RE commissions from selling a house in MA
 

Just signed a R/E agreement to sell my parent's house

Selling R/E agent commission = 2.5%
Buyer's R/E agent commission = 2.0%
If no buyers agent, Selling R/E company gets 1.5%

min commission = 4.0%
max commission = 4.5%

down from the previously combined 6 %
and down from the single R/E fee of 3% to the selling sales rep.

BUT up from a single rep, no buyers commission of the previous 3% generally agreed. .

Is the new arrangement working for the industry? I am leaning probably, but sample size 1, with my last sale 25 years ago and I don't remember the commission structure, so inconclusive.

@retiredguy123. . . I already know you won't pay the buyers commission. .

Standard in MA for the last 20 years, has been 5%. I haven't seen a 6% Commission in MA for at least 25 years, unless it was an unusual circumstance.

The Commission has been moving towards 4.5% for the last 5-6 years, primarily based on competition from cut-rate brokers and online services.

I think you paid the going rate, maybe saved .5%.

Going forward for the next few years, I think 4%-4.5% is going to be where rates settle out.

Soon realtors won’t exist. You can search, buy and sell on line. Like clothing purchased online, there will e resistance for a while. Eventually though, realtors will fade into the sunset.

Looks like you signed an agreement to list the house for sale, not an agreement to sell it.

semantics - as I signed an agreement with a R/E agent and petty observation when the point of thread is the commissions. .

Commissions become subject to renegotiation during the period offers are sent back and forth between buyers and sellers. They can be reduced at such times. Rarely are they increased.

I paid a 3% commission split between selling and buying agents on the last property I sold.

It ain't over 'til the fat lady sings.

That would be nice but like the Daily Sunny some things won’t change no matter what the people want.

So you sign a contract for a Broker to represent you ... then try to renegotiate, when a potential buyer shows up?

Doesn't sound very honorable to me.

Geez! I am not claiming it is honorable or dishonorable. It just happens. Based on what I have observed and experienced over the years is that it occurs in the normal course of the real estate sales business, more frequently in commercial sales than in residential. The reason it happens is to close a deal that otherwise would not close. Indeed, what I have usually seen and experienced is that the buyer and seller cannot agree on a price. They are close, but no cigar. One or both of the agents if there are buyer and seller agents involved offers to reduce a commission to gain a deal as no deal means no commission. A listing agent is of course free to not offer to receive less commission and continue to seek a buyer willing to pay a price to which the seller will agree. A buyer's agent can stand pat , too. So no deal. That happens, too. It is a free country.

I've done 100's of residential deals & 100's of commercial transactions ... I've never seen it happen.

If 1% changes someone's motivation to buy or sell, they shouldn't be doing the deal.

JMOYMMV

Yesterday a Village Trolley stopped at Ezell, a group of 20+ people touring the facility. All had brand new VLS name tags.
So either some have left the fold, because over 350 agents are not getting enough business, or additional VLS added to the 350+ agents.

Either way additional new sales people for TV

We signed an agent representation agreement for our MA home in Sept 2024 with the following terms:
Selling R/E agent commission = 2.5%
Buyer's R/E agent commission = 2.5%
If no buyers agent, Selling R/E company gets 1.0%

We had intended to list it in Feb 2025 but signed in Sept because I wanted the pictures / drone videos taken in the Fall, before we lost all the leaves + yard went dormant.

We were approached by someone who heard we'd be listing and sold it in Nov 2024 with no buyers agent so paid 3.5%. No inspection, no contingencies, and we got to pick the closing date.

It cost us 3.5% but oh well...

When I sold my house in Virginia, the buyers offered a lower price than in the listing price, and it included a provision that I had to pay an additional 3 percent of the sales price for the buyer's closing cost. I told my agent that the only way I would accept the offer was for her to split the 3 percent with me, and she agreed to do it.

Every listing contract I have seen specifies a sales price. If the agent brings in a lower offer, the listing agreement is not satisfied, and I see nothing wrong with negotiating a lower sales commission. Note that I provided zero input into the initial listing price. I told the agent that she is the experienced professional, and that she should know how to price the house. She asked me for input, but I refused.

I never paid more than 3% and I sold 3 houses in Ma over 25 years. Last home sold in 2020

NY max = 6% total. House will sell itself at Open House in early Aug. For sure, a money grab!

Uncalled for.

:posting:

So we're down in Lakewood Ranch, hedging on whether we sell in '25 or wait it out and delay gratification until the Fed gets its head on straight and brings interest rates back toward prior levels. No agent here is talking about anything below 6%, and aren't inclined to do much if you want to go lower.

The problem is inventory. Suppose you have two similar homes, but one is paying a 3% buyer commission, while the other is paying 2%. Agents being what they are will steer you away from the 2% home toward the 3% because they'll get more money. Despite what the new rules say, it's still the same game. On the bright side, we're still sitting on a sub-3% mortgage, so the incentive to sell is lessened with rates and pricing where it is.

The Fed's head is on straight. If one wants free money they should save and use their own money. Prior levels were in the 5-8% range until recession mess they needed to avoid.

The best deal yet in selling a home is For Sale By Owner, unless the it is a complicated property with unusual easements, questionable property line or that type of thing.

Commissions
 

You can negotiate and do not have to pay a commission if the buyer is unrepresented. Get a different agent to sell the house

Why pay 5%-6% Commission, when you can simply sell your house for 10% under market value and pretend you did the smart thing?

The statistics have proven over & over again, FSBO cost Seller real money.

And I'll bet those statistics were funded and provided by realty firms. How can one lose money when the home is appropriately priced or maybe a bit higher and it sells within a week to a month.

I agree that there are those who are incapable of handling a house sale but others, like us, that sell our own real estate walk away with all the money due us after closing with none being handed off to a realtor. You really have to do a crummy job of selling not to come out ahead.

Will be selling our primary home without a realtor when ready to move. .

Over the last 5 years, 93% of Sellers used a professional. So it would appear that opinion is in the minority.

I first did that in 1972 when I was leaving Rochester, NY for NM. One small four line weekend ad in the local rag, which cost a small fortune as it was owned by Gannett, did the trick. I was leaving Kodak and the buyer was just hired by Xerox. We closed in the courthouse. I later sold my parent's house to their neighbor who wanted it for his daughter. Over the years I bought directly from a couple of owners but usually listed houses for sale with the best local companies. It depended on market conditions.

In 1976 because it was a piece of cake to do so I obtained a NM RE broker's license which I finally gave up when the pandemic hit in 2020 as the continuing education program was becoming more time consuming and I very, very rarely used the license. Always paid for E&O insurance, though. Many if not most commercial RE investors hold broker's licenses as it can help lower the cost of buying via commission sharing and similarly for selling by co-llsting with an active broker.

You have a good head on your shoulders and will do just fine when you're ready.

It very well could be that only the minority is pocketing the cash from a For Sale By Owner effort and the rest are keeping the realtors flush with cash. We don't mind being in the minority in this situation.:BigApplause:

Thanks for this discussion. It is informative.

Same things happening with cars

good luck with that!

it interest rates go back down to where they were during the pandemic, the country is again in a very dire economic situation. . . not saying it won't happen, but the housing results won't be the same, history events like that seldom repeat without a generation or two passing. .

interest rates today are at a historically normal rate, . . don't be held hostage waiting for interest rates to fall for a housing price explosion. .

good luck to us!

Reminds me of Life Insurance Salesmen
 

It reminds me of the life insurance salesmen that sold Encyclopedia Britannica simultaneously back in the 60s. Agents are on their way out. Skimming on every sale is frowned upon by most as middlemen fade into the sunset because of the internet.

Don’t forget travel agents

So let me get this straight. Rates were in the 3's and 2's for a few years when we weren't in a recession, but we needed to jack them up to 'avoid' a recession? So they jacked them up to 7% because of excessive federal spending and inflation. And when inflation came back under control, they made a couple 25 and 50 basis point cuts then halted with a slightly different explanation each time about avoiding the cuts.
So why now with inflation at stable lows, a stalled housing market, and pricing for even starter homes being out of reach, the Fed continues to artificially maintain a higher rate.
Sure, that makes all the sense in the world. :confused:
Look, we don't expect seeing 2% rates again, but 7% given the current patterns being artificially hiked doesn't make sense either. Something in the 5's would probably satisfy others and provide some needed stimulus to the RE markets. It's not about saving for a house or cheap money, but it is about affordability differences removing people from the market that isn't doing anyone any favors.

Only one variable
 

Inflation isn’t completely under control yet and isn’t the only factor used when considering the lending rate the Fed board sets. Unemployment, tariffs, GDP, dollar strength and many other factors are also important before the Fed votes to raise or lower interest rates. The manufacturing slowdown and layoffs tell a different story.

Rates are best left alone at least till the end of the year.

The only time rates were fiddled with so badly was the recession and covid. 7% isn't an artificially hiked rate. Prices are not going down, more have gone up and people are spending every like crazy. Watch what happens if rates are artificially depressed again. It's no wonder people don't bother saving money anymore, it pays peanuts for interest and their dollars are worth a lot less if they spend them later rather than sooner.

The fed has two mandates,
stable prices (minimal inflation is considered stable)
full employment. .

So the fed is currently waiting to see:

1) if when the labor market weakens, to lower interest rates.

2) if when inflation rises, to raise interest rates.

Currently the dollar has weakened 10%, thus increasing imported good prices 10%, and tariffs have increased imported goods an uncertain amount, depending upon from which company the goods were sourced, and when . .

but neither labor nor inflation has moved significantly, so the fed is waiting for which one moves and by how much to make their decision on which way to go!

You have to look at both viewpoints, not just the most favorable one to your desired outcome. . and the fed is just waiting to see which movement overpowers the other. .

good luck to us, we need it!

Your assessment is accurate and I agree... Thus, I was pointing that nothing indicates a drop in interest rates right now, it is not supposed to happen just for the "feel good rate when acquiring loans.

Reading United States Economic Forecast might give some people, who haven't an inkling how these decisions are made, some perspective.

just providing some rational for the potential for interest rates to move up or down. . and given the uncertainty and cloudiness of the poli-economic environment, it might be wait and see for quite awhile. .