Percentage commission from Realtor

Asked by KD, Tue Jan 29, 2013

My friend who bought a house last year suggested me to ask some percentage of her commission before closing on the house. She told me that relators will usually pay some percentage that you can use for furniture and stuff. She and her husband asked for 1% and they received $5000 from their relator.

What percentage is usually acceptable?

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Cindy Davis’ answer
Cindy Davis, Agent, San Diego, CA
Tue Jan 29, 2013
It can be done legally as long as it is written up properly and all parties know about this. That said, many many agents take offense at being asked to give back the money they earn. We work very hard to our commission and most people don't recognize that fact.
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Charlotte Ma…, Agent, Rocklin, CA
Tue Jan 29, 2013
Would you want a discount law firm to represent you if you were sued, or would you want the best representation money can buy? Would you choose a surgeon based on his/her fees if heaven forbid you get sick? Buying a home is one of the largest investments many people make, and as such, I would think you'd want someone representing you based on their skills and not their reduced commission. A great agent knows their worth and will save you time, money and headaches by knowing how to get your deal done efficiently.

Good luck in your search.
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Annette Law…, Agent, Palm Harbor, FL
Tue Jan 29, 2013
Yes, this is a topic and idea that surfaces frequently.
It is understandable.
Buyers today seem to have adopted a 'religion' that compels them to ask and keep on asking and ask for more until someone says, NO. From all the silly stuff on the inspection report to the furniture grab, buyers practicing the principles of 'NO' are obligated to keep on asking. Home owners need to understand that "NO" is an option also. However, they need to say NO the American way so the practitioners of NO don't get offended.
It's surprising that these buyers practicing the "NO" religion, NEVER reveal their intentions to rob their agent. They tend to prefer the 'ambush.'
A real professional will look you straight in the eye and give you exactly what you need.
A non-blinking, unwavering - NO!
Maybe even a He** NO!
Let me assure you, you will lose the house.
You will lose your inspection money.
You will lose the appraisal money
You will lose your deposit.
And if you had any respect, you should lose that also.
Let me be clear. agents DO have such programs. I have one. If that is your intention tell me so and I will enroll you in the "Buyer Elite Plan" that delivers exactly what you want. Honesty is always the best policy. Say what you want. Reveal your intentions. You would be surprised how accommodating real estate professionals can be. However, betrayal, as you suggest, will have consequences.
What you may want to consider is ambushing your mortgage broker with your rebate ambush. They have the same compensation structure.
How about the home inspector you will hire.
How about the folks who will have your possessions on the truck, they will be also receptive to your rebate ambush.
Let's not leave out the dentist, the taxi driver, your heart surgeon, your lawn guy, your attorney, accountant, and the roofer, and don't overlook the checkout line at the grocer. You can actually do it there.
Now, don't overlook the obvious. Tell your employees you want 1% of their paycheck so you can buy furniture. Perhaps you will be delighted when your employer ambushes you with a political contribution opportunity you can't refuse. Hopefully the message is sinking in. Of course, if you truly are unworthy of the money you are paid, unworthy of the agreed upon compensation, I can understand your confusion and delima.
The percentage usually accepted? Go for 100%. The 'NO' will be just as clear.
Now, there is another way to achieve exactly the same thing (a common practice of mortgage brokers and attorneys) without revealing your dark side. Of course I'll not share that.

Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
0 votes
Cindy Hipwell, Agent, Sacramento, CA
Tue Jan 29, 2013
I don't know about other states, but in the state of California the Dept. of Real Estate does not allow commissions to be paid to a non-licensed agent. In addition it is a violation to have a lender (the buyers lender) uninformed about funds going to the buyer when they are financing the loan. To explain, if the bank believes you have 20% down and gave you a loan at 80% and then found out that $5K was in essence a "kickback" from the agent, both you and the agent and their broker would be held accountable for lender fraud. In the event a lender was disclosed these funds were coming to the buyer and agreed to do the loan anyway, the income being earned ($5K in this example) would need to be reported to both Federal & State tax earned income - failure to do so would be another violdation. Last, the listing contract with a seller is an agreement between the brokerage and the seller for the amount of commission paid by the seller and to what parties. In California it's spelled out in that contract that the funds go to the listing brokerage and a certain percentage which is named int he contract is paid to the selling brokerage. If a buyer gets $5K from their agent, technically that must be disclosed to ALL parties. This includes the seller, lender, etc.... If a payment of $5000 were to be paid by a buyers agent to a buyer, do you think the seller would agree to that? Most sellers I know would expect a reduction to go to them. After all, they agreed to pay the broker 6%, if the broker doesn't want it, they shouldn't have to pay for it. In the situation where I have the listing and I also represent the buyer I may reduce my commission to the seller, but the funds don't go to the buyer.

One last thought...right now it's a sellers market. Buyers are a dime a dozen. Personally, I have to limit the number of buyers I work with so I can keep my "exceed expectations" service level up. I have more buyers asking me to help them every day than I can handle and most good agents are in this same position. Today, for every single home that is on the market there are at least 8 buyers who want it. Why would any agent chose to work with a buyer who wants part of the income they are to earn when there are so many other buyers out there to chose from? In this market, cash buyers are still competing against other cash buyers to get the one property that's available. Conventional loan buyers with more than 20% down are next in the preferencial list, then Conventional buyers with 5% to 20% down, FHA buyers and finanlly VA buyers. IT takes patience and skill to get a conventional buyer's offer accepted in most price ranges. I have two cash buyers and we're having trouble finding them properties they can get their offers accepted on. If you have an offer that is accepted, go THANK your Realtor! It's not easy to present an offer on a property and have it accepted these days so if they presented your offer in a light that got it accepted, you should be getting them a gift! Couint your blessings you have an agent that knows how to present an offer that got chosen over anywhere from 8 to 25 offers!
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I'm sorry, I've never seen somebody so cocky in my life. Buyers are a dime a dozen, and so are agents. I went to over a dozen open houses before I picked my agent and at each one when they found I didn't have an agent, each one wanted my business. I've been working with an agent for two weeks, probably taken up 10-12 hours of his time. I've got an offer accepted and his commission is excess of $12K. A thousand bucks an hour. Don't give me the crap. Today people are tire of the standard. There's no reason for a broker/agent to get 3% of a sale, or for the lending agent to get 1% or more. Commissions should be limited by law to no more than 1% and adding no more fees that those which currently exist. $3-4K profit for spending a couple weeks with a customer and getting them a $300-400K home isn't bad. If you have a customer, you should be thanking them!
Flag Sat Feb 9, 2013
Morgan Larson, Agent, Folsom, CA
Tue Jan 29, 2013
I've been following your questions on Trulia the past several days. It sure seems like you are very interested in purchasing a home, and you also want to make sure you are receiving the best possible deal. My question to you is, when have you as a consumer gone to far to try to get the best deal?

In a previous question, you noted that you wanted to work with someone who is willing to rip-off others. And in this question, you are asking if agents regularly give a portion of their fees so that you can buy furniture.

Honestly, you are going to have the best experience, receive the best service, and get into a home you love, by working with someone who has extremely high standards when it comes to working with their clients. And to receive high standards you'll want your realtor to receive their fair compensation.

Remember, you already get to use an agent for free. The seller pays their professional fees. So take advantage of that, and pick who you think knows their stuff and can even get you into a home in this competitive market.

Happy House Hunting!
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Alan May, Agent, Evanston, IL
Tue Jan 29, 2013
Realtors operate independently and differently.

Some will be willing (if legal in their state) to rebate a portion of their commission to you. Others (myself included) will be highly offended to have you ask for a portion of the commission that I earned.

Either way, I strongly recommend that you bring this up at the beginning of your relationship... (that you'd like a percentage of the commission rebated)... so that you don't waste the Realtor's time, and that you don't have your time wasted.

What percentage is usually acceptable for the Realtor to rebate toward the purchase of your home, or furnishings... and stuff? Zero percent, in my opinion. The Realtor is not buying the house, he is not buying your furniture, or backyard barbecue... he's being paid for his services.
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Zac Bacon, Agent, Granite Bay, CA
Tue Jan 29, 2013
I agree with the other agents below. I think you got bad advice from your friend. You definitely get what you pay for. How hard would you work for me if I told you I was going to take 30% of your paycheck after you were done?
I do not discount my fees. If I do, it is because a client has sent me numerous other referrals, or they have bought multiple homes from me.
Sometimes I will cover the cost of a home warranty or a home inspection, but that is no more than $500.
If an agent is willing to cut their commission that much, they are desperate for a sale, which makes me very concerned about why they feel they are worth so little.
Good luck.
You get what you pay for.
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Ute Ferdig, Agent, Newcastle, CA
Tue Jan 29, 2013
There is no such thing as "usually acceptable." Some agents may be willing to enter into a commission rebate agreement to the extent permissible under the laws of the state in which they have their real estate license. Unless you are dealing with the broker directly, any commission rebates have to be approved by the broker because commissions are payable to the broker, not the agent directly. If the agent does not get prior broker approval, the broker may deduct the whole rebate amount from the agent's portion of the commission. In most cases, rebates must also be disclosed on the HUD estimate. I personally would only agree to a commission rebate for friends and family or under very unusual circumstances. I would not agree to a rebate at all unless agreed in writing and up front. If a buyer suddenly during escrow told me that he/she will not complete the purchase unless I rebate a portion of my commission, I would tell the client to get legal advice.

For the sake of this discussion, I will assume you are employed and I will further assume you would not appreciate it if your boss told you about half-way through the pay period that he/she will only pay you a fraction of your wages and you would get nothing if you don't agree to that. In the alternative, let's assume your boss tells you in the beginning of the month that he'll only pay you a fraction of your wages, but he still expects you to give it your all and work as hard as you do when you get paid in full.

Based on your earlier question about how to select a good buyer's agent, I know you want an agent who looks out for your best interest and gives you his/her best and I think your agent will deserve a full commission.

Apply the golden rule (do unto others as you would have them do unto you) and you'll be fine. Anything else is asking for trouble.
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Scott Godzyk, Agent, Manchester, NH
Tue Jan 29, 2013
This is not legal in all areas as some states do limit what can be given. second any amount given has to be on teh HUD and disclosed up front to your mortgage company. NOW discount fees usually equal discount services which can hurt you more than the money you are hoping to take from an agents commission. You get what you pay for. A good buyer agents services will save you more than the fee the make.
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Ryan Hellwege, , Dallas, TX
Tue Jan 29, 2013
I would say it would depend on the time and guidance you have received during the transaction. If the Realtor is just opening the lock boxes on the homes that you have researched and discovered and you have had to do all the work on finding the house you want to purchase. Then you should be obligated to ask for a Realtor to help on some of the costs.

If the Realtor is really working for you and helping you find the house you want then they should be compensated for the job they do.
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Ryan, what do you mean by "Then you should be obligated to ask for a Realtor to help on some of the costs"? Please don't add to the manifestation of the notion that there are Realtors who are just glorified door openers. While there are buyers who are actively searching, very few real estate agents asking the buyers to do this because they don't want to do the research and property search themselves. I think buyers should be involved in the home search and do their due diligence, but I am not willing to give up a portion of my commission because the buyer volunteers to do what I am willing to do myself.
Flag Tue Jan 29, 2013
My NC Homes…, Agent, Chapel Hill, NC
Tue Jan 29, 2013
My honest thoughts are this is lousy advice and unless you have this discussion prior to signing a buyer brokers agreement you should have no expectation that your broker will give you part of her commission. How willing are you to give someone who asks you for part of your salary

Here's what I know to be true, agents who rebate commission do so because their weak, hungry for any business and don't have any real idea what their doing or even supposed to be doing. It's all they have to offer and if you choose to work with a discounting agent you'll get what you pay for.
0 votes
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