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Realtor commissions

Asked by Global Property Group, Philadelphia, PA Sun Feb 22, 2009

What is the general thought about offering 2% to the listing realtor and 4% to the buying realtor?

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14
Hello, John,

In over 20 years I have not really seen agents create a sale because of the compensation. If a buyer agent is truly working for the buyer, he will show the buyer any and all available properties. If you are doing your job properly your focus should not be on your compensation, but rather helping your buyer achieve his goals. I see many properties offering bonuses, etc., but they don't seem to sell faster. It is much better to price the property appropriately, or even a thousand or two below market...that usually will bring the quickest sale.

As for the listing agent...when is the last time you went to work and did more than just an average job, and were then asked to give up part of your pay. If you get the right listing agent, that agent will work over-time to get your place sold. He doesn't earn a dollar until that happens. As a ReMax agent, I can tell you that I spend a lot of money on getting my listings sold - advertising, print materials, broker's lunches, etc. So, in effect, I am not really earning the 3% that I am being paid as a part of that goes to expenses. If you would like discounted services, then pay a discounted rate. You get what you pay for in this life. If you have a good agent, that agent will decide if it is appropriate and warranted to share is commission on a different split in order to get a difficult job done.


Carol Murray Cei
ReMax Millennium
215-649-1720
3 votes Thank Flag Link Sun Feb 22, 2009
What would that accompilsh? If you think more agents would try to sell the house because they're paid more, that may be partially true, but I've never been able to force any buyer to like a house because I would be paid more if they bought it. And since the listing realtor IMO works harder than the selling realtor I don't think it's a good idea.
1 vote Thank Flag Link Mon Feb 23, 2009
As hard as it may be to believe by folks outside of the Real Estate industry, I truly do not think that Realtors show their clients properties based on the compensation that they will receive. Don't get me wrong, it's nice to see that the commission offered on a property you are selling is 7% rather than 5% - but in my 25 years I've never decided to omit or add a property showing to a client/customer because of the commission rate.
1 vote Thank Flag Link Mon Feb 23, 2009
I am not exactly sure why you are ready to pay 6 % commission, but want to give the agent, who you will have a contract with only 2 %, this is the agent who will have to hold the open houses, advertise to the real estate community, to the public, assist you in educating you about the market conditions, and if and when they change, keep you informed about the competing properties in your area, and letting you know about those that have sold etc. etc. ----
But I would suggest since you are ready to pay 6 % to discuss how your trusted listing agent would prefer to split it with the side that brings the buyer! I discuss it with my sellers in detail, as sometimes the location or kind of property I am listing may need more or less marketing and time.... And make sure you to the right thing by your listing agent - are you not also going to use that listing agent to find you your next home?

If you are interested in me recommending a trusted Realtor Colleague/Partner in Philadelphia to you, let me know I would gladly do so. E-mail me directly and send me your address and a phone number and I will forward to you the contact info. If you do not mind tell me a little bit about your current home and what you intend to buy.
Hoping to hear from you soon.
Edith YourRealtor4Life Working always in the very BEST interest of her clients!
edithsellshomes@gmail.com
1 vote Thank Flag Link Sun Feb 22, 2009
Hi John,

In theory, it sounds good. However, a very major portion of the expense associated with the sale od a home is absorbed by the listing agent and/or company in the form of advertising and promotional expenses.

I'm afraid that if your plan were implemented properties would not be advertised and therefore visibility would be negatively impacted.

You may be onto something but I'm afraid as it stands, additional work is necessary.

Keep thinking out of the box.....

Bill
1 vote Thank Flag Link Sun Feb 22, 2009
If you can get an agent to take the listing at 2%, I would ask myself, why would they want to take it so low. What are they not going to do to compensate for the loss in income? It surprises me that people would expect a professional REALTOR to take less and still get the same amount of marketing and exposure. If you are listing several properties with them then perhaps they will offer some sort of discount, which I have done in the past with no problem. What you may not know is that the agent does not receive the entire 3%. They have to split it with their broker on whatever agreed upon split they get, and then of course they pay taxes and perhaps franchise fees on that money. So for your typical $250,000 home at 3% your realtor who may have say a 60% split will receive $3285.00 after taxes, if you ask them to take the listing at 2% he or she will receive $2190.00 after taxes...a difference of over $1000. That is pretty significant. I would compare it to getting quotes from a few different contractors and taking the lowest bid, you may make out on price but you may be sorry with the results!

Carmel Archdekin
REALTOR
Coldwell Banker Preferred
223-225 Market Street
Philadelphia PA 19106
Office: 215.923.7600
Cell: 215.680.5998
EFax: 215.940.8207
http://www.cbpref.com
WINNER OF 2008 COLDWELL BANKER ACHIEVERS SOCIETY AWARD
0 votes Thank Flag Link Tue Jun 30, 2009
A great deal of effort is made to sell a house today. You will have a much better chance if a seller uses a top producer. If you want to go to a discount broker, you will get bargain results. why not offer 7% commission and really draw in some interest.

Michael P. Cohen
Permier RE
610-642-0347
0 votes Thank Flag Link Sun Mar 8, 2009
Hi John,

As stated throughout these answers...very rarely will you find an honest and successful agent who shows property merely based on a higher commission. Agents cannot force their buyer to buy a certain home just because the commission is a % higher.

However...what you may find instead is a listing agent who is willing to do less for you if you are paying them less money. For example..if my seller would only pay 2% to my company for selling his/her home...just to give you an idea as to how that affects me. On a normal $200,000 house i would gross about $3327 on a normal 3% commission. Net would be about $2100 after you figure in advertsing expenses. That doesn't count taxes. On a 2% commission I would gross about $1825.00 and net $625 roughly. After taxes I don't make enough to pay my bills (ecspecially if that is my only closing for the month). At that point I am more likely to do less advertising on the property for the simple fact that based on a 2% commission I cannot afford to spare the extra money. What most people don't realize is that 9 out 10 times the listing agent is splitting their commission with their company. In my company, if we bring in less than a 3% commission than we get a little bit less than 50% of that check. Again..because of all of the cuts down the line..my advertising on the property has dropped.

Hope this helps!
0 votes Thank Flag Link Sun Mar 8, 2009
Just putting it on the MLS does not sell a property. A lot of FSBO's do that and are unsuccessful. You are hiring someone who knows how to effectively price and market your property. Just just input it in the MLS and sit back and wait.
Web Reference: http://www.SeanDawes.com
0 votes Thank Flag Link Mon Feb 23, 2009
Too high. If you are going use one just do 1% to each. They will take it. You can really handle it all on your own or just use one to get yourself onto the MLS.
0 votes Thank Flag Link Mon Feb 23, 2009
I would not put more than 3% to the buyer's agent and for the sellers agent it all depends on what they do for you. Are they offering you services you will not find with other real estate professionals? Will they be there for every showing or will it be on lockbox? Things like that. In my opinion, gone are the days of 6% listings where 3% split down the center.

Realtors are making a shift more towards marketing professionals as well as real estate professionals and you need to find someone who understands this.

Feel free to ask me any questions, sean.dawes@longandfoster.com
Web Reference: http://www.SeanDawes.com
0 votes Thank Flag Link Mon Feb 23, 2009
As a Philadelphia expert, there is no right and wrong. It just depends on the scenario. For example, your above scenario might make sense if it was a 10 unit condo building where the listing agent is representing you on the sale of 10 units so there is an agreement to discount that side and to offer the buyer agent more as an incentive.

Still, it is the same amount of work pretty much for the listing agent for each deal and the marketing will be the main reason they go under contract. I believe that buyers agents in this market are just happy to do a deal and thus are super happy with 3 percent too.

Either way, it is good to work with an agent that can think outside the box and come up with a strategy together with you that best suits the specific situation. Good luck ! If you need more info, please check out our site at http://www.thesomersteam.com ... specifically the section "selling your home" http://www.thesomersteam.com/selling.php .
0 votes Thank Flag Link Sun Feb 22, 2009
Its not necessarily a bad idea. As a listing agent this approach is sometimes used as a negotiating tool upon getting the listing for an extended period of time. For example if your property doesnt sell in a specific marketing time you offer buyer side a higher commission to attract other agents to the property. This is becoming more common.
0 votes Thank Flag Link Sun Feb 22, 2009
HHHMMM,

Both Agents Gave Great Answers! And Sooo True too.

Just a Thought.... Going on the fact your paying a 6% commission>>

How about....2.5% to the listing agent , and 2.5% to the selling agent(even split). And a aditional bonus(1%) to the selling agent? Might keep everyone happier, including the listing agent who can list and sell your home too.

Hope I've been helpfull.

Thanks!

Tina D'Amato
0 votes Thank Flag Link Sun Feb 22, 2009
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