thank you rockinblu, for tossing a pan of water on the tired (and deceptive) NAR propaganda.
alex, commissions are negotiable, so letâ€™s all just accept the fact that the 6% commission has gone the way of the Dodo except for the very low end of the marketâ€¦where I have seen 7-8% on $50k properties. I am certain that the 96816 zip has none of those...the 96816 zip includes some of the better parts of town.
Just be upfront with the broker who has demonstrated a great deal of goodwill up to this point and strike a deal or part ways amicably. Your obligation is to yourself, an honorable agent knows this and you can return their professional courtesy by assuring him/her that their client will be dealt with only through their agency. Itâ€™s the right thing to do, contract or notâ€¦you gotta look in the mirror.
There are many ways to get around the dual agency issueâ€¦none are deal killers.
You need a good agent to represent your interests and an agent to represent the buyer. Real estate is a professional licensed and monitored occupation. Good agents have invested extensively in their training and their business much like a doctor or a lawyer. You are working with one of the biggest investments of your life. So I have to ask... would you call a heart surgeon and negotiate his rate if you needed surgery? Probably not. The same goes for a good agent. Certainly you can get better rates from those who need to make a sale. Does that get you the best agent? Not necessarily.
There are 5300 'agents' on Oahu. 80% of them who do 2 or less sales a year. 64.7% of that same number haven't sold anything.
Hopefully you are not considering the same agent to do both sides of the transaction. You should still hire an agent to represent your interests and help you negotiate through the process. Opening escrow is just one piece of the puzzle these days especially given the strict guidelines being put forth by the mortgage companies. Gone are the days where someone makes an offer and others are waiting with baited breath in the wings unless you are priced below market. The agents who are successful in this market are the experienced business people who know how to negotiate and to help you avoid future liability. You could try to negotiate the price down and not have representation, but at this point it doesn't sound like you have an offer, just someone who is interested. Either way there is still a lot of work to be done.
Kelly A. Mitchell, (RA) BBA-Marketing
Top 5% Prudential USA
HGTV Real Estate Expert
Prudential Locations Diamond Head
614 Kapahulu Avenue
Straight Talk~Real Results
You've had some great answers and input here. I work on the island of Kauai, so I'm not trying to become your realtor :) Perhaps you've solved your issue by now. A couple of topics to touch on...Experience! In this market, the only way it makes sense to work with an inexperienced realtor in selling your home is if they are partnering with an experienced agent who provides maximum exposure on the internet. Agency....as a sellers' agent, bringing an offer is only the beginning of the actual process of selling a home. As mentioned in other posts, working through the issues and hurdles that can arise in escrow is a specific skill set that even attorneys may not have. To give you a real-life example, I agreed to represent a friend of the family as a buyer in a transaction where the price had been agreed to already. The idea was to "just work the paperwork". However, after 1 1/2 years of extensive work, a file that's 4 inches thick, going into mediation and having an attorney compliment my work and use me as a "paralegal"...the sale is still not completed, and I have never been paid a dime. But I made a commitment to my client, and I have honored that. As agents, we take on the same level of risk that our clients do. We only are compensated when the deal is closed. If my client had used an attorney, I can't imagine what her costs would be. I'm not trying to say we're cheap :) but the reality is we're seasoned, knowledgable professionals and the only profession that only gets paid when we "get 'er done!!" So, at the end of the day - it's best to have a seasoned, experienced realtor that you've interviewed, checked references and know that they have a track record of proven results. Wish you the best!
My name is Mike Gallagher and I a Broker in Charge at RE/MAX Honolulu.
If the question is whether or not you want to pay a 6% commission to sell your home, the answer is only yours to make.
Every thing in life is negotiable. This includes the commission.
I suggest you sit down with a minimum of three agents who come recommended by friends and associates you know. I would ask for copies of their Transactions Reports. This is KEY. Transaction Reports will allow you to see all the experience these agents have in selling and what % of the Sold Price to List price was the final result. The Transaction Report will also tell you right away whether or not they have experience in your Neighborhood. The Transaction Report should also tell you what OTHER properties these agents currently have on the market FOR SALE. I would recommend NOT going with an agent that already has a home LIKE YOUR HOME already on the market.
As for the question on what you pay for a commission. Let the agents tell you what they think the home should sell for WITH SUPPORTIVE ANALYSIS. How well an agent knows what is going on in the market and particularly in your Neighborhood will be KEY to picking the right agent and sucessfully selling your home.
You will most likely want to pick the agent who gives you the highest number for your For Sale Price. This could be a BIG mistake. A REALISTIC sales price is absolutely necessary in today's market. Choose the agent who KNOWS exactly what the home will REALISTICALLY sell for and ask for an explanation for their reasoning. If it looks good, choose this agent if their Transaction Report is acceptable to you.
List for a shorter period such as 3 months and ask for a reduced commission. After all, if this agent truly believes they can sell the home for the price quoted within a short time then a reduced commission should be a reasonable expectation.
If an agent has to work with a Seller under an UNREALISTIC Asking Price several things will happen:
1) The Home may not sell within a resonable period and the agent will be coming to you for Price Reductions.
2) The agent will conduct Open Houses and sell potential buyers at your Open House a different home with a REALISTIC Price.
I hope this helps.
If you need more help I recommend you visit my website at http://www.hawaiirealestatestatistics.com to really know what is going on in the markets around Oahu and read my Real Estate Articles on Oceanic Cable at http://www.aroundhawaii.com
I wish you much Aloha,
Broker in Charge, RE/MAX Honolulu
Oh wait The National Assosiation of FSBO's has been disbanned it seems no one wanted to pay the annual membership fee...
Chris, please read the Community Guidelines as your Spam deluded the quality of this thread.
Two words I never thought I'd see in the same sentence.....diplomatically, Rockinblu... : )
Armchair Quarterback, Dunes
Lets assume for the moment that the agent has a buyer. You should work the deal. If the buyer puts an offer in on the house, that agent could have saved you a lot of money even if the home was only on the market for three months, carry costs for example.
How much are you saving by not having to pay your mortgage?
How much are you saving by not having to advertise?
How much time are you saving by not having to clean the house to be able to show everyday?
Selling a house is stressful look at all the people having to make price reductions.
If the house sells in 1 day or a 180 days does not mean the agent is due less money in means more money should be paid, because your time is valuable.
If you are not prepared to pay a Realtor then do not deal with one, Do not pitch your home, do not waste their time. That agent was going to get a commision with or without you because they had a buyer that trusted them and wanted to work with them, his commision has already been earned.
Before you worry about whether the agent lied or not WORK THE DEAL YOU HAVE NOW. Do not sign a listing agreement, sign an agreement based on the agent an their specific buyer.
Very good post. Good advice and a great point.
My advice to you? Interview at least THREE Brokers
Thank you Katie. From my first post: "Are you positive the agent really has an interested client.?"
And in reference to your other statement, maybe Alex should read the blog attached to the first link below. However, Alex if you think you can handle a FSBO, maybe you should read the blog attached to the second link. Good luck on whatever you decide.
Selling your home is typically one of the largest financial transactions most people go through in their lives, so hire a professional. Just like you wouldn't perform surgery on yourself or represent your self in a court of law, it's a mistake that is liable to cost you thousands or possibly hundreds of thousands of dollars to sell your home yourself. Sure you could use a lawyer instead, but I know the good ones in Honolulu cost upwards of $250/hour and when you're talking about reviewing a purchase contract that at minimum is 12 pages, and can go up to 20, 30 pages and more - think how long and how much money that will cost a lawyer just to review, let alone write up a counter offer, negotiate with the Buyer's agent, etc. And that's just to get you into escrow to start, that's not including the typical 40-100 hours that a good listing agent will put into a transaction after it's in escrow to guide it through to closing. While we always encourage our clients to use their lawyers to review paperwork or to answer specific questions, unless you have unlimited funds, it's simply overkill to use a lawyer in Hawaii to sell a home (in my opinion).
My advice to you? Interview at least THREE Brokers - I know there are at least 20 that serve your zip code - and ask them why should you hire them to sell your house? Negotiate your commission with them, and here's the important part: If the other agent has a buyer, call that agent and ask for the buyer's name. Then, when you're negotiating with the person you've decided to hire as your listing agent, give that Broker the possible buyer's name and their broker's info and ask that they be an exclusion to your employment contract with the Broker you're hiring to sell your house. That way, you get the best of both worlds - you hire someone who is a professional to sell your house, but should that other Broker with the buyer actually come through, you would have the option to execute your plan above to cut out your listing Broker from the deal and work only with the Buyer's Broker and lawyers. At that point if you felt like "jerks" you could still compensate your listing Broker at the close of escrow with whatever amount you want.
Hope this helps! Best of luck to you! Warm aloha, Katie Minkus, R(B)
In separate studies by Northwestern University and Stanford University, â€œby ownerâ€ sellers were found to be as effective as agents in maximizing the sales price of their homes. After commissions are factored into the equation, the studies reported, sellers who sell â€œby ownerâ€ actually save more money, and retain more equity, than sellers who sell through agents. The September 08 issue of Consumer Reports magazine also reported that FSBO sellers are more likely to get their asking price while agents deliver, on average, a sales price that is $5,000 less than the original asking price.
I would encourage you to do both of the following: 1. Ask the agent what his/her bottom line commission is and then (if you like that number): 2. Go ask a neighbor who is on the market for a few months what theyâ€™d be willing to do to get that ONE buyer to their door who wants the deal in a day.
A couple of years ago I sold a $3.5 million dollar apartment property with a single callâ€¦not because I got lucky cold calling but because I knew a broker who had a client looking for EXACTLY that type of property AND had just happened to be discussing such properties a week prior with that broker. The call took just a few minutes but the transaction took months and dozens of principles/agent meetings, conference calls, several visits and meetings with the building department, and a few too many trips to the property for inspections, appraisals, estimates etc. It also took about ten agent hours, and even more attorney hours, to sort out the status of the condo map that was thankfully still alive and valuable.
The point is that a tremendous amount of the work in getting a buyer to make a move is most frequently behind the scenes, and that getting an offer to the table is most often just the start of the heavy liftingâ€¦especially in this market.
Also, the proposed sales price of the home make a big difference hereâ€¦I am familiar with your zip code and the prices can be VERY high. I think all here will agree that a higher sales price makes a reduced percentage rate for the commission more likely and reasonable. If you were in a $100k leasehold condo the numbers wouldnâ€™t be as meaningful as if you are talking about an fee simple estate on Black Point Rd.
p.s. the seller of that apartment building was from Kona...small world huh?
(we don't think it's fair to pay a realtor 3% essentially to guide us through paperwork when we could get an attorney to do it for less and probably do a better job. Selling the house is the hardest part of the job)
I want you to think about something. What do you think it cost an agent or the agentâ€™s company to get one real buyer who is qualified to buy a home? If the agentâ€™s company provides the lead did you know that the agent has to pay their company a 25% referral fee plus the normal amount of split the broker takes? My point is we pay a lot of money in marketing and referrals to get one good solid buyer. We pay a lot of money in educating ourselves to be able to answer all our buyerâ€™s questions. We spend an incredible amount of time ( which is money because we are running a business) to build a relationship with our buyer.
If I were you I would be thankful an agent would even consider bringing you an ( FSBO seller) one of their buyers especially in this market. You certainly value your time and your money to market your home so why would you not value the agents time, money, education to bring you a solid buyer?
If youâ€™re interested in selling the home to the agentâ€™s buyer than all the agent has to do is have you sign a commission agreement. If homes are not selling your area you may want to pay more of a commission. My broker requires the FSBO seller also sign a non-representative form disclosing we do not represent the seller in any way for liability reasons. The buyerâ€™s agent contract to purchase is not for you, itâ€™s for their buyer and your attorney will have to review the contract with you as the buyerâ€™s agent cannot.
Getting the contract executed is just the beginning and youâ€™re in the dark if you think it's just all down hill from there. I donâ€™t think I have closed a real estate transaction where I didnâ€™t have to chase one or two things to get the transaction closed.
Hopefully this sheds new light for you
This is a real delema.....
you wish to avoid "dual agency"
you know you need professional support to close
you don't feel the full 6% fee is fair
an agent MAY have a buyer
your property is not listed
It appears you are leaning toward paying the agent with the buyer his/her 3% for professional services but this does not resolve the issue of youe closing needs & guidance.
Your option of hiring an attorney is a consideration and they will certainly be able to bring you to a successful closing but will the savings warrant taking this avenue. There is one thing for certain....you will NOT recieve the high level of additional services that a real estate professional will provide.
Our recommendation is for you to do a cost analysis to determine what it will cost you paying the standard 6% commission vs. splitting the expense between an agent and an attorney. You may be suprised....
In any case, he should not be offended if you don't want to do dual agency. You are completely entitled to your own representation. And whether with a dual situation, a lawyer, or a separate agent, you will have to pay someone to represent you (otherwise, why would they agree to represent you?)
As to the 3% (to guide us through paperwork) - that is not a good description of the transaction. First of all agents sometimes work for years with a client to find them the right home. How much is 100 hours of your time worth? Secondly, it is not just paperwork. It takes years of experience to write the offer correctly, then take it through closing. As times have gotten harder, you need an agent more, not less. I don't agree that an attorney "can probably do a better job" than a good Realtor. They know contracts, but they don't work with buyers and sellers every day in the field. You may need to talk to an attorney about this situation though.
If the 2nd agent ends up in a dual agency situation, they can negotiate the commission with you. They should have done it when they brought a buyer. If not, you (and the agent) are in a gray zone.
You can see the complexity of the situation. Therefore, you should be able to see why it is so valuable to seek counsel when doing such a transaction, whether it be with a lawyer or real estate salesperson or the county courthouse or even a textbook.
Realtors are worth their weight in gold. We work hard for our clients. If you don't want to do dual agency, that's fine. But if you don't think it's fair to pay a realtor "to guide us through paperwork when we could get an attorney to do it for less and probably do a better job." Then, go ahead and do that.
Reatlors do more than just paperwork. If you're the seller, your Realtor will work hard to make sure that 1) buyers stay on track and don't default on their contractual obigations (via their Buyer's Rep) and 2) you,as the seller are taken care of (as well as being sure you stay within your contractual obligations).
As someone else suggested below, everything is negotiable. Nothing is set in stone. I think you'll be grateful if you turn to a Realtor to assist you in your transaction. I always advise buyers & sellers to seek legal and professional counsel regarding legal matters. If you choose to just use an attorney and not a Realtor, that's up to you.
Remember, it's a Realtor who is bringing you the Buyer. Realtor's are worth their weight in gold.
I wish you the best of luck with your transaction.
It seems that your major concern is the potential amount of commission to be disbursed to the agent at closing. I agree that 6 percent is a good sum of money, especially if one considers the state of the economy today. However, let's suppose that the agent has indeed a buyer for your home, what are your options?
1)Interview several listing and select the agent you feel most comfortable with. List the property.
2)Attempt to sell the home yourself & negotiate with the buyer's agent, terms & commissions.
If you have sold homes before or are familiar with the process, then option 2 just might work for you and can save you some of the final proceeds. However, be aware that often times "unforeseen" circumstances typically come up during the escrow process. It's not as easy at it may seem from the surface. Agents are not only marketeers for your property but also "watchdogs" of the transaction, making sure that each contingency is met during the alloted timeline. When working with an agent, you not only hire the agent but you essentially hire the entire brokerage that he/she is affiliated with. (called agency). Working with an agent facilitates the process providing for some piece of mind and can save you time.
You may retain the services of a lawyer specializing in real estate to assist you with the "paperwork"; whether or not if it will be cost effective is something you may have to figure out by simply crunching the numbers and comparing the two.
Finding buyer's who have the capacity or qualifications to purchase your home in this market is a challenge, so don't discount the agent's offer to bring in a buyer for your home. However, walk carefully and seek the assistance of the appropriate service professional when necessary.
Geoffrey Guzman (RA) e-PRO
Oh wait The National Assosiation of FSBO's has been disbanned it seems no one wanted to pay the annual membership fee..."
That's too good. Way too funny on both. I'm sorry I can only give it one thumbs up.