Hi! Hope everyone is doing well:)
I glanced at the "pocket listing" post by Mtnrd......how timely, as we have been approached twice about this.
We are thinking of listing and I saw mention of 4% commission for +1 mil homes. Think it's usually around 6 for less than 1 mil.
How does this work? Typically, the buyers agent gets 3%, does the listing agent get 1%?
Seems like having the buyers vs having the listing is the way to go......
I know every market is different, but I don't want to leave $ on the table.
This all kind of reminds me when my SO was an executive pastry chef in a fine dining restaurant with high concept meals and desserts.
There was a large party in who pretty much ran their waiter (and probably at least one staff who was not assigned to their table) ragged. At the end of the night one of the party one of the party asked to speak to the manager:
"Say", he said jovially, "If you comp desserts for the entire table, we will really talk up your restaurant to all our friends and get you a lot of customers, it could be a win-win!"
"No, thank you" the manager said and the customer was kind of offended and said "Well why not?"
Finally the manager said "Because we don't need a restaurant full of people expecting a super-high level of service and then expect things to be comped, or to get free meals. That won't get us business that will get us Out of business".
I am always surprised that people value their own skills enough to demand their salaries and don't run around doing stuff at discounts and then want other people to work at significant discounts as if their services mean nothing.
I’m not answering for two reasons:
1. I have no idea.
2. I forbid you to sell this house!! No!
We need a decor update, and I’m going to pretend you didn’t mention selling. :)
It gets split evenly in most cases
Seek 'Wisdom of Crowds' re CD Rates
Increasing RE Commission (Long)
commission % & housing prices
We are going through escrow now. 5% split evenly. $1 million listing. 4% if our realtor represented both buyer and seller.
I too would love to see an update!
It is split evenly.
Yes, we need more photos of your lovely home.
Wait….you are listing that gorgeous home you were renovating? 😩 Oh my goodness…I love your house!
Several instances I've encountered. I talked to my property manager, said I'd only list my personal residence with "her" if she gave me a deal @ 1% she agreed. The buyers agent got 3% = 4%
Then I purchased a house and made a lower offer than the asking price. The seller said he'd come down to a lower price IF the realtors each took a lower commission...2% each. They both agreed....I made the purchase.
Then there are agencies that list they only charge 2% to list a home, the buyers agent still gets 3% = 5% total
Or...you list your home for sale by owner...and advertise you'll pay a buyers agent 3%. In a hot market...this could work!
Peppa, please PM me.
Honestly in a hot market here most realtors would reject an "offer" of a 1% commission. Do you work for 66% discounts regularly?
We just sold our $800K vacation home. we did it ourselves using a flat fee MLS (our fourth house we have sold this way)
When a house is listed on the MLS you get to specify how much commision you want to offer. I think most listing agents default you to offering 3% because they think it will incentivize RE agents to bring buyers through. However we offered 2% and had tons of people through and several offers. In the age or the Internet when buyers look for houses themselves online I think there is less downside to offering a lower commision.
There are also many services now like Redfin where you can find sellers agents willing to accept less commision.
I personally find RE commisions to be a huge racket. I get that it might be slightly harder to sell a more expensive home than a cheap one but I don’t think the difference between selling a $200k home and a $1 million home is enough to jusify an extra $48K.
When we looked at vacation houses recently before deciding to build ($1 million plus houses) most of the listing agents were not very informed of the homes features. I was not impressed.
In the age of the internet and home owner can list in the MLS, Zillow, and in this market not many realtors could make the claim they 'earned' what they get on a home. What certain careers are paid vs other's is very much an odd assortment. 6% has been the going rate here for 30+ years. I am not aware if multi-million dollar homes get a different percentage. The seller pays that 6% and both realtors split it. You still need to hire a closing company and all the inspectors...some realtors are decent at helping traverse all this other's really stink. It is completely ridiculous that a realtor gets a set percentage--some certainly only earn about 2%!!!!
I think the assumption is that every agent is a high producer. And I do know agents who make hundreds of thousands in commission per year and concentrate on $1M listings.
On the other hand the median salary in PA for realtors is slightly under $50K and the average number of transactions for a realtor is about one per month. In some midwestern areas it's more like one every two months. "Low Income" guidelines for Philadelphia for a family of four is somewhere around $50,000. So while there are the million dollar listers who are getting big commisions, there are many more who are just trying to make a normal living, especially if they are the sole wage earner for the family. And just because an individual agent is involved in your high-priced transaction that does not mean that is typical for them. I had a patient who sold a multimillion dollar listing, and that was one of his two completed transactions for the entire year. And he normally qualified for the low-income guidelines to be treated in our clinic. I don't think this is typical either, but there it is.
The problem for me is that i don’t think many agents earn the commission they get now that we have the Internet. The issue isnt whether they make $50k a year or whatever but that someone selling an expensive house must pay a fortune for what may be very little effort on the part of the agent. the homeowners who had to pay that commision often are not getting their monies worth.
And this is basically required because REs have created a monopoly since you MUST offer a commission AND have an agent to list on the MLS (or use a flat fee service) and basically no one will find your house if you are not on the MLS.
Its not like someone choosing to go to a nice restaurant and being a jerk. It is more like if you forced someone to go to a highly price restuarant offering mediocre food if they want to eat at all.
I don't think finding the house is the major part of the transaction. I think most of the transaction is between starting the offer process and the closing.
Often what happens with the 1% flat fee brokerages is that they put your house on the MLS and that's it and then the other agent ends up doing their own work and some of the work that the sellers agent should really be doing.
And if everything gets reduced down to flat fee, that just turns into another situation of poor or average people having to pay a lot more in relative terms for something than rich people.
Well the whole thing about the restaurant analogy is interesting. I work in a different arena of "customer service" and I have to tell you that people who are jerks often have a very low level of self awareness.
I have a number of patients who always say "Oh I am an easy patient, oh I am low maintenance" and so forth and they are some of the most difficult to deal with people in the practice. And then they also intersect with the population who is never afraid to ask for a professional courtesy or to nickel and dime over a few dollars because of their insurance. Some of them are actually nice people, they are not mean or ill-tempered or rude, they just require a Lot.
So it is regularly a matter of people Demanding or Requiring a higher level of service who then want to Pay Less for it than the average person. Whether they are polite about it or not. They don't necessarily think they are doing anything to be difficult, they think everyone behaves like this.
I have several friends who are or were realtors. They work days, nights and weekends. Recently, one friend in Alexandria, Va, where prices start around 1m and her brokerage will not consider commission negotiations but they do free staging for all their listings, divided her income by hours put in and it really was not worth staying in the game. She now makes much more in a forty hour week working on a us government contract.
Showing homes and listing homes is a small fraction of the job and the easy part. Hand holding and negotiating with demanding and often unreasonable parties was the hardest part.
I've never hired a realtor so I've never negotiated a discount. I would never ask for money off for any service I use, ever. I just opt out of using service that I don't think are worth it. That's why we've always sold our own homes. And we got very lucky in 2 of the four transactions, the buyer didn't have a realtor either so we were able to handle the entire thing w/o commission. We didn't need any assistance from a realtor with negotiating, arranging inspections, or getting to closing. These are all pretty easy DIYs thanks to the Internet as well.
My only real problem with the whole setup, like I said, is the requirement that you have an agent to list your house on the MLS and that you must offer a commission to a buyer's agent if you want to list your home on the MLS.
It should be easier for people who want to sell their house themselves to find buyers who want to opt out of hiring an agent. I don't like that the current system is basically forcing both parties to use an agent whether they want to or not.
If there was an option to list on MLS without the agent requirements, then people who want realtors could choose to have them and people who do not would have more options as well. I don't like that the option has been taken away.
But I think this is wandering away from the original question at any rate.
And you are not forced to be on the MLS. There is an independent broker here who has never listed on the MLS, and at his peak his personal income broke into the low 8 figures, disclosed because he was running for office.
You can stay off the MLS and pay out of pocket to adequately advertise your property on your own. People do it. But then for most people, when are the costs of the independent marketing going to start intersecting with the savings you get from doing it all yourself?
You must be on the MLS to get in front of the widest pool of buyers.
I'll stop posting now, I'm not looking to get into an argument over this. I think the Internet is largely going to solve this problem as more and more people shift to flat fee or discounted services anyway.
Edited to add, it does look like average commissions are slowly trending down from 6%. https://www.inquirer.com/real-estate/housing/real-estate-agent-commision-percentage-sale-20210313.html
Real Trends, a Colorado-based research firm that issues a widely cited survey on the topic, says the average commission slid to 4.94% in 2020 from 4.96% in 2019 and 5.03% in 2018.
Realogy Corp., the nation’s largest broker, reports a different trend. Realogy — which owns the Coldwell Banker, Century 21, ERA and Sotheby’s International Realty brands — says the average commission rate at its company-owned operations rose to 2.43% per “transaction side” in 2020, up from 2.41% in 2019. If the listing agent and the buyer’s agent split the take equally, that would suggest an average commission of 4.86% last year.
Restaurants frequently comp desserts, I'd always assumed it was because the ingredients tend to be inexpensive and spoilage is high. I don't see either of those facts as a reflection on the skills or worth of the pastry chef. I don't see why anyone would ever expect or ask for a free dessert, however.
I don't see how the average income for real estate agents is my issue; it is up to the agent if the nature and flexibility of the work are worth the compensation. IME a lot of people think RE is something easy they can do on the side, and they find it to be pretty hard. They flush out, but their poor results vs. the career agents bring down the average.
It actually reminds me of people who like pretty homes deciding they want to be IDs. Then they find out that the business isn't really about having good taste as much as it is about finding clients, knowing how to appease them, having good sources and workmen, managing timelines and budgets, etc. RE is the same way, the number one thing is getting listings. That's hard to do, especially starting out. And it has little or nothing to do with knowledge of or interest in residential architecture, yet that draws in many.
I agree that the MLS' are monopolistic and the model is not as vital as it was before the internet. I think it is hard to argue that the internet has reduced agents workloads. Anyone who has bought a house pre and post realtor.com has seen that first hand. It is incontrovertible. So why are commissions the same?
But the real issue is simply that homeowners should not shy away from trying to negotiate commissions, based on any number of factors they believe are relevant. And it isn't just high end homes. For example, if I owned a starter home in a desirable school district, I would totally try to negotiate the commission down because those are very liquid homes right now.
Many realtors won't budge, some will, and the homeowner should decide if the agent is worth it.
Just for the record, as a former realtor, it is MUCH harder to sell a $200K home than a million dollar home. Home buyers at the lower end have a harder time getting financing and government lending programs have more hoops to jump through. Sales at the price level fall through all the time due to financing. From a time vs money point, I didn't seek out first time buyers. (TBF, I also reperesented a custom home builder, so most of my sales were not first home buyers anyway) I got out of real estate because I didn't like the other realtors. Way to cutthroat for me.
And yes, there were realtors who would rather risk seeing a deal fall apart then budge on their commission. It was a game of chicken and the realtor usually won and the client had to pay more. The big issue is that realtors will get clients to sign listings for way too long. Best practice: find out the average days on market number and add a month or two to your listing length.
I may be in the minority but I have found that good, experienced Realtors earn their commissions. It seems the tide of division of labor is turning back to a do-it-yourself economy. Cheap online will forms, real estate contracts, booking your own travel, finding your own houses and bagging your own groceries. It’s a Wal-Mart life…..can being summoned for a midnight shift stocking shelves at the grocery store be far behind?
I see it more as an a-la-carte economy. Do it yourself for less (maybe) and not as well (probably) or pay someone to do it for you.
I have sold four of the six homes I've owned myself. The last two home sales I offered and encouraged those interested in buying to use the realtor they have been working with at a 2.5 % commission. It worked out well for all. I did all the listing work and showed the home to the buyers. Buyers then contacted their realtor. The agents on the last two homes provided the contract and set up any inspections for the buyer. The title company did the closing. It was all pretty easy and I had control of the day and time of the showings.
When I was doing clinical research I had a patient high-functioning on the spectrum.
Among other things he pulled several of his own teeth: bought a text, bought or made some instruments and extracted the teeth. Not loose teeth like some people pull out. one of them was broken off and technically a surgical extraction. All it took, he said was proper leverage, and several days. He did this without anesthesia so he did it slowly.
He did a root canal on a tooth. The tooth already had a hole in it, he read a book, he made his own files from pictures he saw in the book, he kept filing until it didn't bleed any more and didn't hurt and he felt like the interior surface was smooth. It didn't have any gutta percha or filler in it. but he still had the tooth.
He treated himself for one of his auto immune diseases after he found out that one of the agents used to treat his condition was similar to bee venom. He bought a book, he bought some bees, he raised them and he would capture bees and sting himself with them, therapeutically. He said it worked.
Yes, he successfully did some things that other people do for a living. He didn't do himself any harm as it turned out. He saved some money. I am still not sure I would recommend it for everybody
I bought my current home 18 months ago when home-buying around here was as cutthroat as it is today, I had done a lot of research on my own, knew the market well, etc. When I first saw my house, it wasn't with my agent--it was on my own during the sellers' one-day, limited attendance, wear-a-mask, and go through a determined route through the house in 5 minutes, open-house. There was a lot of interest in the house, mainly because it was underpriced... somehow the sellers and their agent didn't realize it. (I can't believe their agent let them list it at that price.)
There were multiple offers over list price, of course. Mine was initially rejected, and another offer accepted. My agent tried another strategy with the sellers' agent that was savvy and effective, and my offer was ultimately accepted. I would not have been able to negotiate it without my agent. I had done 90% of the legwork, but when it came down to it, my agent got me the house. I feel very fortunate and grateful to be here.
In addition, there are potential buyers who string their agents along for months or years. Friends have been using an agent to research properties for about 3 years. When they buy, I wouldn't begrudge that agent a penny of his/her commission.
@palimpsest...to answer your question....my listing agent never showed my home, it sold quickly....all she had to do was list it, then show up for the closing. I had previously purchased 4 houses from her, at full commission. I never ask to view a house unless I've researched it and plan on making a cash offer, with a quick closing. I'm not a client that runs a realtor ragged. :0) .....at all! My husband can remodel virtually anything...I'm not that particular.
Feathers, around here, some agents purposely underprice in order to start a bidding war and get over list price for the property. Often, they get way over asking, but they usually get the fair market price at the very least.
Cyn, that was the sellers' agent's original intention. But it backfired because the sellers were overwhelmed and shut down a second open house that could have heightened the bidding wars. (The advertised open house was for 2 days. The sellers stopped at 1.) I paid less than 5% over listing when interest rates were under 3%, and area comps were more than what I paid. Underpricing and bidding wars seem to be newer agents' way to market that they've sold listings over "asking price." Fair enough. But my agent recognized that, and negotiated in my favor.
I appreciate all the perspectives given here.........
The market is worth a try right now and I'll find another project!!
We have sold 7 homes ourselves with a flat rate MLS listing and 3% to the buyers agent. We did the photos/staging/listing and showed the homes successfully.
We have interviewed the "Top producers" in our area and have settled on who we are going to list with. This house is beyond our capability and she should be compensated well. The realtors with the "reach" spend a lot on marketing to reach the buyers for this type of property, will help with staging, she has given up her date with pool contractor for us to have ours replastered this week. She has already brought in potential buyers from Canada and wants this listing. The air is a little thinner at this price point, and will likely be an out of state buyer. This community has some exciting stuff happening that will be bringing in executives from other areas.
However, I believe most things sale related are negotiable. I am not going to pay MSRP for a vehicle when I walk in a dealership. Medical/Professional services are not negotiable, IMO, in the professional/client relationship. If i'm at an estate sale on the first day, I'm probably not going to negotiate - on the 3rd day, sure.
I wasn't sure if the buyers agent commission was negotiable as well & it sounds like it is. It didn/t seem fair for her to do all the listing work and the buyers agent get so much more. She will be bringing a contract on Monday, so I'll see what she's asking.
good luck! You have really saved your house and I hope your hard work works in your favor.