Home Selling in Fremont>Question Details

Ed Baca, Home Buyer in Fremont, CA

Realtor commission/marketing expenses

Asked by Ed Baca, Fremont, CA Fri May 16, 2008

Should the realtor be paid for his marketing expenses or partial commission even when the house is not sold and the contract has ended ?

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BEST ANSWER
Hi Ram,
Unfortunately for us realtors, there is usually no commission or marketing fees due if the house does not sell within the listing period. When the listing expires, the seller may renew with the same realtor or list with another realtor. Our goal is always to price the house correctly and do the bst marketing so that all parties are happy and everyones goal is met.

Our CAR listing contract does have a clause that if the property sells after the listing expires within a certain number of days (depending on what your agent put there), and the buyer had seen it at the time your realtor was marketing it, you may have to pay the commission. But if it is relisted with another realtor, there may not be any commission paid to the first realtor. Of course, you need to be sure that it is the same contract that I am talking about and no other changes were made between you and the listing agent at that time.

If I can help you, please let me know at 510-279-9580.
Thanks

Mena Gujral
Help-U-Sell Achievers Realty
40083 Mission Blvd
Fremont, Ca. 94539
510-279-9580
3 votes Thank Flag Link Fri May 16, 2008
Hello Ram,

It all depend what exactly what your contract says
1. Did you cancel the contract or listing expired?
2. Was this situation spelled out in your contract/ listing agreement?
Check this out
please feel free to call me 510-381-2105 or
email me at CharoBhatt@gmail.com
if you need help at 510-381-2105
Web Reference: http://www.HomesByCharo.com
1 vote Thank Flag Link Thu May 22, 2008
If this is prenegotiated (which is sometimes the case with high end homes which need high end visibility to sell) then the seller is contractually obligated to pay what they agreed to pay, even if the home did not sell. The reality in this market, the price of the home is the major deciding factor in whether or not the home sells, and this is set by the seller. No amount of marketing will sell an overpriced home.
1 vote Thank Flag Link Fri May 16, 2008
Nope.
Agents get commission off of sales.
If no sale takes place - what is there to get commission off of?

On one hand - it's not exactly a fair setup. On the other hand - it prevents people from just taking listings en mass, putting 2 hours worth of work into 'em - and collecting a check.
0 votes Thank Flag Link Thu May 22, 2008
When a home does not sell, it comes down to one of three things: Price, Product, or Pitch....all of which your Realtor is responsible for. Some Realtors may say that "the buyer dictated the price." That's not a strong agent. I would not take an over priced listing...it hurts bothe the seller and the agent. If the home did not sell and the contract has ended...unless otherwise specified in the contract, I would move on. Good luck - San Ramon sales are picking up - there are buyers out there!
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Thu May 22, 2008
Cindi Hagley…, Real Estate Pro in San Ramon, CA
MVP'08
Contact
If you and your realtor agreed up front that you will split or absorb some of the cost of marketing (such as staging your home, etc) then you should reimburse the realtor based on your agreement. When a listing is cancelled, many of our realtor expenses are out-of-pocket and are not recoverable, such as multi-media advertising, cost of producing flyers, holding brokers tours (if refreshments are provided), photos if a professional photographer is used, etc. There are other costs such as featured homes on REALTOR.com, visual tour, etc.

But no... we don't get paid a commission unless the property is sold. If the listing has expired, and then it is sold later to a buyer that the realtor has shown the property to within a predetermined period of time as stated on the contract after the listing expired, then at that point in time, the realtor has the right to ask for that commission. The criterion is: who is the procuring cause that led to the sale?

By the way, if you decide you're going to put your home on the market again, price it aggressively. That means price is LESS than recent comps. Look at the homes currently on the market. If many of them have reduced their price, then you should get AHEAD of the game and price it even better (less) than the competition.

Good luck.
Good luck.
0 votes Thank Flag Link Sat May 17, 2008
I think Keith's second post is spot-on. 10% below the asking price is the NORM, if not much more! if you'r ein a declining market area (like California!) you're going to get the appraisal price reduced by 5-10% at least! Plus, most of the appraisers are under the gun to reel in all those ridiculous appraisals of the 2001-2005 time frame so they are arch conservatives when it comes to giving valuation.
Lastly, your Realtor/licensee can ask for expense reimbursement and cancellation fees, etc in the initial contract. You don't need a "clause" to do this. Two parties can agree for split any marketing fees if they wish. Unfortunately you are one of thousands of Sellers who feel their home is worth more than the next guys! And as you wait for your buyer the market is evaporating before your very eyes as is your EQUITY!
0 votes Thank Flag Link Fri May 16, 2008
Ram,
By the way it is up to you what the Best Answer is. I have seen a few people on here type in large letters BEST ANSWER over their answer. I am sorry but, it is rather pathetic. So those who ask decide.
0 votes Thank Flag Link Fri May 16, 2008
Ram
Thank you for that last post. The market is speaking louder than anything else I read in your post. Unless your home is very unusual, a properly priced home will still setl closest to asking price in the first 30 days or so. That low offer you received was probably fairly accurate.

In another post I addressed the issue of seller expectations. In a flat or down market, there are more listings on the market than buyers. If you want to sell, then you need to price realistically, which in your case would be slighly below market.

Put yourself in the shoes of a buyer. The buyer that sees the home they buy for the first time sees it with a Realtor 90% of the time. So if a property is not receiving showings, that means that Realtors, who should know market value, think other properties are worth their attention rather than yours.

The longer a property sits on the market, the greater the gap between asking price and selling price. At thirty days in my market homes are selling at 98.5% of asking, at 120 days the figure is 93.6%..and that would be after a price reduction or two.

So in a typical market, the way to maximize your net proceeds is to list slightly under market, and create some competition. In our market about 20% of the listings are receiving multiple offers and selling within a few weeks. 80% are average over 110 Days on Market.

Good luck.
0 votes Thank Flag Link Fri May 16, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Thanks for all the replies. Some details on our situation:
We had a 90 day contract on a home for the mid-market. We started off with a price that was inline with some houses sold in our neighborhood. Houses were selling in our neighborhood during this period...comparables to our house were selling both above and below our listed price (I must admit that there were more comparables below than above)...We had an interested buyer but he was willing to pay nearly 10% below our asking price and we didnt want to reduce the price that low ...so the deal fell apart at around 60 days or so....After that we reduced the price by 5%or so and havent found a buyer. The initial buyer that was interested has moved on as well. Our realtor says the house is overpriced and 10% below was a fair price. I see comparables selling at our listed price, so we believe this is an issue with marketing the house. So we arent willing to extend the contract or pay for any expenses...there is nothing in the contract that says one way or another re these expenses if house isnt sold

Any other advice given the above situation ?
0 votes Thank Flag Link Fri May 16, 2008
Ram
I would offer two additional points.
First, expenses aside, how many homes, like yours, have sold during the time yours was on the market?
Second, did your Realtor review these statistics with you and explain the negative impact of long Days On Market (DOM) may have on your net proceeds?
Also, if the property has received showings the Realtor should provide a list of buyers and brokers who have seen the property or inquired about it (sometimes referred to as a "protected client list"). If anyone of those buyers, or their brokers, buys the property, a commission may be due the original listing agent.

Sometimes when sellers initially appear to be motivated to sell, and later, as the market shifts, decide that they do not want to sell, the Realtor is in a tough spot. We invest a great deal of time, energy, and money upfront. The best way to answer your question, assuming the Realtor did a good job, is to ask yourself "What would I expect if I were in the Realtor's shoes"?
0 votes Thank Flag Link Fri May 16, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Ram,
That is not usually the case but, I have seen some realtor's negotiate into their agreements. It also depends on the length of the listing agreement. If someone is only willing to give them 60 days well that traditionally is not enough time. We as realtor's pay out of our pockets for advertising and extra marketing (open houses, flyers, realtor open houses). So I can see where it is a negotiating point. I personally do not.
0 votes Thank Flag Link Fri May 16, 2008
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