Ca Buyer, Home Buyer in Redwood City, CA

My broker wants 5.5% to sell my home in the San Fran Bay Area. Says 3% to buying agent is necessary currently.

Asked by Ca Buyer, Redwood City, CA Tue Jun 2, 2009

Is 3% to buying agent really necessary to get Bay Area agents interested in my house? Wouldn't a 2.5% buying agent commission and 2.5% to my broker be fine?

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Tom, Home Buyer, 94040
Mon Jun 15, 2009
You should set the commission at the low end but price your home competitively relative to recently sold homes on a price per SF basis.

The concept that a higher commission will drive more showings is no longer valid in my view. Most people I know who are currently in the market (including myself) do their own research via sites like Trulia, Redfin, etc. We then tell out agents which house we want to see, or we just visit an open house. Do not hire a broker that promises a high sales price and charges a high commission rate. It will not work, and you will end up having to sell at market rates AND pay a higher commission rate. Check out Redfin as a reference point for a discount broker, then use their rates to negotiate with local agents if you prefer to use someone local.

They key is to get showings and Open House visits. You will get both if your home is competitively priced. Look at houses that were sold in the past 3 months and calculate the average sold price/SF. This is the main metric that buyers look at. Price your house accordingly and you will get showings and sell quickly.

Good Luck
2 votes
Voices Member, , Benton County, OR
Mon Jun 15, 2009
Maybe you'll find the answer here....…

A lot of agents gave opinions on this very question.
1 vote
Barbara Q., , Bergen County, NJ
Tue Jun 2, 2009
Brendan- "Some agents secretly filter their searches so that the automated service won't send their clients listings unless they are 3% listings"

WOW! Isn't that a just a wee bit deceptive?

I thought that Real Estae commissions were negotiable.

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1 vote
Don Tepper, Agent, Burke, VA
Fri Jul 24, 2009
Good answers already. And just to emphasize two points: Commissions are negotiable (as you know), and customs and practices tend to vary by community.

However, IF, hypothetically, the most common commission rate for your area is 6%, with 3% to each agent, then your agent is already doing you a favor by reducing his commission. Some agents wouldn't do that. Similarly, when representing a buyer, many agents would prefer a 3% commission to a 2.5% commission. That doesn't mean they won't show your property, but they might suggest viewing other properties first.

One thing a lower commission can suggest is that it might be more difficult to deal with a seller, that there may well be glitches and problems with other areas of the transaction. It can also suggest that the seller isn't really all that interested in selling. It certainly can suggest that the seller has less flexibility in price negotiations, and that can be a real deal-killer especially if your home isn't already very attractively priced.

So: Do whatever you wish. Just recognize some of the trade-offs for what is a 1/2% savings on the commission--all of, let's say, $5,000 on a $1 million property.
0 votes
Cliff Keith, Agent, San Carlos, CA
Fri Jul 24, 2009
As the homeowner you have the right to pay whatever commission you desire to pay. If you prefer to pay a 5% commission on the sale of your home then pay 5%. If your licensed Real Estate broker doesn't want to work for 5% then take responsibility for yourself and go find a licensed Real Estate broker who will.

As written and asked: What would you prefer? #1. Doing the same job for $100 or $75? It's still all about the money. #2. NO a 2.5% commission to the buyers agent is not fine with your licensed Real Estate broker.

Licensed Real Estate Broker: DRE #00605874
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0 votes
Keith Sorem, Agent, Glendale, CA
Wed Jun 3, 2009
We do not know any details about the sale of your property:
The property itself
The local market conditions
Your personal situation, when you need to move, how much you need to net, etc.

So.....I don't know if you need to list it at 3%, 3.5%, 4%....However, I do know this:

In order to sell you need showings, 10-12 in the first two weeks or one offer. If you don't get that showing activity, then you will need to make a price reduction. Homes that sell in the first 30 days sell closest to asking price, so if we don't get showing activity, we adjust the price until we do.

At 30 days on market listings in my area average 99.7% of asking. At 120 DOM they average 92.3% of asking. When would you rather sell?

So, how does this relate to commission? Would you rather sell your property within 2 weeks, or make a 5% price reduction? Paying another point in commission (let's say 3.5%) would definitely motivate buyers agents. And it would be less expensive than a price reduction.
0 votes
Matthew Bart…, Agent, Glendora, CA
Tue Jun 2, 2009
Hi Ca Buyer,

While commission is negotiable, you must take a look at what the other Homeowners in your area are offering the Selling Agents for compensation. As Rebecca mentioned below some Homeowners are offering 5% to the Selling Agents. Some Homeowners are offering a flat bonus to the Selling Agent in addition to the posted commission. So after seeing the data ask yourself what motivation will the Selling Agents have to show my home versus the competition if you're offering 2.5% to the Selling Agent and your competition is offering 3% plus a bonus to the Selling agent? Your agent can easily pull this information from the MLS for you. Good luck!

0 votes
Rebecca Cham…, , Palos Verdes Estates, CA
Tue Jun 2, 2009
Commission can be set at whatever level you feel comfortable with, however if you have hired a competent, professional Realtor who you trust, I would suggest following his/her advice. Generally they give you advice specific to the neighborhood.

Some properties are listed with as much as 5% to the Buyer's agent.
0 votes
Gene Yakubov…, Agent, Burlingame, CA
Tue Jun 2, 2009
Ya, it is true statement. Your property will get more Agent traffic.

0 votes
Brendan Aiel…, , Burlingame, CA
Tue Jun 2, 2009
First off, It is very kind that your broker sounds like he is willing to work for 2.5% while giving the buyer's agent 3%.

While it is not "necessary" it is in your best interest to give the buyer's agent 3%. It gives the agent the incentive to show your home.

Many people look though MLS email updates. Some agents secretly filter their searches so that the automated service won't send their clients listings unless they are 3% listings.

If it was my home, I would pay the full 3%. Especially since it is still a buyer’s market.

Brendan Aiello
Cashin Company Realtors
(650) 403-6262
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0 votes
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