Home Selling in Wasilla>Question Details

Akhomeseller, Home Seller in Wasilla, AK

why is the sales commission (generally 6%) so high? Since home prices are down shouldn't commissions be down too?

Asked by Akhomeseller, Wasilla, AK Fri Apr 6, 2012

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Anna M Brocco’s answer
Commissions are always negotiable between you and your agent, there are no set standards as it would go against Federal Laws/price fixing; therefore interview in person a few local agents from different realty offices, then choose the one you like best and who has the most the offer; choose your agent with care and not by commission alone...
http://www.justice.gov/atr/about/antitrust-laws.html
1 vote Thank Flag Link Fri Apr 6, 2012
BEST ANSWER
There is no set commission. Talk to local agents and find one that will work with you. In this market I would be more concerned about who can get the job done for you because if your home does not sell what is the value of a low commission? Not all agents are the same. Your focus should be who can get the job done for a reasonable fee.
0 votes Thank Flag Link Fri Apr 6, 2012
Commissions are negotiable, and lower commissions are not uncommon. If you sold a house in 2005 for $200,000 at a 6% commission that salesman that listed it for you probably got about $3,300 to take home and pay 15%-20% taxes which left $2800 from which they paid dues, fees, and maybe advertising and gas for the car as well as insurance.

If they sold the house these days it might sell for $130,000 and at 6% commission they now have about $1823 after taxes, so we did take a reduction in commissions would you not agree?
1 vote Thank Flag Link Fri Apr 6, 2012
Akhomeseller,
Why is the sales commission considered high when if home prices are down so is the commission of the sell . Keep in mind all commissions are negotiable, but if your home doesn't sell what is the value of fighting for a low commission.
0 votes Thank Flag Link Sat Jun 2, 2012
They are, in dollar value. Why you think they should be down on a percentage basis would be interesting to read.
0 votes Thank Flag Link Fri Apr 6, 2012
Sales commission are down because prices are down. The lower the price the lower the commission.

The sales commission gets cut into so many pieces that 6% is a good deal.
0 votes Thank Flag Link Fri Apr 6, 2012
The other problem is the price of the homes may have dropped but the cost to do business has gone up. People have to understand we have to pay for advertisement, insurance, office equipment, staff to answer the phone, paper supplies etc and when the gas prices go up everything is affected too. We don't work for free or an hourly wage and don't get paid til closing so if it takes a while for your house to sell the Realtors still have to pay those expenses whether it sells or not.
0 votes Thank Flag Link Fri Apr 6, 2012
All commissions are negotiable. And sellers have a range of choices--from selling FSBO and not paying a buyer's agent if the buyer's agent brings a buyer . . . to a FSBO willing to pay a buyer's agent . . . to discount brokers . . . to a la carte brokers . . . to full-service brokers. You can choose to pay as little or as much as you want.

And, as noted, if home prices go down, so does the absolute dollar amount of the commission. A $200,000 home, using your 6% example, would generate a commission of $12,000. If the value of the home drops to $100,000, the commission in turn drops to $6,000.

Finally, it could be argued (and I'd make the argument) that in tougher times for sellers, agents are working harder to find buyers and so, if anything, deserve HIGHER commissions. In a hot market, once an agent has snagged a listing, a lot of that agent's work is done. (There's behind-the-scenes stuff, of course. I'm talking about marketing.) But in a slow market, the agent may have to work a lot harder to sell the property.

Hope that helps.
0 votes Thank Flag Link Fri Apr 6, 2012
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
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Dear Ak Home Seller,
All three of the previous answer are correct and great answers. Here this is another thought also. In this day of ever increasing cost for everything that you have to buy from food, paper products to insurance and Doctor visits to gasoline to tires or oil changes; one could assume that the commmission being charged to perform the work to sell your property is a bargin as it has not also increased.
Just this year alone in our local industry charges for E&O insurance, Board of Realtor dues, State licensing fees have increased by over 25% this does not even take into account increased cost for office supplies, maintaining websites, office space, fuel & car expense, employees and health care.

One thing that the previous answers did not mention is that in reality the percentage charged and then earned at the recording of the sale(or under special circumstances at another time) is really split between two cooperating brokerages (sometimes just one) and the licensee who actually listed your property, did all the right things to get it sold will actually only receive a portion of that split that was received by the managing Broker.
All in while the licensee has spent a termendous amount of money based on the hope the property will sell in a timely manner. If the property never sells the licensee is without a pay check and has spent alot of money that will not be recovered.

Yes we feel the sellers pain and we do try to work with the seller by negoiating commissions.
If you would like face to face answers to this question you should visit one of the many fine brokerages in the Wasilla - Palmer Area.
0 votes Thank Flag Link Fri Apr 6, 2012
Hi Akhomeseller,

All commissions are negotiable. However, most are in the range of 5%-6% of the selling price. That said...commissions are lower. Since the selling price is lower, the commission is too. The Realtor still has to do the same amount of work - even if the selling price is lower. And, the Realtor still has the same amount of legal liability - that hasn't decreased just because home prices have.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Fri Apr 6, 2012
I would think if the price goes down so does the dollar amount of the commission.

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time.
0 votes Thank Flag Link Fri Apr 6, 2012
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