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sandlapper42, Other/Just Looking in

What is a fair real estate brokers fee?

Asked by sandlapper42, Fri Jul 13, 2007

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28
Jennifer is correct in saying you get what you pay for.

Unfortunately, there are agents out there that don’t follow the rules and will ignore a property if they feel the commission is too low. In many States this is illegal and unethical. But it happens nevertheless.

Remember that there are so many homes not selling right now. Unless you are priced right going on the market for the first time, your agent will spend a great deal of money marketing your property as well as the cost to drive out to show it to prospects. You need to keep in mind that a good portion of the commission goes to the buyer’s broker. So the agent needs to keep within a budget.

Discount brokers provide discount service. They just cannot afford to provide full service at a low commission.

Hope this helps!

George Antonopoulos
Realtor
Shoreline Property Specialist
Coldwell Banker Residential Brokerage
Madison, CT
800.759.6936
Web Reference: http://www.shorelinere.com
4 votes Thank Flag Link Wed Aug 8, 2007
A reasonable fee offers services proportionate to the services provided. The range of services can range from a basic listing in one local MLS and minimal interaction with the listing agent to a full service agent who directly, or through a staff and team, monitors and participates in marketing your property on a daily basis.

Our company offers 3 listing packages, all of which are full service. At our basic listing (silver), the seller will receive all team support, all internet marketing, and full service representation for broker open houses, scheduling showings, follow up, market updates and full service negotiations. Our middle package (gold) adds premium positioning on internet sites, virtual tours, and print advertising. Our premium marketing package (platinum) adds a single property site specific to the property, a floor plan, and comprehensive weekly updates with strategy recommendations. (My descriptions were not all inclusive, only illustrative.) Our last two listings that had the platinum package resulted in multiple offers each which raised the sales price. Both of these sellers firmly believed the investment brought a worthwhile return. While we could never guarantee these as results, we are confident that the additional marketing was key in the success in finding buyers. We are in a soft market, with properties sitting for months without activity, many listings expiring, and lots of price reductions. You are also paying brokerage fees for representation, negotiating, and advice. A good agent will contribute value throughout the transaction beyond marketing. The fees you pay should be appropriate for the level of services and expertise delivered.

At our company, the expenses we incur to market properties have substantially risen. We post at many ‘free’ listing sites, but paid staff members work in offices where they post and monitor those listings daily. We also pay for premium positions on some sites, and post at sites that do carry fees.

The fees you pay to a broker do not represent income. It is a fee to cover business expenses and pay office expenses, salaries, computers, phones, etc., and yes, turn a profit.....hopefully.

There is no magical number that is the right fee to pay. Do carefully compare what you will receive for what investment in your marketplace. The best way for you to know the right price for you to pay is to meet with a few Realtors and ask them to deliver detailed proposals. For you and your property, the right marketing approach may be different than for someone else.
Web Reference: http://PeninsulaFirst.com
3 votes Thank Flag Link Sat Jul 14, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
Discussing commissions is not illegal. What is illegal is colluding to fix commissions. So participate!!!
2 votes Thank Flag Link Thu Jul 26, 2007
In response to Hal's take on commission structure, keep in mind the risk/reward nature of our industry. Are standard 5-7% commissions lucrative? Yes! Why else would anyone in their right frame of mind put up with the uncertainty and stress of this business? If it were not a lucrative field, you would not have many top flight agents who are willing to carry their own operating expenses & insurance, have no pension plans or other benefits, with sporadic returns. Keep in mind that 5 years ago, there were also fewer agents competing for that $250,000 listing. As the market took off, so did the number of fledgling agents. On the surface, you would expect the increased competition to put downward pressure on commission rates. If you look deeper, however, you realize that the increase in total agents means less business to go around. If agents are completing fewer transactions, they certainly are not in a position to reduce their fees. Brand new agents and limited service brokers may essentially buy a listing by working for peanuts, but is this who you would want handling the sale of your half million dollar asset?
Web Reference: http://rayandpaul.com
2 votes Thank Flag Link Sat Jul 14, 2007
I am often asked the fee I charge, usually before there is a mutual decision to work together. I usually respond that the person asking is assuming all Realtors are equal. With 45 hours of schooling (that's Monday-Friday from 9AM-5PM for one week) the only thing I really have in common with other Realtors, I explain my background, discuss what I do to sell homes, demonstrate my track record and then discuss my fee. I also indicate that others who may charge less are quite possibly worth less.

Although I could cut my commission, that just would not be fair for the other homeowners paying me full commission (which is what I decide and will not disclose in this forum) to market and sell their home: So I don't. Lastly, I sleep very well at night, without any guilt feelings.
Web Reference: http://www.GlenHagen.com
1 vote Thank Flag Link Thu Jul 26, 2007
Hi There,

I would love to participate in this discussion, but you should all be aware that this violates the Anti-Trust laws. Doing this violates your licensing law requirements and there are heavy fines and possible license suspension. So to my fellow colleagues…..please be careful!!!

Melissa Mancini, Realtor, CBR, GRI
Web Reference: http://MelissaBMancini.com
1 vote Thank Flag Link Thu Jul 26, 2007
There is not set fee or commission industry wide. In fact, it is illegal for brokerage firms to set an industry standard per the Sherman Anti-Trust Act. Many real estate companies do have internal guidelines and minimums set for their agents.

There is more to consider than the fee when choosing a realtor. There are many limited service brokerages that charge a low fee, but they also offer fewer services and sometimes have charges for things like signage, advertising, paperwork, and attending the closing. Limited service brokers tend to ammass as many listings as possible, do a minimum amount of marketing and provide a minimum amount of services. Limited service brokers focus on volume in order to stay profitable.

A true full service brokerage handles all of the details for you, and the initial fee includes everything with no hidden charges. Their rates would generally be higher than a limited service broker, but the level of service and the end result is much better. Final sales price and days on the market are usually much better with a full service broker. Many agents claim to be full service, but do not do the work. Make sure that you ask as many questions about their education, marketing plan, and the services they offer as possible.

Keep in mind that many brokers work on a commission basis and that no fee is paid until your home closes. If they do not do the job, you don't pay. It may seem that paying a lower rate would be best, but if you and your home are not getting the exposure and service needed to sell your home, it may sit on the market for a longer time, or not sell at all. With limited service brokers, you may be paying marketing fees above the commission during the listing period, even if your home does not sell.

Be sure to consider your market, the level of service you require, the final selling price desired, and the time you have to sell your home when considering what type of broker to employ and what type of fees you are willing to pay.

A good realtor does much more than market your home. They know their market, give a high level of service, and are experts in contract negotiation. Your realtor's goal should be to sell your home for the best price in the shortest amount of time. She should have a difinitive plan on how to achieve this goal.

Everyone wants things three ways...good, fast, and cheap. However, you usually only get two of the three. The bottom line is, in real estate as in all things, you get what you pay for.
1 vote Thank Flag Link Thu Jul 26, 2007
The answer is whatever the market will bear. I know I can reduce my costs by as much as 70% of the local Brokers fees and actually offer more or better services than any of my competitors and still make a handsome profit.

The cost of doing business in residential real estate has never been lower than it is right now. Unfortunately many agents and brokers will try and tell you that anything less than full market commission is discount service. Many of these so called professionals just don't know how to utilize these new and improved technologies to drive down costs.

I am eager to see what others have to say.
1 vote Thank Flag Link Sat Jul 14, 2007
Brokers fees are negotiable in most cases. The fee schedule depends on whether the broker is full service or limited service. In any event, you will get the level of service you pay for. Full service brokers spend more time and yes money marketing your property, so I think its fair to expect to pay a higher commission fee for the extra services performed. In the end, your property will probably sell at a higher price, and in less time if you go the full service route.
1 vote Thank Flag Link Fri Jul 13, 2007
All fees are negotiable.

What is most important is working with an agent that has the expertise to market your home to include maximizing Internet exposure through social media and real estate sites. What is their plan.

Best Regards

Maureen Cody
The Keys To Charleston LLC
0 votes Thank Flag Link Mon Apr 30, 2012
It may seem that what most Realtors are saying it depend upon the bottom line. We are in the business because we love what we do, and in these tough economic times, it is even harder, with many agents having to take on part time or full time employment on the side. This can make it seem agents are more concerned about the bottom line, but most agents just want to ensure you are able to sell your home and earn your business. Most Realtors do not get paid for anything up front unless they have an arrangement with a seller, so these agents are paying for things such as signage, lock boxes, and advertising up front, which , when you have many listings for sale, can become quite expensive.
Many agents here have said the same things, such as when you pay discount brokerage, you may get extremely discounted services or you may wind up paying more as-you-go for things like marketing and advertisement. Of course there is also the incentives to buyer's agents that need to be considered as well. When looking for an agent, look at things like how many resources they have for marketing your listing, and even though there are many inexpensive to free ways for agents to market your home, those same things also take up time to keep up with and monitor. I know it is not something folks want to hear that you get what you pay for, but that is not always the case, but many great agents will give the service that you need and will work hard to get your home selling goals accomplished.

What it comes down to is what a seller and realtor are willing to come up with that will work. There is no 'fixed' fees, and we are not allowed to fix fees, but for something as big as the purchase of a home, it is worth it to get the best for what you are willing to pay for selling your home as quickly and for as much as you can get for it.
Feel free to contact me with any questions!

Katheryn Cousins-Brennan
The Agent Owned Realty
901 Savannah Highway
Charleston, SC 29401
843-442-7416
fax 843-725-7051
http://www.AgentOwned.com
MSgt USMCR ret.
0 votes Thank Flag Link Fri Jul 29, 2011
You often do get what you pay for. The standard rate that my company charges is 6%. 3% to the selling side and 3% to the buyers side. If you are paying less then you are probably getting less marketing and advertising of your house.
Web Reference: http://www.askforjames.com
0 votes Thank Flag Link Mon Sep 8, 2008
You get what you pay for. Pay a discounted commission and get discounted services. Howmuch is a fair fee to pay your stock broker, lawyer, doctor etc. Do you have to pay them upfront? Most times yes. So with real estate commissions, if you pay upfront, you may end up paying less.
You may want to chose between paying your listing broker 0.5-1% upfront, or paying 3% at closing. This does not include the Buyer's Agent's commission.
0 votes Thank Flag Link Wed Dec 19, 2007
Whatever you agree to based on the services you're expecting to receive. Remember, you, as the seller, need to include enough money to assure the potential buyers agent a competitive Buyers Agent Fee. If not, whether we like it or not, many agents won't bother to show your home.

In the end, and I know you've heard this before... You get what you pay for. If you're hunting for a bargain, expect sub-quality performance. Time is money for everyone.
0 votes Thank Flag Link Wed Aug 8, 2007
It really depends on what you want. If you want someone to just list the property and do no work or advertising trying to sell it. It should be very low 4%. If you expect them to work on selling it and spend thousands of dollars advertising it you might want to make sure they are charging you 6%.
0 votes Thank Flag Link Tue Aug 7, 2007
Hello,

Very good question.

Many areas of the country and even in South Carolina have local customs. In the Charleston Metro area it is 6 percent. I find alot of agent who except less 5.5% and 5% but I think they sell you short. We all can agree that we are not in a ideal housing market, with that in mind Realtor's need to increase there marketing cost with homes remaining longer on the market. Realtors are human (yes it's true) and they will not spend all there commison on marketing so how much they are compensated has a direct correlation to thier marketing expenses. Also as sales slow down Realtors expenses stay the same but income decreases, so they look for new ways to increase their income. The easiest way is to show the first grouping of homes to a new buyer that has a three percent commision to the selling agent. This always increases showing and usually will help to sell your home sooner.

Good Luck.

Patrick J Tivnan
0 votes Thank Flag Link Tue Aug 7, 2007
Hey Sandlapper42 -- I believe the best answer to your question is relative to your motivation to expeditiously sell your home. If you are not in a hurry to sell, then you can take a chance with an Agent or Brokerage with the lowest commission (who may do a fine job just the same). If you are in a hurry to sell, you may need to reconsider your thought process on what is "fair".

In a "previously life" (prior to becoming a Realtor), my husband and I transferred with his company 12 times in 13 years. My moves were usually unexpected and selling my home in the least amount of time for the most amount of money was extremely important. I did extensive research in the local market to find out which Realtor had the greatest success in the neighborhood the home was located (based on lots of different criteria) and ultimately chose my listing Agent based on their "statistics", not the fees they charged. You are essentially choosing the "individual" success and work ethic of the Agent you choose, not necessarily the Company they work for. I would highly recommend doing a little "homework" and make a decision based on "actualities"; not an arbitrary percentage amount. Keep in mind, "better" is not always more expensive and what is "fair" is usually what it takes to get the job done within the parameters you have deemed important.
Good Luck
Laura Bunts
Web Reference: http://www.LauraBunts.com
0 votes Thank Flag Link Thu Jul 26, 2007
Any lawyers here that can settle this?

I dont know where you are getting your info. Which asnwer are you referring to? No one here is setting a price. Colluding together to set a price IS a violation.

Everyone is answering the question.

I have a fixed listing fee of $3,000 and I rebate 50% of my buyers commission paid by the seller to my buyer clients.

The Feds encourage competion.

See the attached link. It makes it easier.
0 votes Thank Flag Link Thu Jul 26, 2007
Why is this question being asked? The fee is negotiated between the broker and the seller based on the level of service being provided. As I stated, this fee is 'negotiable' and is not set in stone.
0 votes Thank Flag Link Thu Jul 26, 2007
Technology has mad selling homes easier than ever.

Check out this model:

http://www.redfin.com/stingray/do/sell-how-it-works?direct-s…
0 votes Thank Flag Link Thu Jul 26, 2007
Hi Hal,

Real Estate fees HAVE decreased and you should have no problems finding just the right real estate agent at whatever fee you'd most like to pay. There are many new real estate models that agents use to sell homes.

If I were fortunate enough to own a home that had doubled in value in a short 4-5 years I would be thrilled when it came time to sell. I have $250k more than I did 4-5 years ago. If you lived here in Texas you'd be really ticked. Not only would the real estate commission have doubled but so would your property taxes. We pay some pretty hefty property taxes here in Texas. Anywhere from 2-4% of the homes appraised value. In 2002 you were paying $7500 a year in taxes ($250k home at 3%) and now in 2007 you'll be paying $15,000 for your taxes ($500k home at 3%).

I wish I still paid $1.50 per gallon of gas....no such luck though!
0 votes Thank Flag Link Sat Jul 14, 2007
You get what you pay for, usually, MOST SAY. 5-8% BrOKER'S FEES TO "list" THE HOUSE, SHARES 3% WITH THE REPRESENTATIVE OF THE BUYER. THERE ARE NEW CUT RATE FEES WITH LIMITED SERVICES AS ALTERNATIVE..don bush, keller williams, capital aprtners realty, 614 888 1000, BUSH.214@OSU.EDU
0 votes Thank Flag Link Sat Jul 14, 2007
I looked at some sales information and the price of a house seems to have roughly doubled in the last 5 years in my area. So say the average commission is 5% on a house that costs $250K in 2002, today that house would be $500K. 5% on $250K is $12,500, 5% on $500K is $25,000 double what it was 5 years ago. I don’t believe the cost of running a business has come anywhere close to doubling in the last 5 years. Maybe I’m wrong but it looks to me like commissions should be coming down.
0 votes Thank Flag Link Sat Jul 14, 2007
Will my fellow real estate professional Mr. DeGuzman please share how he can reduce his costs 70% and still make a profit. I've been selling real estate for just about 7 years and I don't think any of the costs associated with this business have decreased. I am always open to suggestions on how to save money and still provide ABOVE and BEYOND service... I look forward to your response. You can always email me direct at cherin@houstonhomesdirect.com. cherin Houston, RE/MAX
0 votes Thank Flag Link Sat Jul 14, 2007
Personally I charge 6% but if you have a hard to sell home, you might want to up the selling side co-op another percentage point. I will usually either offer broker bonuses or some type of incentive to the other agent. My goal is to get the home shown fast and money talks!
0 votes Thank Flag Link Sat Jul 14, 2007
Real estate is local and every area is different.. fees are definitely negotiable however one thing to remember is that if your area has a lot of inventory then you might think about adjusting the fee upward... on the other hand in a hot market fees usually are somewhat lower. As noted in the other responses.. a lot will depend on the amount of service you expect to receive from the agent.
0 votes Thank Flag Link Fri Jul 13, 2007
Kaye Thomas, Real Estate Pro in 90266
MVP'08
Contact
I agree, great question..........also I would echo what has been said already.......plus would like to add the fact that we are all independent business people which means we pay for all our own business expenses......such as health insurance, life insurance, car insurance, equipment like cell phone and cell bill, computers, office space........well you get the idea....just as any small business owner does. As a general rule of thumb the brokerage does not pay for our expenses, it comes out of our fee........" What does that mean to me?" you ask, well not much but people should know that all the fees received must cover all our expenses including the expenses most folks never think about.

In the final analysis, we always get what we pay for. When an agent tells you, "i'll do it for 1 % or I'll do it for a flat fee...." always, always ask, "Please tell me what you provide for that fee."
0 votes Thank Flag Link Fri Jul 13, 2007
Great Question! The good news is that Brokerage fees are not fixed. The bad news is that sometimes you get what you pay for! Which depending upon your needs may not be bad. When I say Brokerage Fees are not fixed there is no law that says what the Brokers are required to charge. Independant real estate offices have Brokers who will set a fee for their office. In most cases any deviation from that set fee has to be done with permission by the Broker. I've heard fees as low as 1%, flat fees, 6% and in some areas 7%. It really comes down to the amount of service you expect from whomever you have represent you. As a provider of full service real estate I charge a full fee to my selling clients. But I have to back that fee up in my marketing & service plan. In many cases I will actually break down graphically where the commission goes so that after marketing expenses, man hours dedicated to your home, taxes, general business expenses (vehicle, fuel, equipment, rent, etc) have all been paid, the client is able to see what I actually make on the sale of their home. Please see the article I have referenced.

Thank you for this opportunity.
Cherin Cox-Wiggins
Houston, TX
RE/MAX Town & Country
http://www.cherincox.com
0 votes Thank Flag Link Fri Jul 13, 2007
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