What commission rate should I pay?

Asked by Leo, Gloucester, MA Thu Nov 1, 2007

What commission rate should we pay?

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16
Jim Walker’s answer
Jim Walker, Agent, Carmichael, CA
Thu Nov 1, 2007
Leo, your profile shows you as a Home BUYER.

The commission rate is usually arranged between the home SELLER and the LISTING agent.

As a buyer, you may enter into into a buyer representation agreement with a BUYER's Realtor.

Buyer Rep agreements often designated the buyers side commission to be about one half of a full (both sides) commssion.
3 votes
Paula Bean, , Orlando, FL
Mon Nov 5, 2007
We are still waiting to hear if Leo is a home buyer, if so, why is he worried about the commission, and why did he answer his own question?

Some questions are worth spending your time on - until we hear back from Leo, this one isn't.
2 votes
Michael Giles, Agent, Beverly, MA
Sun Nov 11, 2007
. Because of the way things used to be before buyer agency was being practiced in Massachusetts, the commission system is really backwards at this point in time. You can chase your tail around all you want to come up with the real answer but the facts are simple. The house is only worth what a buyer will pay. Any commission paid out will come out of the buyer's down payment and what they finance. It seems clear to me that the buyer is paying for a commission that the Seller negotiated! It's nobody's fault it's just how the system has evolved but it is a little backwards.
1 vote
Josh M. Boggs, Agent, San Antonio, TX
Thu Nov 1, 2007
Oh Heck.. why you're at it... why don't you throw in 10% just to make everyone a little more happy for the Holiday season coming up? no? Ok.. just a thought
Web Reference:  http://www.jmbsa.com
1 vote
Keith Sorem, Agent, Glendale, CA
Thu Nov 1, 2007
Leo
I don't get it. You ask the question...then you answer it....
Commission are negotiable. You receive for what you pay (IMHO).
1 vote
#1, , San Francisco Bay Area
Thu Nov 1, 2007
In this market consider 7-10% offering a bonus to the selling agent.
1 vote
Eric Towne, Agent, Boston, MA
Sat Nov 17, 2007
My experience has been that, with only 2 exceptions: paying an 8% gross marketing fee, then offering out 5% to the Buyer Agent community causes great excitement & interest, thus demand, resulting in higher sales prices - the net result should usually be a seller net higher than paying a reduced fee for poor results! (The caveat being it won't work when there are similar competing products, ie: a condo complex, then the buyer will usually go strictly for price/condition). ...after all, that offering should really only be 1% or 2 above what you might otherwise expect to pay a true professional with experience, systems and results, so it is a small investment in achieving a higher net - a win-win for all involved!
0 votes
Michael Cann…, , 01945
Mon Nov 5, 2007
I understand that you are a buyer. Generally, buyers are not obligated to compensate their buyer's agent unless he or she entered into an exclusive buyer agency agreement and such agreement sets forth compensation to be paid. Frequently, the agreement would say that you, the client, will pay the buyer's agent if either 1) no commission is offered by the Seller or 2) the Seller is offering less than the percentage agreed upon by buyer agent and buyer.

We are in the midst of a buyer's market in most all communities in Massachusetts. I suggest that you can find a buyer's agent to work with that will agree to be compensated solely by the listing broker. You don't need to come out of pocket to compensate an agent. That is my opinion. I am sure some agents/brokers would disagree.
0 votes
Paula Bean, , Orlando, FL
Fri Nov 2, 2007
I'm still anxious to hear Leo's answser to Keith Sorem's question as to why he answered his own question? Are you a home buyer Leo - or are you an agent? If you are an agent, your question is still a good one, but change your profile and let us know who we are dealing with.

So - LEO.... we are all waiting anxiously for your response ;-)
0 votes
Jeanne & Jul…, Agent, Hyannis, MA
Fri Nov 2, 2007
3% to a BUYER's agent that will follow you through to the end as if they were buying for themselves or a loved one! Check out my website for FREE market analysis of your property ar search of homes! http://www.JeanSOLDMyHouse.com
0 votes
Dani Pearson, , Bradenton, FL
Fri Nov 2, 2007
If you are the Buyer you typically do not pay the commission. Of course, if you have a Buyer’s Broker agreement with your agent, and you end up contracting to purchase a FSBO that is not offering an agent commission, you could be liable to pay that. You and your agent need to negotiate that, and it should be in line with the norm in your market area. If you are selling, you should at least offer the commission that is typically offered in your area as well, anything lower could prevent agents from actively pursuing to show your home. I know it ethically does not seem fair, but it does happen. Price your home right and list with a great results oriented firm; you will get the most benefit from that by attracting a qualified buyer paying a fair price.

Remember, the best way to increase your bottom line is by having the highest figure possible at the top. Cutting out those middle expenses (commission) will increase your bottom line, but not as effectively as the number at the top - That is the figure to focus on, which is going to bring you the qualified buyer willing to pay what your home is worth.
0 votes
Belinda Arro…, , 02038
Thu Nov 1, 2007
I have a menu of commission that consist of 3 rates. You pay what you feel comfortable paying,based on different services that I offer. There is no one commission rate. It depends on the brokerage. Hope this helps.
Web Reference:  http://www.BelindaArroyo.com
0 votes
Douglas Moore, , 94598
Thu Nov 1, 2007
As a home seller, you will probably pay between 5-6% total and then not pay on the purchase of your next home (as buyer). You need to interview carefully as you select your agent and make sure you are getting a full marketing plan with details on open houses, internet strategies, other agent exposure, maybe some print advertising, etc. Most important of all, you need a hard core negotiator on your side of the table. Any agent giving up on their commission rate in 15 seconds is not my idea of a tough negotiator.

As a seller, the pricing is critical as to how long you carry it and you need to be responsive to market changes with price drops if necessary. Good luck.
Web Reference:  http://www.apr.com/dougm
0 votes
Linette Carr…, Agent, Wilmington, DE
Thu Nov 1, 2007
How much commission do you want to pay? It is a negotiable part of your contract with your listing agent or buyers agent. Generally, the buyer does not pay commission but it has been done.
How long do you have to sell your home? If you need to sell it quickly pay a good commission for your area. It will bring more buyers into your home and possibly sell it faster. Or you can offer other incentives, like buying down the new owners mortgage, or offering them closing cost assistance.
If you are not in a hurry you can pay the average commission for your area and relax a little until it is sold.
0 votes
Paula Bean, , Orlando, FL
Thu Nov 1, 2007
Commissions are negotiable by law - but having said that, what you really need to know is how what commission or fee you pay, impacts you.

Wiill it sell your house faster? If you are paying $2000/mo on your mtg, of which maybe $20 goes to pay down the principal - then every month you sit there you will lose almost $2K.

Every month you sit there, on the market means you will also have to worry about what the next house you buy will cost you - in terms of price and interest rates.

Perhaps you may want to chat with a real estate consultant to get an unbiased opinion on whether you should pay a fee to sell your property, or go the traditional commission route at all. Check this site out: http://www.myreconsultants.com or go to http://www.AcreCourse.com for more info.

When it comes to selling your biggest asset you need unbiased and informed choices to make. It could be that you are best served paying the lowest commission, the highest, or somewhere in between, then again, it may be best to wait a few months, or not sell at all, but rent. Only a consultant would tell you that, because without paying a sales commission, a salesperson doesn't get paid.
0 votes
Leo, Home Buyer, Gloucester, MA
Thu Nov 1, 2007
6% minimum... most sellers are paying more to attract more showings from Buyer's agents
0 votes
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