Real estate commissions a question.

[TrudyM]

Ok now all you retired realtors don’t jump down my throat Ok, :throwtomatoes:I know you all work very hard, just a question. I also know that without the multi-list a seller is sunk.
Does anyone feel it isn’t fare that people sell a little townhouse or apartment for $450 thou (in my area) and the realtors get $24 thou they put in the same effort (or less no Ho dues and covens to explain) to sell a house at $850 thou (median in my area) and get $51 thou.

Isn’t 6% high in this economy in a market were the houses have such a huge price tag. (Many of the houses in my town are over a million.)

Three things sell houses as I understand it.

1. Priced correctly - A good realtor doing a good assessment (estimated hours spent 5) of the market and comps. , and the seller accepting the recommendation.
Responsibility: Seller and Realtor in concert.
2. Staging of the property.
Responsibility: Seller
3. Marketing of the property. (estimated hours spent 100)
Responsibility: Realtor.


If all the above situations are met I am told a house should sell now that the market is partially recovered in 120 to 160 days at the longest. That is $319 a day if they have eight listings that is a million a year. I will after totally renovating my house break even or loose money :cryin2:and my realtor (and whomever the realtor who is working with the seller is) will jointly make $60 thousand. (I won't even start on the 1.78% the state gets)

Ok I have vented feel a little better. Have to go work on my kitchen remodel.:highfive: Thanks for listening.

[Kelsie52]

Trudy

I think 6% is toooo high --Here in New York where everything is overpriced, we just met with a broker to prepare to sell and move to TV --The commission is 4%---

We have sold several homes over the last 30 years and have found the best way is to list with a professional, Prequalifying the buyers is essential --for us--we do not want dozens of people window shopping

I agree with your assessment about pricing and staging --if these items are done correctly homes sell.

I always try to keep in mind the Realtor does not work for the buyer or seller -they work for themselves --That being said --they want your listing you can work on brinhing the commission down

Good Luck ---hope to see you in TV :wave:

[784caroline]

I am no favorite friend of Real Estate Agents but Im not sure you really have a true understanding of RE Commissions. ON a $500,000 house say you pay 6% commission to sell thats $30,000. However the listing agent in most cases does not get that $30,000. Most homes are sold today through mutiple listing service so if another agency sells your house, immediately the $30K is split in half. Of the $15K on your agents side he/she has to split it with the Broker and depending upon the prior experience and sale history of your agent it could be 80/20 or even 60/40. Say its 80/20 then your agent will get 80% of the $15000 or $12,000. From that he/she has to buy advertising for your property which can mount up in cost depending upon how long the property is on the market. Some brokers make agents pay for everything like the FOR SALE sign that is posted in front of your house, the flyer that are printed up or the sales brochures that are on your DR table when prospective clients walk through the door. The professional Video of your property that is posted on the web sites such as realtor.com, and others all cost the broker money that comes out of the ($12000) commission.

When all the stars align where an agent sells his own listing, then he/she makes out GREAT but to be honest with you I would never want that job where you are always on call weekends, you can spend hours with a client and they simply call someone else to make the buy. When times are good, the job pays well, but in times like this you really do need a good agent and a good agent will earn his/her 5 of 6%.

OH and from what I have always been told you missed the Number 1 reason why a house sells..............LOCATION, LOCATION, LOCATION!!! Also to meet your goal of 120-160 days to sell a house, sellers must be realistic in setting the price of their house. This is easy to say, but when its you in the drivers seat few of us are willing to think our house that we lived in XX years is now worth only this amount. There are alot more lookers at $300-400K properties than $800- million homes. Today people need cash for down payments and again you are likely to have first time buyers who have been saving who have accumulated the downpayment whereas the buyer of the $800-million home most likely has a home to sell before they can buy yours unless they are foirtunate enough to be part of a corporate relocation program.

[Barefoot]

I am no favorite friend of Real Estate Agents but Im not sure you really have a true understanding of RE Commissions. ON a $500,000 house say you pay 6% commission to sell thats $30,000. However the listing agent in most cases does not get that $30,000. Most homes are sold today through mutiple listing service so if another agency sells your house, immediately the $30K is split in half. Of the $15K on your agents side he/she has to split it with the Broker and depending upon the prior experience and sale history of your agent it could be 80/20 or even 60/40. Say its 80/20 then your agent will get 80% of the $15000 or $12,000. From that he/she has to buy advertising for your property which can mount up in cost depending upon how long the property is on the market. Some brokers make agents pay for everything like the FOR SALE sign that is posted in front of your house, the flyer that are printed up or the sales brochures that are on your DR table when prospective clients walk through the door. The professional Video of your property that is posted on the web sites such as realtor.com, and others all cost the broker money that comes out of the ($12000) commission.

When all the stars align where an agent sells his own listing, then he/she makes out GREAT but to be honest with you I would never want that job where you are always on call weekends, you can spend hours with a client and they simply call someone else to make the buy. When times are good, the job pays well, but in times like this you really do need a good agent and a good agent will earn his/her 5 of 6%.

OH and from what I have always been told you missed the Number 1 reason why a house sells..............LOCATION, LOCATION, LOCATION!!! Also to meet your goal of 120-160 days to sell a house, sellers must be realistic in setting the price of their house. This is easy to say, but when its you in the drivers seat few of us are willing to think our house that we lived in XX years is now worth only this amount. There are alot more lookers at $300-400K properties than $800- million homes. Today people need cash for down payments and again you are likely to have first time buyers who have been saving who have accumulated the downpayment whereas the buyer of the $800-million home most likely has a home to sell before they can buy yours unless they are foirtunate enough to be part of a corporate relocation program.

Caroline, as a retired Real Estate Broker, I'd like to thank you for clarifying some of the misunderstandings about the massive amounts that real estate agents make. You have an excellent understanding of the way the "system" works.

If the real estate commission on a house is $12,000, normally the listing agent's office would get $6,000 and the selling agent's office would get $6,000. Depending on commission split within the office, it is quite possible that the listing agent will end up with $3,000 LESS expenses, which can be considerable. Gas, cell phone, signs, and a massive amount for color advertising. And for that amount, an agent gets to work nights, weekends and be on call 24/7. No company benefits, no pension, no pay for sick time or vacation.

Oh, and don't forget that many people insist on starting with a very high listing price .. the "we're not giving our house away" position. So an agent takes the listing in good faith, spends personal funds to promote it and advertise it. Then the owner becomes angry because it doesn't sell. So they cancel the listing, get a new agent, and lower the price. Trudy, I don't think you figured in the listings where the agent actually loses money!

I'm glad I'm retired from my 80 hour work weeks.

[TrudyM]

The they, I am referring to is the realtor and his broker as a partnership and I understand that they get half the buyers agent group getting the other half. And I also understand I am paying for all the uninformed people who waste a realtors time, can't decide were to live, unrealistic buyers and sellers et all. However my point is the effort is the same to selling a less expensive house. I sunk extra money in for a higher level as an investment and the realtor will make $24 thousand (80% of ½ of the commission) with the other realtors involved getting the remaining $46 thousand, but I will have made not dollar one and it was my money (and sweat) sunk in the thing. I know realtors spend allot of time and effort on people that bear no fruit, but it just hurts that I have to pay the bill when I am not one of them. I have always listed my houses (we have relocated around the country allot) at or below market so that they sell in 90 to 120 days (usually 30) and I have never taken more than 3 weeks (6 afternoons with a realtor) to find a house in the new location. I do my research and hate paying for those who don’t. As I said I am venting.

And the location angle is true I left that out of my list as we poured our retirement funds into this house because of the location as it has city lights and lake view and is the best school district in the Puget Sound. The Greenwich Ct of Washington State. The plan was to bring it up to the level of the neighborhood and make extra money for retirement (the realtor thought we were brilliant) boy did that backfire. I know it is the economy, but when the economy is down shouldn't the commissions be down also?

[BobKat1]

Have you considered a FSBO?

[784caroline]

All commissions are negotiable so I suggest you negotiate and try and get at least a 5% for an MLS sale and even a 4% if the agent sells your home herself. Just dont shoot yourself in the foot for for once you sign for 4 or 5% you will have this agent for 4-6 months and you have to ask yourself will the agent exert or spend the same amount of time, effort, or money (advertising) as he or she would if they were getting 6%.

From an agents perspective they are taking a pay cut for 6% of 500K is not the same as 6% of 400K......and I think you are kidding yourself to think the same amount of effort goes into selling a $800K property compared to a $400K property........especially in todays market.

You may be the fortunate one that can sell your home in 90 days ...hey 120 days would be considerd GREAT and I wish you the best of luck. Just be prepared if things dont work out the way you planned it. A while back there was a posting on TOTV on how long your house was for sale before it sold. If I recall there were more homes on the market closer to a year and beyond before they sold than less than 4 months. Maybe the market today has changed and of course this is all dependent on the price range your selling at AND the location of the country your home is located.

[Barefoot]

I know it is the economy, but when the economy is down shouldn't the commissions be down also?

Trudy, following your line of thinking .... Have you recently taken a reduction in your working income or pension income (if you're lucky enough to get one)? Has your dentist or chiropractor or lawyer or massage therapist or hairdresser recently reduced their rates?

[Niels]

Actually, real estate commissions ARE down significantly. Most real estate agents and have seen a significant reduction in their income.

Real estate commissions are based on sale price. As house prices have dropped (in some areas there have been a large drop in house prices), so have real estate commissions because they are based on a percentage of sales price.

Also, the number of house sales have dropped.

Finally, when people have purchased in the past year, they have tended to purchase smaller, less expensive homes.

Real estate agents may be charging the same percentage commission they were a few years ago but most have taken significant pay cuts for the reasons noted above.

[TrudyM]

Thanks for listening, I just really needed to vent.

[kit9240]

I listed my condo in CT in the beginning of April. I took my realtor's advice and priced it at her recommendation. I wanted to price it higher, but she said this was the best price to sell. Two people looked at it and in 4 days I had 2 offers. I accepted one and was able to get enough out to buy a Patio Villa.....closing on May 25th! Because I had a contract on the home in Fl, I will get the $6500 tax credit. The real estate commission thru Coldwell Banker is 4.5% if listing agent sells it, 5% if another agent/office sells it.

While I would have liked to get more from the sale of my home, timing was right to purchase there. It all worked out in my favor and I am thrilled. I will be a full time Villagers on September 1!!!

[TrudyM]

I listed my condo in CT in the beginning of April. I took my realtor's advice and priced it at her recommendation. I wanted to price it higher, but she said this was the best price to sell. Two people looked at it and in 4 days I had 2 offers. I accepted one and was able to get enough out to buy a Patio Villa.....closing on May 25th! Because I had a contract on the home in Fl, I will get the $6500 tax credit. The real estate commission thru Coldwell Banker is 4.5% if listing agent sells it, 5% if another agent/office sells it.

While I would have liked to get more from the sale of my home, timing was right to purchase there. It all worked out in my favor and I am thrilled. I will be a full time Villagers on September 1!!!

Glad to hear it. :a040: Out here they have overdone the condo building, creating apartments over retail in the central DT of both our town and the others close by, so be glad you were in CT.

Thanks for the info maybe its time for a further conversation with the agents.
Our Coldwell Commission out here is 6% straight up. They can agree to cut it some at contract time to make the deal go through if both the listing and selling brokers and agents agree, but for into the MLS its 6%. They say that if the commission is less no one will show the property. They may be right, I don't know. Stuff is selling at the low end $500 and the high end over $1.2mil the middle price range is still sitting. I have 2800 square ft(plus garage) with view and the realtors I have spoken to (4 so far) are recomending I sink another $200 thou in the place to take it to 4000 sq ft, so I will be closer to the higher end. When we bought the place it was recommended that we put in a new kitchen (just about done) and a new master bath (done), now realtor reaction is that it looks great but the $ per sq ft is off.
That is my other frustration with the situation. Like I have $200 thou sitting around to sink into the house. We will probably wait a year or maybe two in the hopes that helps.
Sorry venting again, thanks for listening.

[cats12470]

Your so right.. we have taken a big cut in pay....PLUS we have the same expenses.... and we must keep our classes up to date.... and all the dues and fees we pay... PLUS we pay our own taxes..... give us a break... we work hard for our money.... thanks...

[logdog]

I did a FSBO and it worked out better for us than going through a Realtor. We had more control over when the house would be shown and I could explain my home's features better than an agent could. We quickly realized that we had to be in the MLS because most buyers will use a Realtor and no Realtor will show a FSBO unless they are guaranteed a commission. I paid about $500 for the MLS and 3% to the buyer's agent.

[784caroline]

Trudy

On the MLS listing the only thing a selling agent wants to see is their part of a commission...that being 3%.......if its less than that you are correct you will get few lookers. It is the listing agreement that specificies 5% (or whatever) split 2 (listing)/3 (Seller). NOt following what you mean you can reduce commission at contract time "If both listing and buying agents agree". You can write into the contract as presented to the buyer, that the listing agent will get 2% and the buying agent has nothing to say (or should he/she care) about that. If you have been told otherwise the listing agent is trying to get the buying agent to share the cut......GET ANOTHER AGENT!!

I personally think you would be foolish to spend another $200k on a property that you are now trying to sell and expect to recoup that money back. If that were the Case why not try droping the price $100-150K and I think you would still be ahead ( and pay less commission!!!) If that does not work, go to plan B.

[TrudyM]

Trudy
I personally think you would be foolish to spend another $200k on a property that you are now trying to sell and expect to recoup that money back. If that were the Case why not try droping the price $100-150K and I think you would still be ahead ( and pay less commission!!!) If that does not work, go to plan B.

What the realtors are saying is list next month (kitchen finished, house repainted) for 900 thou hoping to get 875 which would net me 805 thousand (I have 850 invested in it) or put in another 200 thou and list in March or April 2011 for 1.25 mil hoping to get 1.175 which would net me 1.081 mil so I would loose 19 thousand instead of 45 thousand is their reasoning. They also think it will sell faster but, I think it is too much of a risk.
It was this recomendation (which I got from two of the 4 realtors) which would net me if it worked 26 thousand and the realtors 12 that got me going on this rant in the first place. Thanks for your calm response.

[Pturner]

What the realtors are saying is list next month (kitchen finished, house repainted) for 900 thou hoping to get 875 which would net me 805 thousand (I have 850 invested in it) or put in another 200 thou and list in March or April 2010 for 1.25 mil hoping to get 1.175 which would net me 1.081 mil so I would loose 19 thousand instead of 45 thousand is their reasoning. They also think it will sell faster but, I think it is too much of a risk.
It was this recomendation (which I got from two of the 4 realtors) which would net me if it worked 26 thousand and the realtors 12 that got me going on this rant in the first place. Thanks for your calm response.

Hi Trudy, did you mean to say the recommendation is to list it in 2011 if you invest another 200k? I'm with Trudy. Sounds like a heck of a gamble to sink another 200k into a house you'd prefer to sell now, and then wait another year to sell it, in hopes of recovering the additional investment in an unpredictable housing market. If it were me, I know wouldn't have the stomach for it.

[TrudyM]

I did a FSBO and it worked out better for us than going through a Realtor. We had more control over when the house would be shown and I could explain my home's features better than an agent could. We quickly realized that we had to be in the MLS because most buyers will use a Realtor and no Realtor will show a FSBO unless they are guaranteed a commission. I paid about $500 for the MLS and 3% to the buyer's agent.

I might give that a try, but I will probably end up with a realtor as lot of the people buying are relos from out of town. I think I will just have to wait another year. Things have come back up about 10% (after dropping about 25%) around here so maybe by next year I will be out of the hole.

[Annabelle]

Trudy,
If you have the time, I would first trying selling your home yourself. I did it with my first home, back in the 1980's. This was when we were in a much worst recession with interests rates on home mortgages around 13%.
I did my homework and priced my home comparably with others in my area. I had only one open house and three people made an offer that day. I accepted the one that met my asking price, hired a real estate attorney to handle the closing and that was it.
Today with the Internet and the ability to reach a much larger audience I plan to sell my current home when we retire. By not having to pay an agent's commission, I can use that as leverage with the asking price of my home. I don't recommend this for everyone, but I'm going to give it a shot again.
Annabelle
PS .....If you do decide to use an agent, be wary of anyone who gives you a list of very expensive things (sometimes unnecessary) to do in order to sell your home.

[784caroline]

TWO things....at the price range you are in, I think most prospecive buyers will be using agents and as you say probably alot of agents specializing in relocations that would not touch a FSBO.

I am all for savings buck, but from my personal experience you cannot compare selling a house prior to 2006 to todays market. Practically anyone who was selling 2002-2005 could put up a FSBO sign and have a couple of open houses and sell their house...and agent was not really necessary. we first put our house on the market in spring of 2007 with a company called Help-U-Sell. Supposidly this was a full service RE agency that offered greatly reduced RE commission schedule to sell your house offering 3% to selling agent from MLS, while they placed your home on MLS, Realtor.com, advertised locally etc. Your responsibility was to hold your own open house. If you sold the house through an open house your cost was only $595, if this agency sold your house it was 1% plus the $595. NO advance money or fees were provided....no house sale no payment. If we got a buyer, hey it would have been great but in retrospect, it was 8-9 months lost!

The problems started to arise when we got an offer the agent failed to properly follow up and deals fell through. In this market you need a full time RE agent not only to take care of your side of business but to make certain the buyer has all his stuff together when you come to the closing table.

One recommendation is DONOT fall for those unsolicited RE calls, from agents who know your listing is about to expire, and they ask you do you know why your house is not selling??? They of course want you to say the price is too High, and then they wil go into their marketing approach and how they sell so many homes. I never fell for that approach for after my first experience, I always went with someone who was local and knew the market and would bring by clients on their own.

[jebartle]

I know this is NOT the norm BUT after contract time ran out on present realtor for our home in NC, we raised the price $20,000 and sold it two weeks later ourselves...:loco: .giggle...life is good especially here in the Villages