No agent/broker should ever "steer" or "sort" listings by commission amount. That harms the buyer and is therefore unethical without the expressed permission from the buyer client (in writing).

Buyer's agents who take it upon themselves to shy away from listings that are offering less than what is written into their Buyer's Agency Agreement with their buyer clients,

1) don't have a Buyer's Agency Agreement signed in the first place

and/or

2) haven't spoken in detail with their buyer clients as to what happens when a seller/listing broker is offering less than what is agreed upon in the Buyer's Agency Agreement.

There are plenty of ways to legally and ethically negotiate a contract to cover the difference in commission between what is being offered by the seller/listing broker and what is in the Buyer's Agency Agreement prior to contract ratification. Unfortunately, not many agents know how.

And if you're wondering why many consumers don't like Realtors, answers such as, " Many people look though MLS email updates. Some agents secretly filter their searches so that the automated service won't send their clients listings unless they are 3% listings. " is one reason why. Those agents should all have their licenses revoked immediately.

the TRUTH is, that Realtors® (yes, the one with the registered trademark) agree to work in their clients best interests... NOT in their own.

and that means making sure that your clients are aware of all properties that suit their needs and meet their requirements.... REGARDLESS of what the co-op commission is.

all the Realtors® (and OMG Brokers!) who are replying: "heck what would you do? ... an extra buck is an extra buck! " are breaching the trust placed in them by their clients... and doing so on a national forum... in writing... in perpetuity (cause the internet is forever).

The agent who uses the "commission is too low it might hurt the sale" are either poor representatives of their trade craft or take their clients for complete nincompoops!

As an agent, I believe that I earn the commission that I charge my clients. having said that, commissions are negotiable and I have never not shown a property to a potential buyer because the commission split was "too low". If I have a buyer and there is a home that meets their needs but offers a lower compensation I will gladly show it to them. For one, a sale is a sale. And more importantly a happy buyer is a friendly referral for additional business.

I am almost want to say No it will not hurt and see how much I am going to get reemed for saying so. And any agent that does not show your home because they will make less money is being unethical.
Wait, I just did say it. Here come the lashings. Sorry, but I just put a buyer in a home where I knew I was to make less money on the sale. However, I just new it was the perfect home for the buyer. The listing agent did take a smaller commission for the listing, however, any higher he would have been looking at a short sale. Did he do the right thing to help his client? I think he did. And I was happy to bring his client a buyer.

Do you want a Mac or PC, a burger from Fuddrucker's or Burger King, a Benz or Hyundai, a steak from Morton's or Old Country Buffet, etc?

I agree most with Dunes and Danilo in spirit. Yes, commissions are negotiable, and yes the stars like to get paid.

The real question that you need to ask yourself is how motivated would you be to do the work that you do if your boss were to ask you to double or triple your workload and take a 33% pay cut, because this is exactly what you're asking the agents to do.

Here's the perfect "converse" example to answer your question.

There's a townhome in Evanston (where I do business) that is bank owned. The bank decided to listen to many of you who insist that a higher co-op commission will attract more agents, and therefore they will convince their buyer clients to view the townhome, which will result in a faster sale (because after all, Realtors are "human", and "greed" is human.

So they changed the co-op fee from 2.5% on this $217,500 property ($4,350.00 commission to the buyer's side) and increased it to a whopping 6% ($13,050.00)... Certainly that HIGHER commission will help the sale... right?

Well, it has been on for 3 weeks at this new highly attractive commission, has created quite a "buzz" among the local agents, and they have seen zero difference in the number of showings they are getting... zero difference in the number of hits online... zero difference in the number of appointments made through agents.

Zero difference, and it remains unsold.

Put incentives where there work... in the hands of the buyers. Incentives such as "reduced prices", "cash back bonuses toward closing costs... where legal", "credits toward decorating, new appliances, new roof"... incentives to buyers work. Incentives to agents, don't. (in my humble opinion).

I am still here reading all the threads on this topic and want to thank everyone for their input. I'm able to see two (more like 100) sides to the argument. There seems to be much more to the behind-the-scenes of this business than I was aware of. It's an interesting and complicated business and I give credit to the hard working agents out there. Don't care much for the slick ones.

PS .....OK... one more thing....in all honesty the public does NOT care what our expenses are or how much our E&O insurance is, or gasoline costs are , etc., any more than I care how much my MD pays for his liability insurance or rental on his office or his staff expenses. It's the cost of doing business.
I just want to make sure I am getting the best health care I can get ! I can opt to go to a walk-in clinic type medical practice, an in-networj MD, or go to a higher priced MD who may not even take my insurance......and I did that just last week. Ultimately, I select what I think is the best for my needs.

The public only cares that their needs are being met in the most efficient and honest manor.

I understand the desire expressed here to "explain" to others what is included in our cost of doing business, but after a while it becomes tedious to read, and the consumer gets turned off by it. Every business has "costs" involved . Does my buyer care whether I schlepped around with someone else for 6 months who never wound up buying a home from me? No, he doesn't. He only cares what I do for him.

There are now a number of business models for a consumer to choose from, not only with real estate, but in many other businesses, too. The internet has opened up a number of these choices.

I choose to work as a "traditional" Realtor, following a traditional business model in a large company. I feel that my clients are getting the best service and that their needs are totally being met. Other agents opt for other business models. That's their choice. And, finally, the public gets to choose what they want. It's the American way!

Dan, I agree with the point you are making, and I have even posted the same idea in a much earlier response.

Even if I were inclined to omit showing, or telling my client about, a low-commissioned listing (which I am not), the mere fact that my buyer might find it on Realtor.com, and ask me about it is enough to cause me to make sure I don't leave it off the list of listings I email to my client or discuss with them. As long as it is a fit for them. I would never want to lose any credibility with my buyer or the trust that they have in me. That is key to me.

Now, if I explained ahead of time to my buyer that my company has minimum standards, and I cannot show a home with a severely discounted commission, that's different, I would still tell them about it, but by then we would have already worked out a way of handling this situation.

With Realtor,.com, the majority of my buyers are as on top of things as I am. I would never want to come up short as far as working in their best interest, or be caught with my pants down (figuratively speaking, of course!)!! How embarrassing for them to ask me about a isting I decided to omit.

The key is disclosing what your position is right from the start, and then making sure your client's best interests are served.

As you can see, alot of agents think they are really worth $500 an hour. I know so many people that work as hard or harder than we work. Agents can take days off when needed, and if you really think about the
time you put into each listing, its nothing like what you spend working in an office full time, doing all of the things you do as an agent like mailouts, flyers, calling clients etc and only getting $20 an hour in addition having someone telling you what to do all day. Keep up the good work. Keep charging clients more than you should and with all of the for sale by owners coming up, they will no longer need an agent. The ones that are greedy and are worh so much money will find themselves working for $20 an hour and putting their license inactive. Think about it. If you have a buyer that wants to see a home they found on the internet and ask you to show it and you see its only 2% on your side to show it.(a 4% commission split in half for each broker) ....You are telling me you would not
drive into a driveway of a $500K dollar home and not get the $10,000 commission???? That is hillarious.
So instead of $10,000 you prefer to say no not me, I'm worth so much more. If the client likes the house
she WILL get the listing agent to show it and they will gladly open the door for that. Might want to wake up.
Greed makes you broke.
Think Guys!!! Email me if you need help. Good Luck. B. Farris, Louisiana

If possible listings are reading this, email me if you need help finding a first class agent for lower commissions. Century 21 is International and I can help you find someone in your area that is very very good and will save you thousands. CallBrandy@aol.com or http://www.brandyfarris.com

Steve
I will disagree that a low commission will hurt your sale.

You goal is to sell your home to net the highest dollar figure, I am assuming. So simply based on that one condition, if anything paying a low commission should help you net more.

However, in most situations today the sale of a property is not simple. In most sales the seller has other needs, such as when they need to move, what if they are trying to maximize their sale price? If real estate was as simple as "the lowest commission will net you the most profit", then the discount brokers and MLS Entry Only brokers would dominate the market.

So why is that not the case?

Because most sales, particularly in this environment are anything but simple or easy. Why does that make a difference?

From the economic model, if I need to earn a living, I need to sell so many homes. If I sell at a lower rate, then I need to sell more homes. If I cannot sell enough homes, I go broke, change careers, etc. So I think you would agree that if an agent's ONLY benefit is they will list your home for a lower commission, what happens if YOU, the seller, NEED other benefits, such as a crack negotiator. What happens if the buyer turns out to be unqualified for a loan AFTER contingencies have been removed? Should your agent have known beforehand, or is that just bad luck?

Steve, I recommend that you interview three Realtors and compare their analysis of your situation and their proposals. If you really need to move, with a hard move date and a minimum you need to net, doesn't it make sense to find the best Reatlor?

Let me put it this way - what would happen if you picked an agent, told you they could do the job, and then they end up not being able to sell your home for the price you need?
At that point does the amount of commission matter?
I track stats for MLS Entry Only and Discount brokers. In the last quarter in MY MLS 931 units sold. Out of that 25 were sold by MLS Entry Only and discount brokers.

Also, properties listed by MLS Entry Only Brokers and Limited Service Brokers FAILED TO SELL 60% more often.

When they did sell they averaged 2.9% lower in list price versus sale price.

You make the call and good luck.

I believe it was Fred who wrote,

"Amazing how many agents first thoughts are about "their commission" vs. the "right home" for their buyer."

There's plenty of amazing things to be found in these 719 "answers" to a question that was asked nearly six weeks ago. I suspect the seller has made his decision.

It is sort of interesting how many of us would argue that the seller's opinion of the value of his home is not a valid factor in the market value. But now we are going to argue that how much we want to earn is a valid factor in the commission rate charged.

While forums such as this may not improve the reputation of our industry much, they do provide an opportunity for buyers and sellers to listen to prospective agent's thinking. I rather suspect there are a few who have lost business as a result of their "honesty" here. Vivia the Internet!

This growing "transparency" is one of the more positive outcomes of the web... as at least one other person has pointed out, internet buyers will request information about properties they find on the market based on their needs--not the commission. It would be professional if we all did the same, focused on finding them properties that suit their needs. (One of the biggest complaints I hear from buyers is that the agent they've BEEN working with hasn't listened to their needs.)

Thankfully, we are "killing" the old model wherein the seller pays the buyer's side commission -- it's just dying a slow and painful death. In the interim, sign up your buyer clients at the commission rate you "want" and make them pay the difference. Then prove to them that the laborer is worthy of the hire. That approach negates the need to criticise listing agents for not charging and splitting enough commission. So instead of debating the wrong question we can go out into the field and sell some property.

That's good that you pay the buyer side 3% since obviously they are the ones doing all the work and you're doing nothing. Getting 1% for a few keyboard clicks is overpaying IMO.That's good that you pay the buyer side 3% since obviously they are the ones doing all the work and you're doing nothing. Getting 1% for a few keyboard clicks is overpaying IMO.
~~~~~~~~~~~~
Your comment is the exact reason why 95% of buyers and sellers think that our profession is over paid for the value that is brought to the transaction. Our firm’s pricing strategy and process makes sense to almost every prospect for both buying and selling. In fact when we help a buyer purchase a property we share 1% of the commission (paid by the seller) with the buyer at closing on the HUD. How can we do this and stay profitable? We weed out all the BS overhead and cheesy self promotions that the client pays for. Face it a one inch square photo of seller's home that is beside a three square photo of the agent who picture is 10 years old will not sell the house! No matter what publication it is printed in. That is promoting the agent. And sellers and buyers know this! The client needs help with the negotiations, contracts, repair lists and real world advice. Also, not all the work is done on the buying side either. Statistics show 75 percent of buyers in the market search the internet first and find a group of homes they want to see without even talking to an agent! 85 percent of these buyers get an agent to show them a select few houses before an offer is made with the agent. It kills me to see competing agents running prospects around town without a buyer’s agency agreement or even a pre-qualification letter and do not even know what the client needs. My advice to this seller is to get your home cleaned up, repaired and priced right and do not mess around with buyers or agents who are not qualified! And yes even doctor fees are negotiated in the end! Best of luck.

If you are really a good agent, when you list a home, you price it right by using the correct comparables as well as whats happening in that particular area. When you price a home, using high/medium and low pricing, choose the one that best fits your potential listing. Price it right. It will sell. No one cares what we as agents get paid. Its so funny when someone says we're worth so much money. Think about it. If you are spending that much time on one home and can't sell it, something YOU are doing is wrong.
Agents have been spoiled for years. With our economy you need to help like many others are doing or
let the clients use a great agent that has sense enough to help others. Business Doubles
and people appreciate your help. We still make more money that any other career.
http://www.brandyfarris.com

They are just trying to scare you into paying more money. Now days with all of the ways to find homes on the internet and all of the free sites as well as online MLS, you don't need an agent to find you a home. If its listed on MLS and many sites offer this free, you can pick your homes for the agent. The agents that are not showing homes because of low commissions, should be thrown out of the real estate field.

We have an obligation to take care of our clients and provide integrity and honesty.

If you find a listing on a national real estate site, or any real estate site from any company, it may not be their listing but you have a right to see it no matter what the commission to a real estate agent is. If you find out anyone lied to you about it not being on the market, call the Louisiana Real Estate Commission.

Times are hard. People need breaks and at even 3% we are making a very good living.

If you want to sell your home in or around Baton Rouge, call Brandy Farris or visit http://www.brandyfarris.com.

Good Luck!!! Commission has NOTHING to do with the sale. Location and Price as well as
whats inside sells homes.

I honestly think this is a good question, but my thing is, our job is to find the buyers a home, no matter what the commission is, no where in school did it tell us to make sure we look at what we make on a home before we decide to show it. I wish they would eliminate showing the commission until after a home is shown. That would insure the buyers sees every home in their price range and also insures the sellers home is being seen.
Too many realtors get caught up on the paycheck, this job is supposed to be more than that.
I know this will really ruffle some feathers but I have sold alot of homes in 2 years and I don't worry about the commission I just do my job to the best of my abilities and it always works out, many times, I have recieved bonuses because of this.
Just my too cents.
Lisa Revis
Southern Charm Realty Inc
Mooresville, NC 28115
704-856-2551
sold28117@yahoo.com

@Alan, don't take her words so literal, chill... just take the 3% comment and replace it with whatever your fee is. BTW there is such a thing as a standard commission and it's not an anti-trust issue either (most brokers have or should set minimum standards or prices within their agency policy). Anti-Trust issues only come into play when the "standard" or pricing conspiracy is an industry wide effort to stamp out competition and does not refer to company policy. BTW, one can make an argument that flat fee brokers are violating these same anti-trust laws. ;-D
~~~~~~~~~~
the anti-trust issue, Victor, is in actually having any discussion amongst Realtors (especially in a national forum) about what we charge. That, in and of itself, is a violation.

And "no", there is no "standard" pricing between agencies, or in a community. Yes, an office could have it's own standard commission, (for example our manager has commission standards and guidelines we must follow), but I am not allowed to discuss what those standards are with any realtor outside our office, nor with any other agency. And "no", that is not because we don't want them to know what our rates are... it's because it would violate Sherman anti-trust laws, and might be construed as an attempt to price fix.

Keep in mind that overpriced listings will not sell regardless of the commission.
~~~~~~~~
and "properly priced listings WILL sell, regardless of the commission".

Tony wrote:
-A maturing industry: I again disagree with this statement. I believe it works great as it is.

I think the question might be whether or not the public/consumer thinks it works great. Ours is a very internally focused industry with some fairly self-serving ideals. Given the confidence level in and reputation of our industry one might speculate there's at least a little room for improvement in the way we do things. I happen to agree with the poster who said most buyers wouldn't pay the 3% (or whatever amount) to hire a buyer's agent if each transaction side was responsible for it's own commission. Why? Because we've not done a very good job of demonstrating value.

I've worked with plenty of buyers who were frustrated with previous agents who wouldn't listen and try to understand their needs. I've "cobroked" with agents who don't know the difference between a warranty and a quit claim deed or how determine who they represent in a transaction. (I'm not kidding.) How much should these agents get paid?

There is nothing wrong with expecting to be paid, but there is something wrong with an arrogance that assumes one is entitled to "full commission" (a term that is actually meaningless) simply because that's the way it's always been. I applaud clients who force us to demonstrate value. The very fact that Steve is asking the question is great. It's interesting that a lot of folks answer is a higher commission will attract more agents. I thought the point of listing is to attract buyers?

So Steve, it's ultimately about perspective. Obviously attracting agents is part of the formula, but ultimately the buyer buys the house (and you end up with the buyer's dollars to pay the commission under the current model). This is a question of value and while it's not simple, it is easy. How much are you going to pay and what are you going to get? While everybody is worrying about how much the agent is going to make, you need also to consider what sort of services, advertising, etc. you are getting. The commission needs to be high enough to support a complete, integrated marketing program (unless you are willing to do some things yourself). If you scrimp on that program without compensating in some other way you will, in fact, "hurt" the sale.

To be honest i could care less if it is 5% or 2%. I am doing my job to help people find a house they will love. If they love the cheaper house with less commission I am going to show them that house. I would rather have clients who get what they want and continue to refer me thana client who finds out I sold their house because I made more money.

The price of the house also affects the amount a Realtor will ask. If I list a million dollar property and ask 6% that is 60,000. Usually the higher the price on the house the commission tends to be lower.

Bets of luck and I hope you can find a Realtor who will work with you and agrees with you as to what you think is fair.

I have been actively involved with our local Association of Realtors in Seattle for 17 plus years; chairing committees on ethics and chairing panel hearings (agent to agent, public to agent). I can tell you that it is against our Code of Ethics to work in this manner. Even if an agent does not belong to the National Association of Realtors, it would still be considered unethical to steer clients away from low commission homes.

If an agent is representing a buyer, and has a contract specifying a set fee to be paid, then no problem. They can show the property with the lower commission and still get paid what they think is fair. We don't talk about commissions with other agents and companies - that is price fixing and an agent is on very shakey ground should they do that.

We are obligated to show any listing that meets our buyer's criteria. Period. No one cares how many bills we have to pay, how good we are at real estate or how many kids we have to support, and that shouldn't even come into the discussion. That is just the kind of thing that gives real estate agents a bad name, and I sure hope there are not many doing that. It is always best to take the high road.

AS a buyer agent - I learned the hard way several years ago WORK WITH CONTRACT . A contract laid out between buyer and agent. Listing expectations from both parties. Buyers time is important , but so is the agents. I pledge to work hard for my buyers to find them the best deal for a home in the towns or cities they are searching in. Duties are defined. Will I search for FSBO's for them or not? Should I successful bring them to close on the house of their choice for a fair market value, then I will have earned my professional fee. What ever it is agreed to in writing before the actual hands on search & community information is given and viewed. .
I show buyers every property that is in their price range in the towns they are looking in. It does not matter if the buyer agent receives , 1apple , 2 apples or 2.5 apples. Rarely aroun here do we see 3 apples unless it is a bank owned.
I can not believe that an mls would allow an agent to limit searches by commission. That is just wrong. To a buyer I would say , if you feel this is happening to you - then you should double check property on trulia or Realtor.com to make sure you are recieveing EVERY listing in mls in your price range. If you find you are not- Mention it to the Realtor and find yourself a new one. An agent/Realtor should always put the clients needs first and do the best possible job to find them a home that will meet their needs and pocket book.
I specialize in the low end of the market for 6 years now. I work very hard at what I do and I do not mind. Now some agents have called me crazy because at the end of the transaction I don't make much. WEll so what .Laugh at me now. For the past three years I have been selling condos and houses for under $150,000. I may not make much , but I am still selling in a down market . I make many first time home buyers happy and they have referred future business to me. If an agent wants to gain a buyers trust and have a chance at helping a friend or relative in the future- you always put the client first. Without the client you have no business. Everyone and every property should be treated equal.

The unfortunate reality is that agents are motivated by the commission you pay them. As you can tell from all of these comments, most of these agents would steer their clients towards properties with higher commissions because they "deserve it" or "have expenses to pay".

Whatever the reason, most of the real estate professionals on this string seem to be unaware of their duties to their clients. When representing a buyer, an agent has an obligation first and foremost to their client, not their pocketbook. Those duties are ethical and legal requirements of our profession.

To all the agents who would steer a client away from a home offering 2% rather than 3%, you need to rethink your obligations to your clients. You are obligated to find them the best home for their needs, not for your pocketbook.

Sarah, Nar doesn't back up your fuzzy math.

In 2004, the median business expenses in 2004 were $8,210 annually per REALTOR®. In 2008 REALTORS® reported their expenses dropped annually to $5,810.


http://www.realtown.com/NARResearch/blog/busexp

Fuzzy math: Usually, a fuzzification of mathematical concepts is based on a generalization of these concepts from characteristic functions to membership functions. Let A and B be two fuzzy subsets of X. Intersection A ∩ B and union A ∪ B are defined as follows: (A ∩ B)(x) = min(A(x),B(x)), (A ∪ B)(x) = max(A(x),B(x)) for all x ∈ X. Instead of min and max one can use t-norm and t-conorm, respectively [4], for example, min(a,b) can be replaced by multiplication ab. A straightforward fuzzification is usually based on min and max operations because in this case more properties of traditional mathematics can be extended to the fuzzy case.

http://en.wikipedia.org/wiki/Fuzzy_Mathematics

Duties to Clients and Customers

Article 1
When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly. (Amended 1/01)


Standard of Practice 1-1

REALTORS®, when acting as principals in a real estate transaction, remain obligated by the duties imposed by the Code of Ethics. (Amended 1/93)


Standard of Practice 1-2

The duties imposed by the Code of Ethics encompass all real estate-related activities and transactions whether conducted in person, electronically, or through any other means.

The duties the Code of Ethics imposes are applicable whether REALTORS® are acting as agents or in legally recognized non-agency capacities except that any duty imposed exclusively on agents by law or regulation shall not be imposed by this Code of Ethics on REALTORS® acting in non-agency capacities.

As used in this Code of Ethics, “client” means the person(s) or entity(ies) with whom a REALTOR® or a REALTOR®’s firm has an agency or legally recognized non-agency relationship; “customer” means a party to a real estate transaction who receives information, services, or benefits but has no contractual relationship with the REALTOR® or the REALTOR®’s firm; “prospect” means a purchaser, seller, tenant, or landlord who is not subject to a representation relationship with the REALTOR® or REALTOR®’s firm; “agent” means a real estate licensee (including brokers and sales associates) acting in an agency relationship as defined by state law or regulation; and “broker” means a real estate licensee (including brokers and sales associates) acting as an agent or in a legally recognized non-agency capacity. (Adopted 1/95, Amended 1/07)


Standard of Practice 1-3

REALTORS®, in attempting to secure a listing, shall not deliberately mislead the owner as to market value.


Standard of Practice 1-4

REALTORS®, when seeking to become a buyer/tenant representative, shall not mislead buyers or tenants as to savings or other benefits that might be realized through use of the REALTOR®’s services. (Amended 1/93)


Standard of Practice 1-5

REALTORS® may represent the seller/landlord and buyer/tenant in the same transaction only after full disclosure to and with informed consent of both parties. (Adopted 1/93)


Standard of Practice 1-6

REALTORS® shall submit offers and counter-offers objectively and as quickly as possible. (Adopted 1/93, Amended 1/95)


Standard of Practice 1-7

When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing. REALTORS® shall not be obligated to continue to market the property after an offer has been accepted by the seller/landlord. REALTORS® shall recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contract or lease. (Amended 1/93)


Standard of Practice 1-8

REALTORS® , acting as agents or brokers of buyers/tenants, shall submit to buyers/tenants all offers and counter-offers until acceptance but have no obligation to continue to show properties to their clients after an offer has been accepted unless otherwise agreed in writing. REALTORS®, acting as agents or brokers of buyers/tenants, shall recommend that buyers/tenants obtain the advice of legal counsel if there is a question as to whether a pre-existing contract has been terminated. (Adopted 1/93, Amended 1/99)

Standard of Practice 1-9

The obligation of REALTORS® to preserve confidential information (as defined by state law) provided by their clients in the course of any agency relationship or non-agency relationship recognized by law continues after termination of agency relationships or any non-agency relationships recognized by law. REALTORS® shall not knowingly, during or following the termination of professional relationships with their clients:


reveal confidential information of clients; or


use confidential information of clients to the disadvantage of clients; or


use confidential information of clients for the REALTOR®’s advantage or the advantage of third parties unless:


clients consent after full disclosure; or

REALTORS® are required by court order; or

it is the intention of a client to commit a crime and the information is necessary to prevent the crime; or

it is necessary to defend a REALTOR® or the REALTOR®’s employees or associates against an accusation of wrongful conduct.


Information concerning latent material defects is not considered confidential information under this Code of Ethics. (Adopted 1/93, Amended 1/01)



Standard of Practice 1-10

REALTORS® shall, consistent with the terms and conditions of their real estate licensure and their property management agreement, competently manage the property of clients with due regard for the rights, safety and health of tenants and others lawfully on the premises. (Adopted 1/95, Amended 1/00)


Standard of Practice 1-11

REALTORS® who are employed to maintain or manage a client’s property shall exercise due diligence and make reasonable efforts to protect it against reasonably foreseeable contingencies and losses. (Adopted 1/95)


Standard of Practice 1-12

When entering into listing contracts, REALTORS® must advise sellers/landlords of:


the REALTOR®’s company policies regarding cooperation and the amount(s) of any compensation that will be offered to subagents, buyer/tenant agents, and/or brokers acting in legally recognized non-agency capacities;


the fact that buyer/tenant agents or brokers, even if compensated by listing brokers, or by sellers/landlords may represent the interests of buyers/tenants; and


any potential for listing brokers to act as disclosed dual agents, e.g. buyer/tenant agents. (Adopted 1/93, Renumbered 1/98, Amended 1/03)


Standard of Practice 1-13

When entering into buyer/tenant agreements, REALTORS® must advise potential clients of:

the REALTOR®’s company policies regarding cooperation;


the amount of compensation to be paid by the client;


the potential for additional or offsetting compensation from other brokers, from the seller or landlord, or from other parties;


any potential for the buyer/tenant representative to act as a disclosed dual agent, e.g. listing broker, subagent, landlord’s agent, etc., and


the possibility that sellers or sellers' representatives may not treat the existence, terms, or conditions of offers as confidential unless confidentiality is required by law, regulation, or by any confidentiality agreement between the parties. (Adopted 1/93, Renumbered 1/98, Amended 1/06)


Standard of Practice 1-14

Fees for preparing appraisals or other valuations shall not be contingent upon the amount of the appraisal or valuation. (Adopted 1/02)


Standard of Practice 1-15

REALTORS®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property. Where disclosure is authorized, REALTORS® shall also disclose, if asked, whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker. (Adopted 1/03, Amended 1/09

As a real estate professional who enjoys helping clients reach their dreams, I have negotiated commission many times in order to help the client. My manager usually supports me by saying that some commission is better than no commission. I recently was offered a large condo complex to list, but the owner was only willing to pay a certain commission. I knew the owner was going to list with someone and I wanted to be the agent of choice so I accepted a lower commission. The volume of sales will surely be worth something even with reduced commission.
I have heard that some agents hesitate to show properties with lower commissions, but as a real estate professional who puts the needs of others first, I show any and all properties that fits my clients criteria.
Rita Rebouche

"What other industry allows the public to take advantage of a professional's time, money, knowledge, and liability without ANY guarantee of compensation?!?"

And to answer Sara's question: Car Salesmen, Insurance Salesmen, Amway Salesmen, Mary Kay Reps, and anybody else who has decided to make their living in sales and commission. This is the third "rant" I've read that's been posted with this "I'm tired of my clients wasting my time we should be paid an hourly wage". If it looks to be so much more lucrative to do it that way then by all means, do it. But quit screaming about how clients are wasting your time. It's your job. You don't like it find another line of work already!!!!

The responses in this section have been interesting, and enlightening. I understand that a buyer's agent does more than just drive you around to see some houses. However, as a buyer, I also do the vast majority of the footwork to even find the houses in which I am interested. Unless you are relying on your buyer's agent to find houses for you, and not just facilitate the purchase, I'm not sure how their services even warrant the same commission as the seller's agent (though how they split the commission is their business). I spend hours on the internet looking at homes for sale, determining which ones meet my criteria, narrowing down the ones I'd be interested in based on features, location, price, etc.

Additionally, the whole focus on percent commission doesn't make much sense. Why are you so concerned about making X% commission? Would you prefer to make 4% commission on a $150,000, or 2.5% commission on a $250,000 house? You don't work harder (or at least I hope your effort isn't tied to the listing price) selling the more expensive house, so in this case even though the commission is lower, you make $250 more than the other...money you'd miss out on if you just focused on the % and not the bottom line.

There are several problems that I'm having with this thread. It seems some of the replies are as though every house that an agent might show that is at less than what they want ideally in commission will always be the perfect house for the buyer, and that will be the one chosen. I just don't believe in real life that always happens. I believe there is at least an equal chance that a higher commissioned house will be the one. I personally think agents should do the do the right thing. Let the law of averages work, and quit loading the dice.

The second thing is all the inventory thing, and why should agents show listings at a lesser commission when there are 100's to choose from higher. I'm not buying that, because by the time you filter through all the buyer's criteria, such as school district, price, bedrooms, baths, fireplace, basement (finished), garage (size), pool, central air, I could keep going, but why? You get the idea. An agent, in most cases does not have 100's to choose from, and probably in most cases not even 50. If you have 20, no one is asking you to prioritize the list in favor of the lower commission houses. Just do the right thing and include them.

Finally, there can sometimes be a fine line between information and intimidation: " If you know what's good for you you better ___________"
Posters, including agents have implied on an open forum, not only to the OP, but to every other seller who stumbles upon this thread that if you want your house shown, pay up. With this day and age of the internet, how many agents acting in a buyer agent role actually have clients that don't find houses off the net for the agent to show in addition to the ones selected by the agent. In most cases these clients haven't a clue, and couldn't care less as to what the commission is. If a client asks you for a showing of house, are you going to refuse? Probably not. Will you explain that the buyer will possibly have to pay the shortfall to cover the agreed upon amount, probably. Will you inform the buyer that you will do your best to negotiate the price lower to cover the shortfall, or are you going to just let the buyer continue to drag you along for another couple of days, or week, or a couple of weeks when it could end there, since the buyer has asked specifically about the house? IMHO, the lower commissioned house will be shown by most sensible, ethical agents.

That's all I have. Fire away. :)

Roy - don't you think listing the property in the MLS - and getting it world wide exposure to buyers thru the MLS sold the property - not the commission -

Roy,
That's amazing. You were really able to sell the house for 575k when your friend the cashier at Target couldn't get it sold at 490k. All because you offered the buyers agent 3%. There has to be more to the story than that.

I am still amazed at the answers agents are offering for this question. Like these statements...

"Some times low commissions houses are very difficult to sell, because if the seller is too greedy to pay commissions, they are also very difficult to negociate with a buyer"
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"If you work only for commissions for sure You will always look for the high commissions. "
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"Realtors when searching for listings tend to choose properties that have a standard or a better commission rate for the listing. If the commission is to low, buyers realtors tend to leave the property for last choice when showing it to their client."
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"The Realtors look at many details and one is to see if they are going to be compensated. All Realtors know what they consider to be fair, and customary. Whether they choose to present a home offered for sale to the customer is up to each individual agent."


Amazing how many agents first thoughts are about "their commission" vs. the "right home" for their buyer.

NAR was on the right track when it started the requirement of all member taking ethics training every four years. From reading this thread - it looks like the body of REALTORS need it at least every two years - and maybe every year. Article 1 of the REALTOR code prohibits you from putting personal gain above your clients needs -
Also read Standards of Practice 1-13 and Article 15. Steves agent should have disclosed his commission to him.

Now Steve be real - you have computer - did your agent ever refuse to show you house you wanted to see?

Now do lower commission hurt sales NO, NO, NO There are only three things that impact sales Location, Condition and PRICE. If I have a low coop commission I may take grumbles from buyers agent - but the deals still happen.

I don't know what rock you guys are living under but the days of a customer walking into my office and saying this is my criteria show me houses - I pick 5 - they buy one - are long over. Look at sites like this and Twitter

My relationships usually start on the phone or internet about 3 months before they need to buy - Thru the mircle of the internet and IDX - they have access to all active listings on our MLS - they use my website and conversations with me to learn about the buying process, the neighborhood pricing - market conditions - how to get a loan etc. mean while they are narrowing down the pack themselves with drive bys - Once they decide on the neighborhood - we look at EVERY SINGLE LISTING in there INCLUDING FSBOs.

In my 12 years of practice - I have NEVER looked at my compensation until I went over the HUD - or if negotiations were tight - buyer had given all they could - seller have given all they could I and my fellow REALTOR have given up some and in some cases most of our commission to make a deal happen. Because is was the RIGHT thing to do.

I have never lost a deal because of my commission. - and you all need to take a good look a commission and not be so gready. Our industry has tried to get 4-6% sincce the beginning of time. Houses in the 70s went for 20,000 - now even in economically depressed areas they go for over 200K. Think about it.

Great question, Steve. Lower commissions should never hurt the sale, but it could change the dynamics a bit. Specifically, it depends on the anticipated response to your property, how well it will be marketed, and the current market conditions in your area...there's way more to selling a home than slapping a 3% commission on your listing. Commission negotiated between Seller and Listing Broker is just that-anything offered to cooperating Brokers could enhance your ability to move the property, strictly by the numbers-more agents equals more potential buyers...but that doesn't mean it's required. Typically 50% of that agreed upon commission is offered to the cooperating brokers, and I always suggest you make sure your agent puts that in the agreement. It precludes them from taking a 5% commission and only offering, say 2% to the rest of the field, thereby giving you no real benefit. Any agent worth their salt is showing homes that meet the client's criteria, not those with the bigger commissions. Real estate is a relationship business, and we wouldn't be building too many relationships if we were focused solely on the money ... take care of the clients, and the money takes care of itself. I've done deals for nearly free that resulted in multiple referrals down the road ...so which is better? My final thought, as a seller, pay a fair commission for the services rendered...if your home is in perfect condition and the effort required to sell it will be minimal, then you should be able to save money and still get great service.However, if the home is in a tough market and requires "out of the box" marketing and extensive effort to move it, recognize that and treat it a s a cost of doing business. Have prospective agents you interview show you ALL the recent activity in your neighborhood, and compare the coop commission offered - that'll give you a snapshot of what everyone else is doing...but don't make your decision based on that alone, just be aware of it. Hope it helps, and best of luck!

"I would definitely show your home but if there are comparable homes in the area, I would say it'll be easier for me and other real estate agents to convince their buyers to go with the other homes."
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@Theresa - Since when do agents "convince their buyers" to buy a home with a higher commission??? I hate to burst your bubble, but buyers don't give a hoot about YOUR commission. They only care about finding the perfect home for them.

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"So as agents going to show homes to their buyers, I would say anything under 3% will be on the BACK BURNER NUMBERS DON'T LIE."
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@ Melissa - I just don't get how you (and other) can say this!!! You won't show homes under 3%??? I can't even believe what I cam reading on this post... It's INSANE! How do you call yourself a REALTOR? You sound like you're working for your own pocketbook and not for the buyer.

No Mandy, Steve is asking this......"And how low is too low?"

And you're saying anything less than ? is a pay cut in your opinion........... because..

"commission is negotiable"

I love the low commission vs. high commission argument on these blogs!! As a discount broker we hear from clients all the time who tell us competing agents tell them their house will not be shown if they list with a discount broker. The simple fact is that not all real estate agents are professionals in their field and as sales people are only concerned with their commission. Stay clear of those people. Also, if a buyer finds your house and likes it enough to want to see it then their agent can negotiate their fee with both parties. Every seller wants to net at the best possible price. There are other ways to save money on the sales transaction than just the real estate commission for example a shorter sales cycle means less carry costs which can add up with days on the market. But as a seller you need to evaluate your needs realistically and honestly with yourself before you place your property on the market even if you go the FSBO route. When you have a realistic sales plan then you should select a firm to represent you who understands the local market, pricing, one who is professional and compensation scale that fits your situation.
Our firm list client properties for 4% vs. the 6%. So we save the client $2000 per $100,000 of the house price. That is more than beer money! We keep 1% and offer the buyer agent side 3%. That works well in our market. We do this because even though the majority of buyers are conducting their own real estate searches on line the majority of these buyers find a real estate professional to help them through the transaction. Now there are things we do not do for our fee like maintain an expensive office space or print advertising. We have a streamlined process that works but not all clients fit our model. You have to keep in mind that most real estate professionals still provide a valuable service to the client and must be compensated for their time and work.
My advice to you is to clean and repair your house to sell! Price it right! Then choose a real estate firm that fits your personality, needs and your financial situation so you can move onto your next life challenge.
Best of luck.

OK...So............as I see it..... by now..........after 600 responses.......... Steve has long since shut off his computer , already sold his home (paying a huge commission, but he got well over asking price, so it's ok) , bought a pied a terre in NYC and is now considering a run for Governor of Alaska since that state is going to have an opening. The End.

But......no matter what - this thread will continue on, as it has a life of its own.............long live this question!!!

The direction of this thread is all over the place. But it is a great study in human nature.

I have a question that I hope someone can answer. Some people dedicate a lot of time and effort in to responding. That is great. But I noticed that some of these profiles have a majority of their responses voted as "usefull". I have read enough of the responses to know that some are definitely interesting and usefull, but many are not.

Are these people really creating secondary accounts just to vote on their own material?

I have not named names. There is no need to threaten me.

Why not treat this industry like attorneys do? Buyers hire their Buyer's Agent, rates vary according to skill level. Sellers hire their Listing Agent, rates vary according to skill level. Each side has to give a retainer for the estimated amount of work that will be completed. For Sellers, they will have to come to an agreement with their Listing Agent on what marketing expenses they are willing to pay for and also deposit those funds.

If someone wants to hire the least expensive realtor, they will probably get what they pay for. If they want to hire the best, then hopefully they too will get what they pay for. Thats the way it is in most professional fields.

Then the agents keep track of their billable hours. That ensures that we get paid. It also ensures that the buyers and sellers don't disrespect our time and effort and marketing expenses.

How many agents out there have had buyers or sellers take up a considerable amount of their time, then later just change their mind. They are entitled to change their mind, but shouldn't they pay for that error in judgement?

Yes, Fred, to answer your question, after 24 years in the business, I am more than familiar with how mortgage brokers are compensated - unlike you, I don't begrudge them earning a living, I am not here to defend their industry nor critque it, and since this is all way off the original topic, I am done replying.

ps....... I am glad, however, that you find my drama funny, as I do try to inject some humor here once in a while....

THE TRUTH - If the house is $150,000 or $300,000 and the agent charges X%, the same X% for either, they earn double on the more expensive home. They do the same marketing for both so how does it make sense to charge based on %? It really doesn't and that's the problem. What would make sense is to charge a flat fee for the services performed.
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And by the way, I still do full service when folks want it. And I still charge based on the % model. So I do understand your point. The difference is I offer options for those that want it....
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So let me understand this - as much as you critiqued it, you're not above charging a percentage (you failed to mention that in your initial comments) , even though, according to you, "it really doesn't make sense, and that's the problem".............you critique it, and point a finger at those who work that way, yet you are willing to work that way, too.......interesting.............the fact that you offer a choice doesn't mean you earned a gold star - it's just how you choose to do business..........that's your prerogative......you like to cover all bases ......isn't that a bit two faced, though, to find fault with one business model, yet be eager and willing to work that way, too, if it's what the public wants? I am just commenting - not passing judgement.


In regard to my analogy being "pathetic".....I kind of thought it was cute, actually - the point being, it was intended to show that people often get compensated more for performing the same service....it's not unique to real estate.........

.......and as far as corporate America goes - many who earn salaries (my son is in this group[ , and he works for a major corporation) based on a 40 hour week get paid overtime for working 50 hours that week - some do, some don't.........that was hardly an equal analogy in my opinion, nor did it make or prove any particular point

And finally .............
Move over Realtors - since we're all "in bed together".....make room for the Mortgage Industry - is there a bed big enough for all of us??? Hey there , don't steal the covers!

Fred - is there anyone in the real estate industry you don't have disdain for - besides yourself?

I hate to post this because it really is off topic, and I’m not a big fan of government intervention. It has it’s nose in too many of our affairs as it is. It seems it’s members have enough affairs of their own (pun intended). However, to me, it’s a shame some member doesn’t introduce a bill prohibiting seller agents aka buyer agents from receiving any compensation from a seller in any form, directly or indirectly. Then again playing on the lawyer theme, what client pays the lawyer for the opposition to present evidence against them? It's obvious to most sellers that when they pay that co-op commission, they are paying for agent representation against them as well as the agent bringing them a buyer. I think a seller should pay a listing agent, and a buyer should pay the buyer agent. I realize there probably isn’t any member of any state or federal legislature that has the guts to introduce a bill such as this given the tentacles of the NAR, but I can dream can’t I? All that any one of them would have to do is print out this thread, and use it for a reason that legislation is needed.

It could be argued that a dramatic change such as this at this time would have a detrimental effect on a already troubled industry, and cause buyers to drag their feet even more. However, sellers would no longer feel the need to be baking in the buyer agent commission into their asking price, thus creating a lower listing price. Possibly if a law such as this was in place during the boom, it may have prevented many from entering the housing market that had no business doing so in the first place.

A law such as this would:

1. Stop all the nonsense with agents showing only houses that offer them the greatest rewards.

2. Possibly make for easier negotiations and fewer failed agreements as the buyer would no longer be able to assume he is being tricked into paying for the buyer agent commission with an inflated price.

3. Allow sellers to no longer feel the need to inflate the price to cover the buyer agent portion of the commission.

4. Let the free market work. Sellers would not be forced into paying a usual or customary somewhat agent fixed price to get their homes shown. Buyers would get a list of homes to view that would fit their criteria without agents showing partiality due to commission. I think it’s great that on the listing side, some offer ala carte flat-fee, while other agents negotiate their commission based on their self perceived worth, and the individual situations of the sellers. I also think that those who think that they should charge hourly should do so. The buyers agents can negotiate their commission with their buyer clients or charge hourly. What's so hard about that?

I’m sure all the above has been discussed before, possibly even on this thread, and if it has, whoever else that suggested it gets my nomination for a KISS award. KISS being the acronym for “Keep it simple stupid.” Sellers pay their agents, and buyers pay their agents, simple.

Hi Steve

If you think we've heard enough on this topic, could you close the question? Another good question to pose would be the length of the listing contract......

In addition to Tina's inate self determination I thought I'd give her a little pokey too!

Isn't it wonderful there are so many business models from which real estate can be conducted. This gives the consumer an incredible selection of choices. Just like healthcare...you can go to the clinic, the ER or private practice. Should the consumer expect a different level of service from each of these? Pay differently for each of these? PIck your industry, threre's choice and we like to think the consumer determines the winner. (think microsoft). When you dictate the busines model and compensation plan the result will be an industry controlled and manipulated by two maybe three players. That might be a better plan for some narrow thinking folks, but it is NOT GOOD FOR THE CONSUMER! The consumer at this time can choose from the DYI kit at Home Depot or full service from their Lexus driving deva. American...whats not to like!

Peter... "decisions" aren't your forté, are they?

You said "A good real estate agent on the buyer side should work with an exclusive buyer broker agreement, and put in the clause that he will get 3% commission regardless of what home is bought." (ahh... so that means a low commission DOESN'T matter)

then you said: "Some agents might be a bit greedy though and go after the higher commission especially in developments with cookie cutter homes and many on the market at the same time." (ohh... so it DOES matter)

then, before you could take another breath you said: "A standard commission will most likely work best at any rate!" (right... so it DOESN'T matter... ?)

and then you end with: "Why risk scaring some one away??" (er... it DOES matter??).

No wonder the public is confused. Four separate opinions from the same agent, in a single comment.

Sometimes, individuals who are just entering the real estate market will offer a lower commission for a temporary basis to establish a clientele. In this respect, I don't think it diminishes the sale of the property, in fact I have seen these properties sell faster because of the aggressiveness of a new agent.

I happen to be a Realtor and not just a lowly 'agent', however I reject the accusation that Realtors are somehow better, or more ethical, just because they are subject to some Association rules. Please. You're either ethical or you're not. And many agents don't join because either their broker has not joined (and so they can't either) or because they just can't afford the dues right now. See this post on the value of the National Association of Realtors and their attempts to educate the public!

http://activerain.com/blogsview/30398/nar-not-absolutely-rational-

Let's boil all these responses down to some simple home truths:

The answer to your question is actually very simple. Yes, it can hurt your sale.
If the question is SHOULD it hurt my sale? Then the answer is obviously no.
What's the difference? Human Nature.
Done.