Howard Kaplan, Home Seller in New Jersey

when listing a home why does agent play the 5%/6% game?

Asked by Howard Kaplan, New Jersey Sun Aug 22, 2010

Help the community by answering this question:


It's not a game. It's a fee schedule. You will get what you pay for. All commission are negotiable, but when you pay less, you very well may get less advertising, etc. It is your prerogative to interview different agents for the job. When you do, be sure to find out what each will do for the commission you pay. The answers may surprise you and make all the difference in how quickly your home sells and at what price.
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1 vote Thank Flag Link Mon Aug 23, 2010
Question was asked almost 2 years ago folks...
0 votes Thank Flag Link Tue Jul 31, 2012
It's not a game, Howard. It's the way we make our living. For 6% commission, 3% goes to the buying agent and 1.5%goes to my broker. The 1.5% that I gross needs to cover my expenses to market your home - MLS fees, advertisements, Open House expenses, flyers, on-line advertising, photography, signs, printing, and other marketing expenses. Whatever's left over is my salary. For 7%, I bring home .25% more commission, so I can afford to spend more on marketing.

The most important factor here isn't how MUCH you pay, but WHO you pay it to. The right agent - one you trust and one that will get your home sold for the most money - is worth it.

Cheaper realtors aren't necessarily better. You wouldn't choose a brain surgeon based on price, would you?

Commissions are negotiable, so feel free to offer to pay what you think marketing your home is worth.
0 votes Thank Flag Link Tue Jul 31, 2012
Realtors are like wolf pack, they hunt together both buyer and seller agent are in cahoots and always hunt for more commission and steer buyer to them, and don't always work for the best of buyer. If you are buyer, skip the agent and do your own research. Be aware, seller agent will try to be a dual agent, don't fall for that, get the half commission as discount on buy place.

If you are seller, give agent free customers some incentive, and agent not more than 2%.

Its a jungle out there ....
0 votes Thank Flag Link Tue Jul 31, 2012

Not a game at all. Since there is no "set" commission by law, it is always negotiable. However, many Realtors provide services to your listing on a sliding scale depending on the amount of commission. Believe me, in these times, it takes a lot of time, effort, energy and out of pocket $$ to get a home sold. So, as many posters have said (or insinuated), you get what you pay for.
0 votes Thank Flag Link Mon Aug 23, 2010
While the rate range you mention is probably the most common all fees are negotiable in NJ by law. There are brokers that charge less and more. There are agents who do not have the same skills or experience as others and there are sellers who may have unrealistic expectations. From my personal experiences my fees have ranged from 4% to over 10% . With higher fees in place for properties/sellers that required additional work or attention. If you are making your decision on who to have market your home based upon the fees they will charge you ;I suggest you be certain they have a clause in your agreement where you can terminate it early if dissatisfied with their efforts on your behalf.
0 votes Thank Flag Link Mon Aug 23, 2010
Hi Howard,
Real Estate Commissions are not set it stone - they are negotiable....
Just the way we negotiate or select different professionals for different jobs, or we select them for various reasons....
But how many times do we all select the better mechanic for our car repairs even if he charges more! How many times do we rather have an electrician with a super reputation and someone we trust do the job, even if he is the more expensive one...... So - the same goes for Realtors.... as their commission is often based on the higher need for advertising or marketing, or the Realtor knows that it will take much longer to market the property in question in the current market, or because the seller wants/needs to sell quickly the Realtor understands that a more aggressive advertising and marketing will have to be done which will be more costly....

I think after reading all the other answers as well - you may understand a little bit better, that the variation in commissions is really not a "game", it is a necessity based on the requirements for advertising, marketing, time and effort invested by the Realtor to get a specific property sold....

Good luck to you!
Edith YourRealtor4Life
Your Chicago and Northern Illinois Expert
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0 votes Thank Flag Link Mon Aug 23, 2010
Howard I took a listing last week at about 18%. The seller is comfortable with it and fully understands that is what it is going to take to get the property sold. The commission depends on how much marketing can be done and compensation for the buyers agent.
0 votes Thank Flag Link Mon Aug 23, 2010
Hi Howard:

It really isn't a game. The Government does not like the idea of set fees (Sherman Anti-Trust and all that). Besides, it makes sense. Agents can do more for you if they are assured that you will pay more upon the sale of your home. Or they can do less if money is a real issue for you. You may not sell as quickly or you may have to hold on to your home if it doesn't sell, but this is a good option for some sellers whose homes have lost value and they just want to get out without losing their proverbial shirt.

0 votes Thank Flag Link Sun Aug 22, 2010
For the same reason--as noted below--that you negotiate your salary.

For the same reason a car salesman negotiates the price.

For the same reason a home buyer will negotiate the price.

For the same reason two gas stations may charge different prices for a gallon of gas.

For the same reason two plumbers may give you different quotes for a job.

It all depends on the services you're asking for, your ability to negotiate, the other party's ability to negotiate, and the underlying cost structure of the person you're negotiating with.

It's not really a game, though you may find it more acceptable if you view it that way.

Commissions are negotiable. So feel free to negotiate.

Hope that helps.
0 votes Thank Flag Link Sun Aug 22, 2010
Don Tepper, Real Estate Pro in Burke, VA
Howard, when you go to apply for a job, don't you negotiate your salary? So do we. I think you should pay very close attention to how hard a negotiator the agent you're interviewing is. An agent who drops their drawers, so to speak, without a debate may not be the agent you want to hire.
0 votes Thank Flag Link Sun Aug 22, 2010
I'm not sure what game you are speaking of, but all commissions in the state of NJ are negotiable and sellers and brokers have a right to reach an agreement that works for both parties. All brokers also have a right to offer specific fee schedules. For instance, at our firm we have many different plans depending on the situation, the marketing required, the price point, and the strategy required. Basically, we bid the job. We also have the minimum required for it to be worth our while. Most of the time we can reach a fee that works for everyone, sometimes we can't and then we move on to help someone else. The marketplace allows for agents to demonstrate why their fee is a good value. If you are feeling that others you have met with are not demonstrating value then you need to find someone who is, if that is what is important to you. Hope that helps.
0 votes Thank Flag Link Sun Aug 22, 2010
Hi Harold,

We offer various options to our sellers and the fee structure can be lower than 4%, or exceed 8%. I have definitely closed contracts with fees both below and above these numbers. It is not a least for us. We determine the fee structure by evaluating the marketing campaign that we will engage for the subject property, the complexity of the transaction, the property value, the competitive landscape for that subject property, and the seller. We do not approach real estate from a one-size fits all perspective. We offer sellers many options, learn about the property and assess the situation. Our sellers play an active role in the discussions that determine the fees. We sometimes offer a buyer's agent a higher split than we take. Other times the buyer agent may receive an equal split, or we do, sometimes, offer a lesser split. We always weigh in with strong opinions that buyer agents should be paid well.

Some agents may have the same seller program regardless of the rate charged, but they will still negotiate for a higher rate. You may consider that a game. I have negotiated fees with attorneys, accountants, property management services, relocations services, and other agents. Before I was in real estate, I negotiated national and global contracts of substantial figures with Fortune 100 companies. There, I was dealing with savvy business people on the other side of the table, and it was a lot of cat and mouse in those negotiations. But, it was my job and it was just business. Maybe some those maneuvers made the job interesting. Today, I get excited when a position strategy benefits my real estate client. I recall reading a thread on Trulia a while back in which agents were saying it didn’t matter, the seller already knew what his/her # is. I never joined that thread, but I could not have disagreed more.

On Sept 1, in Monmouth County, the Women’s Council is holding a class on Negotiating Skills. I believe negotiation skills are one of the values we bring (or should bring) to the table for our clients.

I am the Broker for Peninsula Realty, and we strive to be straight forward, candid and easy to work with and understand. It is never our intent to play games, but we do not have a one-size-fits-all perspective for real estate. When I entered real estate in the 90‘s I didn‘t understand that viewpoint, and I thrilled to see the evolution of consumer choices in real estate. If you asked me what we charge, the answer would be “It depends.” But, it’s very easy to get an explanation, and that’s why I say we are not playing games.

Deborah “Deb” Madey - Broker
Peninsula Realty Group - New Jersey
President - 2010 Women’s Council of REALTORS
732 530 7755 (Main)
732 530 6350 (Direct)
732 784 8450 (Mobile - Text or Voice)
0 votes Thank Flag Link Sun Aug 22, 2010
Deborah Madey, Real Estate Pro in Brick, NJ
When selling a home and negotiating the agent's commission, you have to think about it in two ways. You want the lowest commission because you want to save the most money. But the agent is not just asking for a higher commission for themselves. If the buyer's agent sees two similar homes, both around the same price and condition, and one is offering him/her 3% commission (his split of 6%, with your agent) and another is offering him 3.5% (the split of 7%), he/she is more likely to choose the higher. Some real estate professionals consider this unethical, but it does happen more often than not.
0 votes Thank Flag Link Sun Aug 22, 2010
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