Don -
Sounds like you got great answers to your question and I learned a little from my fellow REALTORS about the way they do in business. In Columbia, Missouri there is a spot on the listing contract where an up front fee can be inserted (generally $200-500 in other answers) and that is to cover paperwork, etc. It is not a suprise as you go over the listing contract with the seller and say what you're filling in that blank. It varies by brokerage and agent as to what the amount is, what it's used for or whether it's waived. I usually waive the fee unless I see the property is unusual and will need a lot of long term extra care above the usual things I do for my listings (which are tons). This especially applies to something off the beaten path where I'm going to be spending a lot of gas money and time and the property is not that expensive so my commission will be low. I didn't use to charge the fee but Columbia is surrounded by small rural communities where I would probably turn down the listing if I couldn't charge the fee. I sold a house last year for $59,000 which is less than some building lots go for in major metropolitan areas so my commission was less than $2,000. But as was said in previous answers...everything is negotiable. Good luck and hope you have a wonderful sales experience.
Trisha Lee, REMAB Boone Realty, Columbia, MO

Thu Jan 17 2008, 15:15

Don,
If you'd like to see what I do for my clients, I would be happy to send you a copy of my basic marketing plan. I do personalize it based on the home, but many things are fairly standard (like being put on the Charter Real Estate TV Show, if you don't sell too quickly). My last 2 listings sold in a month each, the one before that sold in 48 hours. I fully admit not all of my listings sell that quickly.

One of the most important things that I do (far more important actually than my marketing), is to go through your home with you and discuss what you need to do to get it sold for the optimum price with the optimum terms, one of which is to sell quickly. Marketing gets people in the door (like a resume gets you the job interview), but then the house has 15 seconds to impress the buyers enough that they walk through the front door (and yes, I've driven up to homes with clients in the car and had them refuse to go inside because the exterior was terrible), then another 15 seconds to impress them when they walk inside. If your home doesn't "WOW" them, you end up as the runner-up instead of the home pageant winner. I can get them in the door, and I can tell you what it will take to "WOW" them, but you have to make that happen.

I'm not the cheapest person in town, but I'm not the most expensive either. If I can get your home sold faster, thus decreasing the number of mortgage payments, insurance, taxes, etc that you have to pay on the home, then you've made money using me, over someone who may charge you less, but provides minimal service and your home lingers on the market.

When you interview Realtors, make sure that they give you a "Reality check" - do they know the stats on the absorption rate for the neighborhood and how long it typically takes to sell a home in your area. Each area is differen, each price band is different. When you are getting ready to put your home on the market in today's home market, you need to know what to really expect.

ANYONE can (and many agents do) promise you to sell your home for a higher price, then once they get the listing they just keep coming back for price changes and extensions on the listing contract instead of starting out ensuring that the home has the "WOW" factor and is at the right price for it's condition, location and what it truly is. I'm definatly not talking about putting a below market price on the home, I'm talking about putting a realistic price on it

I'm located in the Creve Coeur/Chesterfield area, but I handle homes throughout the metro area (including St Charles County and Jefferson County). I fully admit it's not as updated as I would like (I spend my time with my clients instead of updating it), but check out my website and see what you think.

Thu Jan 17 2008, 08:41

Thank you all, I was just trying to gain information in preparation to list my home. Uniting kindred spirits was just an added bonus. Keep up the good work. Don

Thu Jan 17 2008, 07:37

Dale - thanks for following up. It actually sounds like we are kindred spirits of sort. Just two hard working gals trying to do it right. : )
CJ

Wed Jan 16 2008, 17:02

My apologies, I did not mean to infer that you were cutting costs elsewhere if you were paying the fees. Each Realtor is different.

Here we see a lot of agents who will make a big deal out of paying the administrative fees, but put absolutely no money of their own into marketing a property (we also see even more who don't pick up the fees OR put any money into marketing). If their broker doesn't pay for it, it's not done, so the sellers get a sign in the yard, a supra box (and some get an "other lock box instead) on the front door, and their listing in the MLS (often with very few pictures and those are bad ones), and then a minimal number of flyers in the house and the agent doesn't even check back to see when more flyers are needed. The homes then linger on the market. If they had instead spent a little bit of money marketing the home, they would have had it sold.

Now some brokerages do more automatically then others do, so perhaps the best point to make is that the marketing plan for the home needs to be discussed - what's going to happen, who's going to do it, when is it going to happen (you don't want someone who throws it all out there the first week, then does nothing to keep the interest up, if it doesn't sell in the first week.), rather than focusing on how much it's going to cost and who's paying it. I've seen some VERY creative things done that cost very little money and got the property sold faster.

We don't have quite as many agents per listing as you do, but in my company alone there are 3,500 agents and very few of them market to the extent that I market a home (I'm in the process of putting an ad for a $90,000 home on the local cable real estate show, most don't do that).

Wed Jan 16 2008, 15:18

If they do, they are not supposed to. What kind of fee are you seeing added?

Wed Jan 16 2008, 14:04

Dale - Great that you are a local agent and can identify the do's and don't of a listing. That's important for Don to know.

Again, the question was about disclosing fees. I went into details about why I pay for certain fees to counter your implication that any agent that is paying fees for the seller is cutting corners somewhere else. Not necessarily so.

There are different price points. I agree. There are different market dynamics too that can dictate the service necessary in a certain locality. Last time I looked there were 20 agents for every house that went on the market here in Silicon Valley.

Trulia doesn't confine response to only those in the area. For me it is great learning how each state is different. Each market, unique. I think it is a great service to see how many different ways there are to accomplish something in real estate and I am always glad to see local agents respond.

CJ

Wed Jan 16 2008, 14:02

I think those of you in California and New York who are answering need to keep in mind the differences in price points in our market areas. Here our median home price is about $285,000, and once the commissions are split, the individual Realtors only see $2,000-3,500 gross for most transaction. Then we have to take into consideration our own operating costs (from our cars and cell phones, to our Board and MLS fees) and our continuing education requirements to maintain our licenses.

It's great to say you spend $1000 on marketing when you have a higher price point that you are selling at, but while I typically do the same marketing for all my homes regardless of the price point that they are being sold at (from cable tv shows on), there have been a few properties that I actually lost money on when I added up everything I spent to market them and my operating costs. I do personalize each marketing plan to find the right buyer for each property (for example, not every property goes in the St Louis Business Journal, and my last 3 properties sold so fast they never got on the Cable TV show), but I don't start out by saying I'm going to spend $1000 on a home, that wouldn't be reasonable in this market unless you are selling a higher end property. Even then we have to be very careful about starting out saying we will spend XX amount on a client, since Missouri is an anti-inducement state and telling a buyer or seller that we are going to give them something of value if they list with us will get our licenses pulled.

Wed Jan 16 2008, 13:01

Don,

The $1000 is not in the listing agreement but it is a part of the marketing plan. I offer a grocery list of ways a client can utilize the monies and I state clearly how I will market their home. I talk about communication expectations, I talk about open houses, I talk about recommended inspections, staging, advertising, and then we agree on what is best for their situation, check the appropriate boxes and both the seller and I sign the document. This is my promise to them of my activities and my services above and beyond the listing agreement's outline of fiduciary duties and commissions.

I am sure I will get dinged by some agents for offering a rebate. Sometimes I pay for items under that $1000 up front. Each situation is different and when I have had a situation where the seller did not have the monies but I thought completing certain repairs (or whatever) would help sell the house I paid up front. I have never lost a sale doing this and I have gained many referrals by being flexible.

It is a changing market not only because of sub-prime fallout but also because of the Internet's ability to make many business practices transparent. I believe that many will have to change their way of running a real estate business. Good Realtors can make a decent living and offer a wealth of service and support to sellers and buyers. If they want to.

Thanks Don for the question.
CJ

Wed Jan 16 2008, 12:32

Thanks Roberta, I still have to go with my best instincts and full disclosure. Even if I had time to research real estate case law, it looks like I could still be victimized by the discretion of a tile or escrow company abuse of fine print

Wed Jan 16 2008, 12:21

Thank you all for your excellent and timely responses to my question. CJ, is that up to $1000 figure you state, put in writing in your listing agreement ? If so, I wouldn't expect it to affect your marketing budget. I would agree to reimburse for any expenditure above and beyond our agreement if it was mutually agreed upon as neseccary to effect the successful sale of my home. That said I think Dale is giving sound advice. If I do my due diligence in hiring a competent and proffesssional listing agent. I should not have to expect any surprizes. I will insist on full disclosure as you have so eloquently expressed

Wed Jan 16 2008, 12:06

All fees should be disclosed at the time of listing. Some agents pass a transaction coordination fee onto their clients, which can range from between $200 to $500. We elect to pay that fee ourselves, as it helps the transaction to flow more smoothly--and feel that it is just part of the service we provide to clients.

I would consider this to be a negotiable item at the time of listing.

Finally, I would also beware of possible escrow cancellation fees. To read more about this issue, follow the link below:

Wed Jan 16 2008, 11:50

I disagree with Dale. It is the way I do business to counter a fee that I think is inappropriate from my broker.
Her comment -

"Note if the Realtor is telling you that he or she will get the fee waived, what that really means is that they are paying it for you out of their own pocket, not that the company is waiving it. If they are giving away their own money on fees, rather than spending it on extra marketing for your home, I'm not sure it's a good trade off on your part."

I also pay up to $1000 toward repairs, maid service, and inspections credited back at closing. I set my fees based on what fits the situation. I am not greedy and make a reasonable living on my commission and sales. Paying these fees does not alter what I spend on the marketing of a house if it did it would be counter productive and not very smart. Remember, I want to sell the house. I don't get paid if I don't sell the house.

If the seller is reasonable in their expectations (price) and cooperative with showing the house, I will spend whatever it takes to sell a home. That's my job. Maybe I am a little different in that way.

In this business it is really naive to judge how each area works the monies and services. I have a list of very satisfied clients that let me know that the way others do it isn't necessarily the right way for me and my clients.

Hopefully when sellers interview Realtors, they will realize the level of service and integrity offered and call references. I outline very clearly what I will spend on the listing both in time and in cost.

I think the main point of the thread is that all costs should be disclosed. From the lender, from the brokers, from escrow company...ALL. I complete an estimated sellers proceed every time the transaction changes. At the beginning, at the time of an offer, at the time of a price change, at the time of inspection results, the closing date changes...whatever.

Whatever changes my client's bottom line triggers disclosure. Again, that's just my way of doing business.

CJ

Wed Jan 16 2008, 11:32

In the St Louis area, the fees from the Brokerage that list the home should be listed on the listing agreement, and should be discussed when you sign the agreement. If there are any additional fees, those should be covered at the time you sign the agreement and the agent SHOULD get you to sign something in writing at that point. If changes come up during the listing agreement, those shoudl be discussed with you as well and you should sign off on them. Most companies do have some type of administrative brokerage fee, though they may call it different things. Some agents also have fees of their own - they may take the listing at a minimal commission rate, then anything they do in addition to the minimal services required by the State of Missouri, they charge extra for, but those fees should be covered up front with you (from advertising to putting your home in the MLS to putting a supra lock box on the home). There are also times when a seller who is out of town will request that a Realtor take care of something for them (perhaps pay a lawn care person) then will reimburse the Realtor at closing out of the proceeds, but that is something that the seller requests the agent to take care of and the agent will normally want something in writing at the time of the request.

Note if the Realtor is telling you that he or she will get the fee waived, what that really means is that they are paying it for you out of their own pocket, not that the company is waiving it. If they are giving away their own money on fees, rather than spending it on extra marketing for your home, I'm not sure it's a good trade off on your part. The marketing will get your home sold faster so you have fewer mortgage payments to make, which in the long run will save you more money than not paying the fee will save you.

NOW, there are additional fees that come up at closing that ARE NOT to the real estate brokerage, so please do not get those confused with the brokerage's fees. For example, in Missouri, the law just changed and we now have a seller's protection letter that covers the seller if the title company goes out of business without paying everything they should first, or the title company commits fraud (this was caused by the high profile title company issues over the past few years), That fee would probably NOT have been discussed with you earlier, because it didn't exist until Jan 2008 as a state law. In 2007, only a few of the title companies were providing the seller protection letters, and they weren't always charging for it. The fee (which is set by law) is paid to the underwriter of the title insurance. You pay it at closing. As a seller you can waive it, but I would recommend that you don't. It's minimal and it was enacted by law to protect you because of problems.

You will also have fees that are paid to the title company that encompass many other things. The title company can give you a breakout of what those fees are and who they actually go to (the title company only collects and disperses many of them - they get paid to everyone from the sewer company, to the home protection company if you are offering a home protection plan, to subdivision or condo management companies to ensure that everything is clear when you close). If you still have a mortgage on your home, there may be fees charged by your lender as well to close the account

Ask for a full break out of the fees, what they are for and who they go to. And keep in mind that each company and each agent will be different.

Wed Jan 16 2008, 10:04

I'm sure the processing fee is handled regionally, and independently with each office... in our office, like JR's, it is listed on our marketing agreement, it does not just "show up" at closing.

Wed Jan 16 2008, 09:29

Don,

Each individual office has their own fee schedule for each transaction. The important thing is that you ask this question as you are interviewing agents. This is important because while one agent may be offering a lower commission rate, there may be other fees and cost associated with using their services (keep in mind what your mother always told you "You get what you pay for!") Do your due diligence and make sure that you get any promises in writing. Keep in mind that not all large firms charge these types of fees. If these fees do apply they need to be explicitly written on the listing contract. I work in the St. Louis Area, so please do not hesitate to contact me with any additional questions.

Wed Jan 16 2008, 08:47