Home Buying in Florida>Question Details

Carrie,  in Florida

If I buy a home from the listing agent, do they get the full 6% commission?

Asked by Carrie, Florida Wed Jul 30, 2008

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18
Isn’t it amazing that we always assume that all commissions are 6%? Where is it written? There are times that I have sold properties for "net advertising costs" meaning nothing to me and other times 10%.

All commissions are negotiable and really only discussable between the party paying and the party receiving.

Just setting ones sights on half the commission (which you have not stated, so I am making an assumption) is akin to me buying a car from my brother in law, the car dealer. he will gladly forgo his commission for me. I will pay 40K for the car and save $1,000. While I am bragging to all of my buddies about the $1,000 I saved, he is on the boat spending the real profits, the money that I left on the table. That is why I don't buy cars, I use a paid negotiator to buy them for me. (15% of amount saved)

My best advice, before answering the question, is to advise you to find a REALTOR who will lead you through the process and negotiate the "price" to terms that you are favorable with, and more importantly represent your interests and protect you through the transaction.

Now with that said, here is my answer. Yes...I do.

Every client asks me what will happen if I bring my own buyer. I tell them that I will get them to closing. Of course they then rephrase...no, I mean, what will happen with your commission.

I then say......."That since I will now have to do twice the work, and twice the coordination with exactly twice the risk and all of the blame, should the deal go awry, are you about to ask me if I will accept 1/2 of the pay, because if that is what you are asking then I should probably leave now"

That is when we understand each other. So yes, I keep the full commission.

Gary@BayVistaRealty.com

Gary De Pury
Broker-Owner
Bay Vista Realty & Investments, Inc.
Chairman, Communications Committee
Greater Tampa Association of REALTORS®
Director, Florida Association of REALTORS®
4 votes Thank Flag Link Wed Jul 30, 2008
If Seller A is selling his house via me, then I have a certain amount of work to do.
If Buyer A is buying a house via me, then I also have a certain amount of work to do.

If Buyer A likes Seller A's house, then how is my work mitigated. I still have all of the same seller responsibilities and all of the same buyer responsibilities. Only the house is common.

If I decide to change my business model to the "ala carte" system, then I will change my mind, until then I am a full service and kinda enjoy being paid in full.

Proudly,

Gary De Pury
Broker-Owner
Bay Vista Realty & Investments, Inc.
Chairman, Communications Committee
Greater Tampa Association of REALTORS®
Director, Florida Association of REALTORS®
3 votes Thank Flag Link Fri Aug 8, 2008
Hi Carrie -- That would be something that is part of the listing contract between the broker and the seller. Both "sides" of the deal generally split the total commission 50/50. On occasion, the listing agent may have agreed to reduce the total commission paid if they have "both sides." This enables the seller to negotiate a bit more aggressively (i.e., take a lower sales price because his costs will be lower).

By your question, I am going to assume that you are looking to ask the listing agent to give you part of the buy-side of the commission. Since you won't know if that agent already has agreed to reduce his/her commission if they bring both sides, thereby allowing the seller to negotiate a better "sales price" for you, you are ultimately asking the agent to take less in their bottom line than they would if they took that buyer to another listing where they would get the full commission (and then get the full commission when another agent sells their listing.)

In the long run, I really believe that the commissions are irrelevant to a buyer. You should be looking for an agent that will negotiate the best sales price and terms for you. Rather than looking for someone to pay your costs, you should be looking at your net sheet and making sure that you are paying market or below for your property. If you can trust that your agent is knowledgeable, honest, a good negotiator, and that they are educating you with the knowledge about the home and the local market (area trends, cma, mortgage information, etc) you shouldn't need to "get in the agent's pocket" for help in buying this home.

Agents work hard for their money--whether it's beating every available bush for a buyer for one of their listings or whether it's driving buyers around for months (at $4.00/gallon). Please respect your agent--if you can't, then get another one.

Happy House Hunting.

Louise Warring
Coldwell Banker Residential Real Estate
3 votes Thank Flag Link Wed Jul 30, 2008
Louise, the problem I have with "dual agency" (the same AGENT on both sides... I'm not talking about the same AGENCY on both sides) has nothing to do with agents acting nefariously. I think that most agents (although not all), can manage to keep proprietary information private, and not transmit it to the other side, nor will they do anything to jeopardize the deal. In fact it is now doubly important to that agent to make sure the deal comes to fruition.

When a seller hires you as their listing agent, aside from your marketing prowess, part of what they hire you for is your expertise and experience as a negotiator, and for your counsel in deciding what to do regarding inspection issues.

When the buyer hires you as their buyer's agent, part of what they hire you for is the same expertise and experience as a negotiator and counsel for inspection issues.

When acting as a dual agent, both of those skills are nullified. You can no longer offer effective advice regarding the negotation of price or inspection issues. You can only offer "therapeutic-style" advice such as: "What do YOU think we should do?". You now exist solely as an impartial advisor, able to offer no advice that would put either side at an advantage.

And now, for the reduced level of service, we are being paid BOTH sides of the transaction. That is not what the buyer or the seller signed on for, and if they truly understood that, the would not allow us to participate in a dual agency situation.
2 votes Thank Flag Link Fri Aug 1, 2008
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Carrie,
Yes the listing agent get's the "full commission" ,you should have your own Realtor to represent you in the trancaction. The listing agent is represented by the the seller.
1 vote Thank Flag Link Fri Aug 1, 2008
Great post Gary.........as I have come to expect from you from reading several of your previous contribuitions. I do hope that someday we have an oppty to meet in person!

While there isn't much to add to what you have already stated..........

Some MLSs require a disclosure of a variable rate commission. This means that when a listing agent has agreed to modify the commission for the seller when there is not a buyers agent, it must be stated in the MLS. In fairness to all other buyer agents and buyers, this info should be disclosed. When a buyer agent or buyer is aware of this VRC, it can have a negative impact on the showings and interest in the property.

I encourage sellers to keep the commission and fees consistent so the emphasis remains on the property and not the agents' commissions.

Deborah
1 vote Thank Flag Link Fri Aug 1, 2008
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
Carrie,

The agent is entitled to the amount specified in the listing agreement. It is sometimes stipulated in the agreement that if the listing agent also sell the property they will accept less commission.

This is something best taken care of before the fact and not after the fact......

Good luck,

The "Eckler Team"
1 vote Thank Flag Link Wed Jul 30, 2008
The real estate commission is split between the listing brokerage and the selling brokerage. If the listing agent list and sells the property then the listing brokerage will receive all of the commission. The agent usually receives a portion from their brokerage firm. This portion is usually a percentage of the commission. This applies to a transaction brokerage.
Web Reference: http://regenacarnley.com
1 vote Thank Flag Link Wed Jul 30, 2008
Carrie, listing agents (by their own admission) often don't reduce fees for a buyer without an agent, which means that in the price of the house, you're paying for the seller to be represented...twice. If you're hoping to avoid this, either state in writing in your offer that you would like the fee to reflect a discount due to no buyers agent, or get an agent in there to represent your interests. Good luck- you've pinpointed an issue that is inherent when buying from "the guy on the sign".
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Wed Jul 30, 2008
Hi Carrie,
The answer to your question is...it depends. The commission paid at closing on a listing is negotiated between the seller & the listing broker at the beginning of a listing. If the seller and listing agent agree, the listing agent can offer a reduced commission to the seller if the listing agent represents both the buyer and the seller. If there is no such agreement, then yes, the listing agent would receive the full commission negotiated at the beginning. Whether the commission is 6% or not is another issue. Many times, the listing commission is not 6%. I have often listed homes at other commission rates than 6%. There is no set commission rate. Truly, the commission is already negotiated and set between the seller & broker so you can't renegotiate their contract anyway. I do recommend you have a buyer's agent represent you so you will have someone fully representing your interests in the transaction.
1 vote Thank Flag Link Wed Jul 30, 2008
I guess I'm curious as to why it's any business of someone's what the commission is if they aren't paying for it. The commission comes out of the seller's proceeds (if any). Carrie...what is the motivation behind your question?
0 votes Thank Flag Link Fri Sep 12, 2008
Hello Carrie,
Every firm and agent are different in regards to what they charge, how much the agent keeps, and what the firm charges for office overhead, advertisiting, insurance, etc. The buyer's agent normally receives part of that percentage, for bringing a buyer to the closing table. As a consumer, you can negotiate your commission with a listing agent. I do this frequently for my clients, and offer a substantial discount for repeat customers. Although I do normally discount commissions because my firm allows me to keep most of it, I still give full, top-notch service to my customers. If you have any other questions, please email me at dsmcgarey@cfl.rr.com and I will be happy to assist you!
Donna McGarey, Realtor
Charles Rutenberg Realty
0 votes Thank Flag Link Fri Sep 12, 2008
Hi Carrie, The answer will vary some depending on the state in which the transaction occurs. However, let me first clarify that the agent in your example does not .."get the full 6 %". The commission stated in the listing agreement will be split between the listing broker and the agent. The same would be true for the ofice bringing the buyer. The brokerage , to pay overhead, insurance, advertising, etc will take between 5 - 35 % depending on a whole bunch of veriables.
0 votes Thank Flag Link Fri Sep 12, 2008
Excellent point for Carrie to digest, Elvis.
The seller, when listing in NY, hires the agency (not the real estate saleperson). For that reason, gaining an advocate WITHIN the agency is not possible- the best that can be offered is disclosed designated dual agency agreement from the second real estate agent.
For those that feel that they suddenly have "double the work", I'd take issue- how hard is it to go through a transaction much as Elvis has described, when the appropriate responses have nothing whatsoever to do with the best interest of either the buyer or the seller?
The transaction broker method is interesting, and eliminates the "fiduciary" found in our fair state (as well as some other east coast areas)- I equate it (possibly incorrectly) more as a sales counselor role than fiduciary advocate. At least the recipients get something other than, "it's up to you/your decision/I can't disclose that", as is found with dual agency.
Paying an equal amount for dual agency vs. representation (as sellers and buyers typically expect at the onset) reminds me a bit of "bait and switch" if the listing agent is willing to switch the agency relationship after a buyer is located- there is no legitimate reason that I can think of, other than the listing agent receiving double the amount that they'd anticipated. Why else not suggest that the buyer get represented? It's very obvious.
Better to let the buyer find their own representation, and offer a transaction that exceeds expectations.

Because Carrie is in Florida operating with transaction brokers, it would seem that there would be less risk of the agents falling short of providing assistance to both parties in the same transaction, because the requirement of disclosure is very different from most states. There is no initial "misunderstanding", because the real estate agents there do not operate with the word fiduciary in the equation. Thanks for the insight, Louise, and good luck, Carrie!
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Fri Aug 1, 2008
Ok, nefarious was a bit strong. :) Perhaps I should have used the word, "dishonest" or "self-serving" instead. I've been in the business for quite awhile, have never been sued, and I don't worry overly much about being sued. My attitude is that if I do my best to give everyone the most information available, try to stay abreast of what's going on in the market/local area, etc. and impart that information to my customers, then I'll have a good outcome and the customers will ultimately have a good outcome. Sorry I appeared "touchy". I was just trying to give another side to the previous answers that were implying you shouldn't work with the listing agent if you're a buyer. It has more to do with the particular agent, than whether their on one or both sides of a sale.

Thanks for giving me the chance to change "nefarious."

Louise
0 votes Thank Flag Link Fri Aug 1, 2008
Sorry, but I have to weigh in again. I don't understand why there are so many of my fellow agents who are advising that the buyer gets "his own agent". Maybe I work in a very unusual office, but we often represent both sides of a sale in what used to be called a "transaction broker relationship" (the State of Florida just did away with the requirement that we disclose the nature of the "agency" to customers (single agent, no representation, transaction broker--we don't do dual agency here). And we have very satisfied customers!!

To a Buyer OR a Seller, I will reiterate my former point. It's extremely important that you trust your agent. Ask them questions, check their references, notice how willing they are to be helpful and give you advice, especially advice that may be in opposition to the agent's own interests. For example, if you're a buyer, check to see if the agent is showing you listings that are offering ALL levels of compensation (from a low commission to a home with a bonus to the selling agent); if you're a seller, is your agent marketing to attract agents from all other brokerage firms to bring buyers (or are they trying to keep it a secret to "double pop" the sale).

To my fellow agents, I really think we do a disservice to the 95% or more of the qualified, professional, honorable agents to suggest that the listing agent would do something nefarious to get both sides of a sale. With very few exceptions, Realtors do their best to represent their customers to achieve a fair, honest and open outcome where all parties feel they got a "good deal" (even when they're representing both sides of this deal).

Best of luck to you, Carrie. I hope you'll be among the many satisfied agent-assisted customers who have a great, lifelong "real estate relationship" with their Realtor.

Louise Warring
Coldwell Banker Residential Real Estate
0 votes Thank Flag Link Fri Aug 1, 2008
The full commission goes to the listing agent and his/her broker, depending on what agreement they have. With some real estate firms, the split is around 50/50. With others, and depending on the volume of business done by the agent, it might be up to 80/20 or 90/10 to the agent. Some agencies are set up so that the agent receives 100% of the commission in return for a monthly payment--maybe $500--to the broker.

As most of the other responses note, commissions are negotiable, so the commission might be higher or lower than 6%.

But the point you may have been trying to get at is: The full commission (whatever it is) is still paid. It's just paid to the agent/broker on the listing side. Put another way, the seller won't save any money on the commission if you buy directly from the listing agent. So you might as well have your own agent. Your own agent will get a share of that commission, which otherwise would have gone to the listing agent.

Hope that helps.
0 votes Thank Flag Link Fri Aug 1, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
It depends on your listing agreement and if the property is being placed in MLS. The usual arrangement is the selling office receives half to the 6%. But remember by law commissions are always negotiable
0 votes Thank Flag Link Wed Jul 30, 2008
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