Do Realtors get the comission if they fail?

Asked by Karen, Pennsylvania Sat Oct 13, 2007

I have a friend that hired a company to sell her home. It has been on the market with no bites. The owner has some one that may buy it if the price goes down, but they don't want to take the hit either. Does the realtor still get commission even though they failed to sell the home? Or could my friend just take the commission off the price and be rid of the house?

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Keith Sorem, Agent, Glendale, CA
Sat Oct 13, 2007
I want to thank you for posting your question. I am going to answer this honestly.
To be truthful, your post does not provide us with a great deal of information. Rather than ask you to clarify it, I am simply pointing out that if you friend was selling a car, and the car didn't sell, whom would you blame? Your friend? No, you'd probably advise her to lower the price and advertise more, right?

Okay, here are the basics in buying a home:
1. Idenfity your preferred area.
2. Have a Realtor bring you a list of homes that offer what you want at the best price.
3. Go look at about 10-12 homes, buy one.

Your friend's problem is that she needs to place her feet in the shoes of a BUYER.

I'll bet that there are other, similar homes, that have sold during the time your friend's home was on the market So why would they buy a home other than your firends?

As one of the posts points out, if your Realtor is diligent (and most sale, no check) and the home doesn't sell, it's really the SELLER's FAULT.

However, sometimes the Realtor has a difficult time helping the owner understand.
My three rules:
1. Ten showings or two offers, in two or three weeks, 5% price reduction.
2. Low offers? The market is talking to you.
3. No offers or showings, reduce the price.

We are not magicians. Overpriced homes will not be shown, nor will they sell.

One more tidbit (sorry, it's late): Don't blame the Realtor that the home has not been sold.
Price, condition, location are the three main selling points.
However, having an accepted offer is JUST THE BEGIINING. Most Realtors will tell you that we earn most of our money during the negotiations phase.

Don't take my word for it. Your friend needs to have an honest discussion with her Realtor.
2 votes
Chris Willia…, , 38401
Sat Oct 13, 2007
Taking a hit is a bad choice of words in regards to a commission for services. I think the real problem here is that the agent has not done an effective job of explaining the benefits and expertise that we provide. Our job is not simply to find a buyer for a home. That is the easy part. We first provide detailed information regarding the current market conditions, and evaluate the property in contrast to that information. We then advise a home owner on where we should price the home to have a competitive edge vs. the competition. We take photos and write ads, and mail just listed cards, all without charging anything. This all comes at our expense. Then we follow up on showings, provide feedback, suggest improvements or changes based on that info, write more ads, do more follow up, etc. Then the buyer shows up. Our job is done right? No, it just started, we then have to make sure the seller is protected by having all the proper disclosures signed, that they are looking at all the possible problems that could arise due to inspections, and contingencies, and loan approvals. We then make sure that all inspections are performed as per contract, that the repair list or release of inspection contingency is removed, that loan application is made and all the documentation is provided, and that the termite letter has been ordered, and the appraisal has been ordered, and that the titlework has been ordered. Then we have to work out any problems that might arise with the title work, or the termite letter, or the septic letter, or the appraisal. Or anything else that could have happened due to inspection like find mold or fungus, radon, or lead based paint. All this is done with no money collected up front by the Realtor. Now, what do you think? Since the Realtor has already done the front end things, and advised on forms, helped determine price etc., would that be fair or just to do what you suggest?

1 vote
Ute Ferdig, Agent, Auburn, CA
Sat Oct 13, 2007
Hello Karen. The fact that your friend's potential buyer is only interested in buying if the price goes down tells me that the property might not be priced right. If the real estate agent has not been able to sell an overpriced house, the only thing the agent failed to do is perform a miracle. It's always easy to blame the real estate agent when the property does not sell.

Whether your friend can sell to this buyer without owing a commission to the listing agent depends entirely on the type of listing agreement your friend signed. Most real estate agents will not list a property unless they have an exclusive right to sell as anthing else does not justify spending any money on advertising. I'd tell your friend to read his listing agreement or even better, talk to his agent about this. Maybe they could find a way to make this a win win.
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1 vote
Linette Carr…, Agent, Wilmington, DE
Sat Oct 13, 2007
We will assume that your friends realtor did not spend any money on local advertising, had no open houses, no brokers opens, sent no fliers out to other realtors to highlight the property and because of that not one person looked at your friends home. If that is true your friend should sit with the realtors broker and discuss the problem since that is actually who they hired. If all I said is true and the contract that was signed is at its end or close to it, and the person that wants to buy the house did not find it through any advertising, then your friend is probably right to not want to pay, even though they are under a contractual obligation. But if all that is not true, then your friend should pay the realtor to take the sale to closing and to make sure that everything is executed properly.
0 votes
Joe Culberts…, , Pensacola, FL
Sat Oct 13, 2007
I am licensed only in Florida, so I cannot speak for other areas, but here, It would depend on the type of Listing Agreement that your friend agreed to with the Realtor. Even though you feel the Realtor "failed" chances are that the Realtor has a considerable amount of money that they have personally invested in advertising and promoting the sale of the home.

The best thing she could do is discuss this with the Realtor.

Joe C
0 votes
Jim Walker, Agent, Carmichael, CA
Sat Oct 13, 2007
Karen - The Realtor did NOT fail ! Your "freind" has some one who may buy it? Where do you thnk that "someone " found out the house was for sale? It was from the Realtors marketing effort. Your freind wants the Realtor to take a "hit" -- She wants him (or her ) to take the hit NOT because she failed to sell the house but because a buyer HAS been found. SHAME on your freind for wanting to cheat a hard working person out of their rightfully earned living.
0 votes
Marty Van Di…, Agent, Palmer, AK
Sat Oct 13, 2007
The Realtor gets nothing if they do not find a buyer. ..usually. Your friend needs to read her listing contract carefully. When does it expire? Can it be cancelled?

If the Realtor has a listing contract that has not expired, sometimes they want to be paid something to cancell it early. After all, the Realtor has probably spent time and money trying to sell it with the understanding that he/she had a certain amount of time to find a buyer.

The main reason a Realtor's commission is higher than many in the public would like is because Realtors do a lot of work, and spend a lot of money without getting paid anything at all.
0 votes
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