Quote:
Originally Posted by JohnnyP
Real estate commissions of 6% may have been justified before the internet, and computerized forms, but not anymore.
- Once a house is listed on the MLS or VLS, buyers are able to search and find candidate homes without any real estate agent assistance.
- Sellers can stage their own homes, following guidelines on the Internet.
- And a lot of the paperwork is now the responsibility of the seller/buyer to complete, after an agent emails access to online forms.
I sold my home, in MD, after interviewing 5 agents and selecting a very successful RE/MAX agent who seemed the most capable and only charged a 1% commission.
- My wife and I had already staged our house, and I took a great set of ~70 photos.
- I hired the agent at 2pm, signed an agent agreement at 4pm, and the home was listed on the MLS by 7pm.
- The first open house was 4 days later and yielded 2 competing offers. The sales contract was in place 2 days later, $26K over the asking price of $780,000 ($806K sale price).
The brokerage fees were:
- Listing agent commission 1% $8,060
- Selling agent commission 2.5% $20,150
- Total commission 3.5% $28,210
- A savings of $20,150 (42%) over the traditional 6% commission of $48,360.
If enough sellers push back on the traditional 6% commission, and select discount brokers, then the market will eventually respond with lower commission rates.
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In a hot market this is the way to go. Friends in Orange County, CA and on the Big Island of HI bought and sold multiple homes and condos similarly for many years. They found a listing agent for $500 - $800 (the price went up over time), paid a top notch photographer a similar amount, staged the property themselves and paid the selling agent 2.5%. They did this 10 or 15 times in as many years with spec condos as well as their own homes. Two of their personal residences they sold themselves just by chatting with someone looking at other homes in the neighborhood.
In a slow market it is a whole 'nother story.
Some agents are just listers, signing homeowners up, listing the property in MLS and collecting half the commission when another broker brings in a buyer. That is why the el cheapo listers became popular. Why pay an agent so much for so little? Now if a listing agent lists, otherwise advertises, holds open houses and so on where they actually earn their commission use one of them, especially in a sluggish market, as they will earn their compensation.