That's a great question and something you should discuss with your listing agent. It's important to ask what type of service you will receive for your agents commission. Some agents will not working for anything less than 6% while others may provide the same service at 4-5%. But here is something to keep in mind:
When you list your home, you are not simply paying your agents commission. You are paying the agent's broker and the buyer's agent and broker. That commission is then split four ways. So if you are listing your home for $400,000 for instance at 6% commission and assuming your agent gets a 50/50 split with their broker, your agent actually receives $6000 (1.5% of the commission). From that $6000 must come all your advertising and marketing, errors and omissions insurance, GSMLS fees, Realtor.com fees, etc. etc. not to mention your agents expertise and time -which can be plentiful.
I mention this not simply to say your agent deserves it, but because you want to make sure you are offering enough enticement to the buyers agents to show buyers your home. The more commission you offer to the buyers agents, the better the chance of getting traffic and interest. Some Realtors will not show houses that have a commission rate below 2.5%. I don't condone this practice as I think regardless of the commission split, you should be servicing your client's best interest, which to me means showing them any house that they may love, but not all real estate agents operate the same way. Listing a home below 2.5% to the buyers broker may not be in a seller's best interest.
We're also in a different market, where houses sit longer, which means more overhead costs to your agent and more time spent listing the home. It's also a time where many Realtors are living paycheck to paycheck to keep their heads afloat so many have no choice but to ask for a higher commission rate.
It's important to have a good relationship with your Realtor and open communication. Don't be afraid to ask you Realtor what you will get for 4% versus 6%. S/he may be willing to eliminate a portion of their service in order to accommodate your financial needs, if you are willing and able to take on those responsibilities yourself.
Best of luck in your sale.
Mountain Resort Properties
One final thought. The following link is a very well written Trulia blog penned by a "Other/Just Looking" member such as yourself with input from multiple sources on "Choosing the Right Realtor". http://www.trulia.com/blog/rockinblu/2008/12/i_ve_got_my_fin .
See criteria #3:
Be sure to mention the names of other agents you have talked with, or will be interviewing. If the agent you are interviewing gives any indication that could be interpreted as a knock against the competition, he or she has failed on an important criterion. If, on the other hand, the agent is complimentary about his or her colleagues, that is a plus.
As we know, all commissions are negotiable.
You need to discuss with your prospective agent what they are going to do in marketing your home to justify the commission. I give great detailed information regarding my marketing techniques to support the commision structure that I require.
Advertising is costly. All forms of advertising, from internet to print. I not only advertise in NJ, but Brooklyn and Staten Island to find the buyer for your home. I have opinions regarding different business models also. Remax is different then C21 and both are different from a corporate owned CB/C21/Prudential company to a C21-"Bob Smith" ( that is an example) .
If you would like a personal discussion reagrding the differences, please feel free to call me directly.
I am a short 5 minutes from Colts Neck and we can discuss the differences in person.
Orange Key Realty
Luxury Property Specialist
For reduced listing commissions there is a risk unless you are in a high demand neighborhood. Top agents earn top commissions for performance and experience. They typically price better, market better, and their transactions go smoother. Commissions are market based so if your neighbors have been paying 2.5%-3.0% and you want to pay 2% better agents will be looking to see where the value is to them. In most cases sellers who grind commission expect full service as well. Most agents will compromise to a degree but remember our job is to market your home and compromised come in the form of reduced time and energy in the marketing of your home potentially increasing your time to sell.
Now the selling side commission is another story. Realtor agents have to show your property at any commission. Whether your home is the first or the last home to get shown is controlled by the agent. I guarentee the homes with 4% commissions always get shown first. In other words a 1% commission says a seller believes his home is so much better positioned in the market the home will sell itself.
I hope that helps.
No reason to pay 6% or 4% for that matter. Our business model enables sellers to pay a flat fee ( see http://www.PatrizioRE.com ) while choosing the commission rate offered buyers' agents - usually 2.5% (motivated sellers have chosen 3 or 4% as it attracts hungry agents).
While there are a plethora of naysayers who use fear based tactics to dissuade consumers from using our services, one can only refer to the numbers to counter these ascertains. Realmart Realty landed in the top 5% of all listing brokers in Monmouth County, with the top 2 agents in Monmouth/Ocean County MLS being Realmart agents.
Please see my website for more details or give me a call @ 732.606.2931 for more details as Colts Neck falls within my marketing area.
Francesca Patrizio, Realtor
NJAR Circle of Excellence '06, '07
Million Dollar Sales & Marketed '06, '07
Thank you for your question. This response varies from the prior answers, so please take time to read it.
Your purpose is paying a lower commission is to net more profit at the close of the transaction, right?
There are a number of possibilities that you should anticipate when trying to sell your home:
1. If the average commission in your area is 3% (which appears to be what you are saying), if a Realtor did agree to list your home for only 4%, the likely scenario is that they will offer the Realtors representing the buyer 3%, leaving them only 1%, or perhaps offer the Realtors 2.5%.
If they offer the Realtors 2.5%, your home becomes the "discount listing" and may not receive the showings that you need.
At a 3% commisison that means the Realtor would list your home for 1%. Assuming the broker takes 50%, why would a Realtor take a listing for 0.5%/
As the seller I would ask myself these questions:
If they are only keeping half a percent for themselves, how motivated are they to sell my home? Wouldn't they make more money selling someone else's home? Or, if a buyer saw the listing, contacted the listing Realtor, then the Realtor might show them other homes where they will earn a greater commission.
2. The other question is "what am I getting for half a percent?". In many cases we read posts from sellers working with discount brokers or MLS Entry Only brokers asking for answers to questions that they really should be asking their broker. For example, "Why isn't my home selling?"
As it turns out, in most cases the money that you "save" in commissions you actually lose when the sale closes. The expertise that you need to properly prepare, market, and negotiate is not there when you need it...because you did not pay for it.
To prove my point, I track stats on the RESULTS of Full Service Brokers versus Limited Service and MLS Entry Only Brokers. For the last eight quarters the results have been the same:
Homes that a listed by Limited Service or MLS Entry only brokers FAIL TO SELL more than twice as often as Full Service.
When they do sell they sell on average 96% of asking price. Full Service Brokers average 99.4% of asking price (for both when the properties sell within thirty days).
Why do you think Full Service Brokers net their sellers an extra 3.34%? Because they are able to project the value of the property best, and buyers see the vlaue.
The other major factor is simply the volume. These stats are for the last three months of 2008. During that time the TOTAL number of MLS Entry Only and Limited Service listings that sold were 12, compared to 866 sold by Full Service Brokers.
By the way, the website I mentioned has 10,000 Realtors in all fifty states including your area around New Brunswick or your specific town. By the way, newspaper advertising is way overrated. It does showcase a real estate office but buyers much prefer interactive listings that are forwarded to them by their buyers agent, who represent 85% of the buyers. The other 15% can find your listing on Realtor.com.
Call me if you want to discuss our referral program.
I respectfully disagree with you in that I will show whatever home works for my buyer. Period....end of story!
Most buyers today are up to date on the market through the internet..........how would I explain NOT showing a home just because it had a lower commission???......conversely, how would I explain showing a home that isn't what my buyer is looking for, and wasting their time, just because it had a higher commission??? My credibility with my buyer is vital. I work hard to develop that trust, and no commission is worth risking losing that, or losing a client.
In my experience, the best incentive to help get a home sold is an incentive given to the buyer, not the agent. Another great incentive....is a price reduction!!! Just my opinion.........based on almost 25 yrs. of experience..
Best wishes to you.
Prudential NJ Properties
I realize this isn't a chat site...you can email me or call me if you like 732-757-7329 or JoyDeLucia@yahoo.com
See you around in Trulia!
I am new on this site...I always ask for most recent ??...I didn't see it answered the way I answered. But in light of your comment...she may very well have expired with a" help you sell broker" and is ready to try a full service agency.
2 percent a month. In a declining market your home loses value every month. So if you list your house and it does not sell in 6 months, it will cost you around 3%. Last year if your house didn't sell in 6 months it cost 10 to 12%. Ultimately in a declining market selling your home in the shortest amount of time will save you the most money. Is your discount realtor going to go global with your listing (multiple sites on the internet). Will they be negotiating every offer that comes in. Will they be handling the open houses, showings, paperwork, advertizing, mailings, phone calls, interacting with attorneys, inspectors, and other agencies to move the sale of your home to the closing table. If so GREAT!...if not trying to save 2% could cost you 3 or more....do your homework...
In today's market, listings are staying on the market longer and cost so much more to market ... and agents cannot work for nothing --or less than nothing, often costing them money out of their pocket to sell your home -- (I've had that happen!). Besides, agents find it hard to get excited about working hard for a seller who believes we are not worth the money we earn. The old saying: "You get what you pay for!" is still true in every walk of life! Would you like it if your boss asked you to take a pay cut to do the same job as the guy next to you??? You probably wouldn't work as hard, would you??? Enough said!
my oh my, did you think that you would "open such a big can of worms", just a figure of speech, because you got a lot of different answers here and some quite passionate as you can see.
You know I still think the truth of your questions lies somewhere right in the middle.... the listing agent, and now lets forget the high powered big brokerage companies with pages and pages of ads in the papers and huge beautiful offices and staff, someone as you know has to pay for those, but just think small think about the individual real estate agent, who is as you probably know an independent contractor (we are not employees of brokerage companies) we do not have expense accounts we do not have a salary, so we make only money i.e. income if and when a loyal client Seller or buyer closes on a property with us.....
Now you have to think about it that this particular agent you pay your % of commission to has to share that, mostly half or so with the other brokerage company/agent who brings the buyer and then the agent has a
commission split with his or her brokerage company as well. So at the end there is very little left, if you then deduct the expenses incurred by the agent, and the taxes he or she has to pay, very little goes into the agents pocket as net income..... But it may even look a little bleaker if you look at the efforts Agents make while working for a seller for several months and then the seller decides not to sell anymore (all the expenses out of the agent's pockets gone!!!!) and the buyers who are looking with an agent to find the right home and after several weeks and sometimes several months they decide they can not find what they like, or not afford what they like, and all the time, efforts and expenses the agent incurred also gone!!!!
So when looking at the agent as an individual business, it is easier to understand for the buying and selling public why the general commission % is a certain amount....
Just thought this may help you understand.... and if I have given that answer once before, well it does not hurt...
And I agree these days, heavy internet marketing and marketing to the real estate community is most efficient. Newspaper ads rarely are worth the expense required to put those ads in the paper and few if any buyers arrive at properties based on those ads.
Hope you are a little clearer about the commission and why and what, and if you are still in need of a good local Realtor to assist you in selling and buying process let me know and I will gladly connect you with a partner Colleague of mine in your area. E-mail me to email@example.com
Edith YourRealtor4Life! Working always in the very BEST interest of her clients and so do her partner Agents!
I love the "you get what you pay for" response from traditional full-fee agents. That is absolutely true! If you think that a picture in the local paper that is so small you can't even recognize your own home is the key to selling your home - then 6% is the way to go. If you believe that having someone sit in your home on a Sunday for 3 hours while you hope that none of your belongings walk off is important - then 6% is the way to go. If you like coordinating 4 visits with the agent and the photographer and the measurer and then the agent again - then 6% is for you. If you like the feeling that around 1% of the proceeds of the sale of your home will go towards rent and support staff for your brokerage firmâ€™s large office â€“ then please pay 6% commission to sell your home.
However, if you believe that most home buyers are using the internet to conduct their home search and you think open houses are just farming tools for agents to get more business, not sell your home, then a 4% listing is perfect. 4% listings are great for those sellers with a hectic life that would rather e-mail their paperwork to the agent than arrange an extra visit. Or those sellers that don't want to leave work early 3 times in a week just to meet the various agents, photographers, etc at their home. If you donâ€™t want to have to run over to your brokerâ€™s office to meet, but would rather meet them in the coffee shop near your office, then a 4% brokerage may be for you. If you judge your agents effectiveness by how many offers you receive and not how many unqualified buyers and curious agents traipse through your home, then a 4% broker may better meet your expectations.
Our competition calls us discount brokers, we think of ourselves as efficient brokers. 4% listing brokers spend their time processing listings, not pursuing new leads. Our company keeps only 1% for the listing fee and offers a full 3% to the buyerâ€™s agent. Our pricing model brings customers to us and forces us to become very efficient at the value added steps of the selling process. Yes, we have trimmed some of the steps that research shows is unlikely to sell your home - like print advertising, open houses, and expensive office space - but we do provide an efficient FULL SERVICE alternative to 6% listings. All brokers have different strengths and every client and geographic region has different needs. I think there is room enough in the market for everyone, so choose the service type that is best for you.
My Dog Tess â€“ A New Breed of Realtor
â€œOffering Cash Back to Buyers and Low Commissions for Sellersâ€
Serving the Triad from Winston-Salem, NC
Simply put....there is a difference between the level of service you will recieve when dealing with 4% service instead of 6% service.
Unfortunately, many people only look at the surface and see only the difference in the fee for service without getting a feel for the differences.
The two most significant marketing issues in today's real estate market are price and visibility. Most discount services don't go much beyond placing the property on the MLS and do very little property promotion. The more people that know about your homes availability the greater the chances of selling the home.
Many properties are on the market for much longer than a few years back, so the listing agent will have to work harder, spend more of his/her own money, advertise and market more, more open houses, and on and on,
So this is not the time for agents or brokerages to negotiate on their listing commissions, no matter where in the country they work.
I would be curious to find out what you will finally do..... do not forget to share it with us...
Good luck to you...
You best buyer is the person willing to pay the most money for your home.
The odds of finding your best buyer are in direct proportion to the number of people your home is exposed to.
Like it or not, under-commissioning your home will lessen the number of showings your home will get and in the end cost you money!
With so much inventory on the market, and limited time to show houses, agents much choose which homes to show their clients. When forced to make choices, most agents will choose to show their clients homes that are priced right AND offer them the greatest likelihood of getting paid!
As to the question of the 4% listing... there is absolutely NO WAY an agent can take a listing at 4% and give the service I provide. It would be a losing venture.
But you know the old saying You pay for what you get, most of the time!
In other words I always suggest to anyone who asks me.... Select your real estate agent the same way you would your attorney, your dentist or your doctor ..... You want them experienced, you want them may be close by, you want them to be reachable in other words if you need to talk to your doctor you need not wait till office hours you call, leave a message and he or she calls you back etc. etc.
Well use the same standards for when choosing your Real Estate Agent, you want to see expertise, professionalism, good rapport with you, you want to find out how he or she will negotiate on your behalf, will they keep you informed on a regular basis, and are they internet savvy etc. etc. All of the above and a few other items the other agents already touched on are way more important than the amount of commission
If you select the right Agent for YOU, he or she will work very hard to get your home advertised marketed, open houses, reverse prospecting, flyers etc. etc. and most of all they will negotiate in your very best interest.
And you will know that they are then worth every penny of the commission they ask for! And yes some agents explained that the commission is split often by 4 (2 different agents and 2 different brokerage companies) and believe me if you could add up the hours a good agent spends on a listing (and much of their work you as the seller do not see .....) the hourly rate may surprise you!
So concentrate more on the rapport and trust with your agent, then 1 % more or less commission.
Good luck to you!
Edith YourRealtor4Life! Working always in the very BEST interest of her clients!
If you ever meet anyone moving to Chicago / Northern Illinois send them my way!
Each realtor you interview should tell you what they will do for the commission.
Some common differences are: where they advertise, do they place listings on several different websites, what print publications do they list in, do they do open houses, do they have an enhanced listing on realtor.com, will they include multiple pictures or a virtual tour, will they negotiate on your behalf, etc. Also make sure the commission you are offering to the buyers agent is competitive for your area, you want to get agents attention.
Every agent works differently, some harder than others, so you have to take everything into account when choosing an agent.
626 Route 9 South
Freehold, NJ 07728
Although you might feel that only paying out 4% is a good idea you might want to look at it from a different perspective. Selling someone else's house is not easy. There can be contrasting personalities and points of view within the home. There are negoitiating skills necessary to protect you and your interests. There are zoning/permit issues that come up. There can be a milllion issues that come up and in the end it is the Agent that watches out for your interests while keeping up a good repore with other agents that they can't stand but want them to help sell your home. Extra advertising that comes out of our pocket. Open houses that take us away from our families on the weekend. After hours phone calls. Also having to be careful because of lawsuits, either from other agents or sellers/buyers. We are required to carry insurance just for that reason. Real Estate Agents continually get training on the latest this and that. There are so many things that are done behind the scenes to make the transaction not just go through but smoothly. That is the reason to interview a few agents. Talk to people in your community. Just because someone has the most listings doesn't make them the best. Not giving the maximum you could would be like negoitiating your pay month by month. We work hard for that % and most of the time it is for strangers. A lot of agents have won't do it for 4%. Although ethically we have to show the buyer whichever house they want, an agent that puts their needs ahead of their buyers(yes, they are out there) will find any reason to discount buying that particular home for another one that gives more. Typically the more the commission the more foot traffic and the more offers. You don't see Foxtons anymore, do you? So please rethink your position. Also find the right Agent that deserves it and has the resources.