Kenn, when you hire an agent to sell your home, you are paying them for a service. This service is independent of what you paid for your home or what type of "hit" it has taken in terms of value. Bottom line is that it's an investment and maybe it went bad maybe it didn't. If you have an e-trade account and you decide to sell a losing stock, you still pay the same amount as if it was a winning stock right? Furthermore, listing your home with a realtor carries essentially a Satisfaction Guarantee. In other words,if they don't get your home sold you don't pay and they are out whatever $$ they have personally put into it! In my mind, they are taking a lot of the risk
You realtors out there who have responded to defend yourselves and the commissions you recieve, I dont feel you need to. In tough markets you scrap to earn your commissions, in great markets it's a little bit easier but there are more and more complexities being introduced into real estate transaction every day. Agents who are true professionals at their craft work hard at it in terms of being educated and passing on expert advice to their customers. Now often this advice is not what potential clients want to hear - I think the majority of homeowners are very jaded and want to think that their home is more "special" than their neighbor's and thus not subject to the whims of the market - but it's the brutal truth sometimes. I think Hank said it best when he mentioned giving realistic expectations and choosing to pass on working with clients with unreasonable ones.
Well that's it, I'll get off my soapbox now. Realtors, just like mortgage people there are some shady one's out there who give the profession a bad name, but there are also a lot of true professionals among us. Kenn, try to find yourself one of those to assist you in selling your home!
By profession, I am a consultant. Consulting is nothing more than the application by a specialist of technical information to a problem which, when solved, offers a disproportionate benefit to the client compared to the fee he pays.
Consultants negotiate their fees - retained or contingent? hourly or daily rates? How about weekly rates?
Taking a hit...hmmm? Is that sort of like my 2009 promotion, in my neighborhood, with my neighbors - the 2009 discount that only they can get, because they are my neighbors and they deserve a break?
Is that like when I negotiate my selling agency commission after binding agreement and help to make a win/win deal for all parties, but especially for my buyer client? When all else fails...I give. To someone I care about? Like that?
Is taking a hit like making less money?
Sometimes, but because in addition to being a consultant, I am a marketer, and I usually attract cool people who need help and who are willing to pay a fair price for excellent fiduciary service. When a discount happens, it's attached to a value that is a win/win.
So, Seth Godin said something about your question in his blog yesterday - the link is in the attached web reference, and the message is copied and pasted here, Kenn.
I think that Seth's first sentence get the point across clearly enough, doesn't it?
"Creativity loves a problem, but it hates a lousy audience.
If everyone around you is sure the economy is tanking, that the end is near, that time is up and the company is headed for the tubes, it's almost impossible to find a creative solution.
Creativity changes the game, whatever game is being played. "We're going to run out of cash by the end of the year," is accurate unless you count creativity into the equation. Then the accurate statement is, "Under the current rules and assumptions, we're going to run out of cash..." Big difference.
Creativity demands exposure to market needs, and insulation from market fears. Give it some time to work, some support, some breathing room. That's when creativity has a chance to change the game." "
Kenn, thanks for your question.
As this question seems tied to your other, I'll keep this one brief. This is my business and my job is to help sellers move their home as fast as possible for as much as possible. For buyers it is to find them the best home at the best price with the best possible long term security. Simple stuff that many agents fumble and that many clients fumble because they shop price first and foremost and buy into complete happy horse**it that most agents toss.
Bottom line is that most sellers that bought wrong or overleveraged themselves are going to lose money. The market determines price, nothing else. My job is akin to an ambulance driver; my clients may be banged up and damaged, my job is to get them out of a bad situation as fast as possible and in the best shape possible.
Am I willing to take a "hit"? I'm willing to evaluate each client and I will pass on clients with unrealistic expectations. I'm fortunate in that I'm a professional and I am both a certified appraiser and broker. After 20 years in this business in which I only get paid for success, I maintain that success by choosing my clients carefully. A short conversation will tell me bunches, everything is negotiable but how negotiable depends on many things.
Hank Miller, SRA, ABR
Associate Broker & Certified Appraiser
Prudential GA Realty
I find this question to be a non sequitur. Taxes often go up whether or not property values rise or fall. The price of chicken McNuggets, a ream of Staples' bonded paper, and Intel's new i7 processor are whatever they are. Doctors, fire-fighters, GCs, teachers, and senators typically don't negotiate their rates with the public at large. So, why should realtors be expected justify their rates/commissions?
As a consultant and investor, I never bother defending my rate/terms. I'll work with the ones that will pay, and work around the ones that won't. It's nothing personal; it's strictly business.
I'll also ask another variation of this question--which is also a non sequitur--to help illustrate my point. There are lots of delusional sellers out there who refuse to price their properties appropriately during the current market conditions. Should they be expected to take a greater hit for ignoring the advice of their realtors (assuming that those realtors tried to advise those sellers--and failed--to set realistic list prices)?
It appears you may have struck a nerve.........
The truth of the matter is, we agents are taking a hit every time we answer the telephone, show a property, take a listing, advertise, etc. We are about the most willing people around when it comes to sharing...........unfortunately, it is not advertised.
The reality of the situation is that a really, really good agent, particularly one who has the skills to effectively market your home and is willing to spend the money it takes to do that, is well worth the commission they receive. If they have a good enough marketing plan to get you a fighting chance of receiving a quick offer, they will save you a lot more money than you spend on their commission because with prices continuing to slide, you lose money every month your house stays on the market. Now, if you have a really high priced listing, an agent is going to have more latitude to potentially cut you a deal on commission. But the reality is that agents simply are not getting rich off the backs of financially distressed homeowners.
Think about this -- approximately three quarters of listings in Atlanta last year failed. That means the agents who listed those homes spent their money and time marketing them only to get zero out of it.
So my question to you is this, if a home doesn't sell, are homeowners willing to compensate their agents for the time and money they spent on their behalf?
Well it really looks like you hit the jackpot for responses.
Heres mine, Be careful, you do get what you pay for!
Our team of residential and commercial Realtors, do have a sliding scale. We also will give you a real selling price (Market driven), if you choose to be totally involved, then the flat rate might be sufficient, if not then as services are added, so goes the commission rate. In these market times, you do need a "real realtor". So, it's your choice, as to how you want to proceed. Good luck!
You should consider a flat fee broker where you can considerably reduce the commission you pay to list your home. So, by using a flat fee broker, you have the room to further negotiate your deal so that the buyer's agent representing the buyer for your home does not have to "take a hit". We also have incentives for buyers based on the number of homes we actually show. Other companies in town also offer incentives to their buyers by reducing their commission if you use them to list and buy. So, you do have some choices.
I hope this helps you.
Associate Broker/Buyer's Consultant
Case in point: Your home may have been worth $400K 2 years ago. That's a good commission check.
Now it's worth $250K, and now I need to sell two of them to make almost the same amount of money.
So agents are feeling it to, but the professionals that know how to sell in this market don't discount (easily).
only is our monetary income reduced, our expenses are higher and our time spent is so much more....
Believe us, a realtor's hourly rate is not enormous!!!!!
And remember we are independent contractors - our expenses come out of our pockets and we do not make any money until a seller or buyer closes on a property with us!
We have no salary and the total commission a seller pays, is usually split between the listing agent and his brokerage company and also with the Agent who brings the buyer and his brokerage company, i.e. 4 ways!
The experienced Realtor will help in the negotiations of terms and price and oversee all that comes with the contract and selling process. Hope you are working with a truly good real estate Agent.
If you sell your home for less than it would have sold for in the past, we make less of a commission, so we already take the hit with you. Since homes stay on the market much longer now, it costs more for us to market your home. That's a double hit. How would you feel about an agent asking you to pay a higher commission rate to cover those additional costs?
The real estate market is similar to the stock market in that, when values go down, you only lose real money if you sell. If you don't have to sell, then don't until things improve. They will - they always have. If you have to sell for whatever reason, then take comfort that the new home you buy will be at a discounted price also.
Remeber 99% of the time you will get what you pay for.
Best of luck to you...
As with everything else in Real Estate everything is negotiable. Now you will in many cases get discounted services for a discounted commission. So it is a coin toss on your part. You can always ask. I mean all they can do is say no.
Hope this helps,
There are opportunities to help each other but when the cost of doing the same job gets higher and the return gets lower, the result is a big hit. We need to sell more houses to achieve the level of income that we need in order to simply survive the present market. Selling a house in this market requires a lot more work and expenses than ever before.