2 to 3 times over by overpaying.
I've recently represented the Seller on two transaction where both buyer's were represented by two separate rebate realtors and in both cases the buyers overpaid for the house. They actually lost money by getting part of the realtor commission.
It may not be true for every rebate realtor and as a rookie I also offered rebates to buyers. Now that I've got 10 years experience and have many referrals, I don't have to offer to share my commission to attract clients.
So just be careful and good luck on your home search.
Regardless of who you ultimately choose, you may want to read a blog (added below for you) to help you with the 'interview'.
The Cambrian area is a very interesting area that can provide great value based on schools and convenience.
You will learn, or may already know, Cambrian is divided into 2 very distinctly different areas, has three Elementary school districts and 2 High School Districts to choose from.
If I am honored with an interview I promise to share all the pitfalls and benefits of commission rebate programs and how they affect you and your goals.
I'll do you one better. If you're willing to do the looking and to view homes at open houses, you'll get as much as 2/3 of the commission back. For our "facilitation services", we will work as your Realtor for a fee of only 1 percent or $6000, whichever is more. If the commission offered to the selling agent (the agent representing the buyer) is 2.5 percent, you'll get back more than 1/2 or 1.5 percent.
Buyers who use this service, and there have been many Trulia clients who have done this, have used the internet to find a home, have viewed the home through open houses, or have asked us to show the home to them if the home is not available for viewing through open houses. We provide all the same services as the full-service agent with comparables, contract negotiations and transaction work. See my blog here on Trulia for more information, or call me to schedule an appointment and we'll talk more about our services.
Grace Morioka, SRES, Facilitator
Area Pro Realty
Tel (408) 426-1616
I do not know about the word Fair, as I, personally, do not give my commission back, as that is my paycheck. Thats what pays my kids college fees! And I work very hard for it.
Please understand, that a good Realtor, works very hard at the entire process of Purchase or Sale of a property. There is so much involved, and you are spending a big chunk of money, so you want to make sure that every step taken is done so professionally and meticulously. If I dont value my own money, how am I going to negotiate for you at the table.
In the past one of my clients who worked with me for a good 5 months, went out and bought a home with another agent because they got money back! I had set expectations from the start that I will take exceptional care of your RE needs, and of you personaly as "people" and not just as one transaction..... I had advised them not to buy in that particular area, as it did not meet their personal purpose or criteria of home purchase......for 1%back, just $6000.00; today their home is down almost $150K........its sad!
Yes, there are discount Brokers and agents who do split their commission/give money back.......and that may work for you......but you have to wonder why they dont value their services/hard work, and yet it works for some......I would suggest you interview 2-3 agents, as you should feel comfortable and be able to Trust your Realtor to guide you well through the process....and then make your choice.
Wishing you only the Best in Life, Regards,
Interview 2 to 3 agents and feel out the most competent one. You have to like an agent and feel that you can work with her/him. The agent you choose to work with will have open communication with you (must), at that point you can discuss the comission structure. Many agents in this current market will share their commission with the clients, however do not choose an agent just because of that. There are other more important factors in choosing an agent. Good luck with your home purchase, I would be happy to discuss with you regarding your Real Estate needs.
Have a good conversation with your realtor, and have that conversation about commissions and how they work. Good Luck.
Amerifirst Financial Inc.