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Message
re: Realtor Negotiations
Posted on 7/23/18 at 1:22 pm to EA6B
Posted on 7/23/18 at 1:22 pm to EA6B
I expect this will be a sticking point whenever I decide to buy a house. I'll likely use a service like Door that charges a flat rate.
Remember: When buying or selling, an extra $5,000 means a lot more to you than it does to the agent. Agents are incentivized to drive velocity, not the highest price.
Remember: When buying or selling, an extra $5,000 means a lot more to you than it does to the agent. Agents are incentivized to drive velocity, not the highest price.
1
Posted on 7/23/18 at 1:34 pm to lnomm34
I agree there's a conflict of interest in general. The seller and buyer are both trying to get the best price for their clients, so why would one person represent both? It's never made much sense to me.
Seems like that was a hard lesson learned doing it in a completely new market with a dual agent. I have friends in the business that I trust and they have not steered me wrong yet. Sucks the agent you originally had just laughed in your face. I can't imagine trying to move into a completely new market with no knowledge and trying to buy. I'd have to have someone I truly trust or possibly rent for a year to get a good personal feel of the city I'm in.
Addressing an issue of the value of a realtor and buying, while I did a good bit of the searching for the house I bought, my realtor did find some other similar places I really liked to make the choice tougher. He also was able to handle a lot of leg work during the work week when I couldn't. I can understand FSBO since the seller eats the costs, but for buying it's very helpful and many times isn't worth the difference for extra hassles you go through in a thorough search process.
Seems like that was a hard lesson learned doing it in a completely new market with a dual agent. I have friends in the business that I trust and they have not steered me wrong yet. Sucks the agent you originally had just laughed in your face. I can't imagine trying to move into a completely new market with no knowledge and trying to buy. I'd have to have someone I truly trust or possibly rent for a year to get a good personal feel of the city I'm in.
Addressing an issue of the value of a realtor and buying, while I did a good bit of the searching for the house I bought, my realtor did find some other similar places I really liked to make the choice tougher. He also was able to handle a lot of leg work during the work week when I couldn't. I can understand FSBO since the seller eats the costs, but for buying it's very helpful and many times isn't worth the difference for extra hassles you go through in a thorough search process.
Posted on 7/23/18 at 1:55 pm to lnomm34
quote:
My first house, we bought using a dual agent. We were new to the area and no one clued us in on areas that would have been more appropriate for our family. We found a nice house, contacted the listing agent, she showed us the house, and we bought it.
Please don't get me wrong... I'm certainly not defending her, her actions or her attitude. But unless the laws or standards and practices are different in the state where you bought, it doesn't sound like she was legally a dual agent. Had you signed an exclusive buyer's agency agreement with her before seeing the house? You just contacted the listing agent and she sold you the house, right? If so, then her fiduciary duties were still to the seller.
Dual agency usually comes about when someone has signed an exclusive buyer's agency agreement with an agent (legally making that person THEIR agent) and the buyer becomes interested in a property that the agent or his agency has a listing on. Not all states permit dual agency. And the ones that do usually require that both parties (seller and buyer) sign off on disclosures.
But the confusion around this issue is what causes a lot of people to either get burned, or at least feel like they were short changed.
Posted on 7/23/18 at 2:03 pm to lynxcat
quote:
When buying or selling, an extra $5,000 means a lot more to you than it does to the agent
This is the part that always makes me a little crazy. Its where the motivations of buyer/seller and agents are clearly out of line.
HYPOTHETICALLY, A $5,000 difference in price makes about a $75 difference to the agents.
5,000 * 6% = 300
300/4 = $75 (assuming an equal split between listing broker, listing agent, buyer's broker, buyer's agent)
5,000 is a lot of money. 75 is not.
Posted on 7/23/18 at 2:52 pm to Jag_Warrior
quote:
Dual agency usually comes about when someone has signed an exclusive buyer's agency agreement with an agent (legally making that person THEIR agent) and the buyer becomes interested in a property that the agent or his agency has a listing on. Not all states permit dual agency. And the ones that do usually require that both parties (seller and buyer) sign off on disclosures. But the confusion around this issue is what causes a lot of people to either get burned, or at least feel like they were short changed.
Correct. If there is a confirmation of agency status I'll bet agent put him as unrepresented. No way you take on the liability if you don't have to. THey already had 6% locked up.
To OP, If you've got an experienced agent willing to take on rural property for 6% that is fair. Typically there are so many special stipulations and performance date requirements you need a guy who knows wtf he's doing. Raw land is generally not a barbie doll in a Lexus transactions. I've charged as much as 10% on these type deals because the time and work involved was worth every penny.
Posted on 7/23/18 at 2:54 pm to AUjim
quote:
HYPOTHETICALLY, A $5,000 difference in price makes about a $75 difference to the agents.
Not even really a "hypothetical"...it's the actual payout in the given use case you described. It is a fundamental flaw to the conventional way the residential RE market works.
I also do not believe that selling a $250K house takes any extra effort than a $200K house, so why should the agent receive pay that varies based on a generally irrelevant factor. We have already established that the agent is incentivized to move your house at a lower price more quickly than a higher price that requires longer.
Posted on 7/23/18 at 4:29 pm to ItNeverRains
quote:
To OP, If you've got an experienced agent willing to take on rural property for 6% that is fair. Typically there are so many special stipulations and performance date requirements you need a guy who knows wtf he's doing. Raw land is generally not a barbie doll in a Lexus transactions. I've charged as much as 10% on these type deals because the time and work involved was worth every penny.
Both properties are houses that would sell fairly quick.
Posted on 7/23/18 at 4:59 pm to TigerSaint1
I think he meant that reply for CharleyLake, who was talking about rural acreage being listed for 6%. And yeah, that would be a good rate... if the job gets done
Posted on 7/23/18 at 6:51 pm to Jag_Warrior
In my particular case my agent is also the agent/owner so that does simplify things. Great information that you provided. Who would know about the fiduciary responsibilities of a "subagent?" Appreciate you comprehensive response.
Posted on 7/24/18 at 9:57 am to lnomm34
The problem isn't the good ones. The problem is the vultures that hang around Zillow waiting to swoop in and snatch up the next incoming "I'm interested in this property" email, then do absolutely nothing but mediate phone conversations and get their piece of the deal.
Posted on 7/24/18 at 10:34 am to CharleyLake
quote:
In my particular case my agent is also the agent/owner so that does simplify things. Great information that you provided. Who would know about the fiduciary responsibilities of a "subagent?" Appreciate you comprehensive response.
No problem. I hope it helped.
There really is too much confusion about agents' roles. Most of what I detailed was because of a couple of negative (litigious) experiences a long time ago. Unfortunately, there are times when you might need your attorney to place a call to a broker and "encourage" him to counsel his agents on who they actually work for. So if agents sometimes forget, imagine how hard it is for the buying/selling public, who, through no fault of their own, aren't even aware of how agency works.
Posted on 7/24/18 at 1:40 pm to TheBoo
quote:
The problem isn't the good ones. The problem is the vultures that hang around Zillow waiting to swoop in and snatch up the next incoming "I'm interested in this property" email, then do absolutely nothing but mediate phone conversations and get their piece of the deal.
Agents pay a lot of money to be part of Zillow. A LOOOOT of money
Posted on 7/24/18 at 1:52 pm to TigerSaint1
quote:
In this scenario would realtor fees be negotiable, and what % would be fair to both parties?
Commission is negotiable as others have stated but to what extent is up to the individual firm / broker.
My broker does not allow anything less that 5%
He has allowed 4% once or twice but that was for a super rare occasion.
Ask yourself this as well...
Do you want your house on the market with a 2% Selling Agent commission vs. a lot of other homes with a 3% Selling Agent commission on them?
Posted on 7/24/18 at 2:10 pm to TigerSaint1
Op , the best thing to do is list with the Realtor who owns the agency not their agents and then negotiate a flat rate by dollars not %
My experience is this normally works out to about 3 1/2%
My experience is this normally works out to about 3 1/2%
Posted on 7/24/18 at 2:39 pm to AUtigR24
quote:
Commission is negotiable as others have stated but to what extent is up to the individual firm / broker. My broker does not allow anything less that 5% He has allowed 4% once or twice but that was for a super rare occasion. Ask yourself this as well... Do you want your house on the market with a 2% Selling Agent commission vs. a lot of other homes with a 3% Selling Agent commission on them?
So in a 5% total compensation, where typically a buyers agent has agreement to a standard 3% commission, your strategy is take 3% for listing and offer 2% to Selling agent?
You need a new brokerage. Yours is stupid. If I were in your market and we were competing for a standard residential client I'd cut my rate to 4.75% and offer a 3% commission to buyers agent so they'd have no reason not to show my property. May not sound like much but on a 250K property thats $625 in sellers pocket.
Posted on 7/24/18 at 4:44 pm to ItNeverRains
No I was using the standard 5% and 6% commission rate as a base and then splitting it evenly between selling agent and listing agent.
For instance if you have a buyer looking for a $250k house...You're scrolling through the MLS and see two very similar homes for $250k One is the OPs with a 4% total commission (2% to you the selling agent) Vs. the other home which has a standard 6% commission (3% to you the selling agent). Which home do you think realtors are going to push their buyers towards?
My point was to the OP that you can negotiate your realtors commission down to a point where it may hurt you instead of help you.
For instance if you have a buyer looking for a $250k house...You're scrolling through the MLS and see two very similar homes for $250k One is the OPs with a 4% total commission (2% to you the selling agent) Vs. the other home which has a standard 6% commission (3% to you the selling agent). Which home do you think realtors are going to push their buyers towards?
My point was to the OP that you can negotiate your realtors commission down to a point where it may hurt you instead of help you.
This post was edited on 7/24/18 at 4:46 pm
Posted on 7/24/18 at 6:21 pm to AUtigR24
quote:
For instance if you have a buyer looking for a $250k house...You're scrolling through the MLS and see two very similar homes for $250k One is the OPs with a 4% total commission (2% to you the selling agent) Vs. the other home which has a standard 6% commission (3% to you the selling agent). Which home do you think realtors are going to push their buyers towards?
In my experience in that situation listing agent is taking 1 and selling agent is taking 3. Otherwise like you said some agents may not be as favorable to your listing as others.
My point is if that house will sell in hours not days and you have the potential of landing an unrepresented buyer and actually taking all 4% of total compensation your brokerage is handcuffing you by its policy.
This post was edited on 7/24/18 at 6:23 pm
Posted on 7/24/18 at 10:10 pm to TigerSaint1
Tell Realtor you’ll use her as dual agent on new house if she sells your old house for 3.5% total. Win win
Posted on 7/25/18 at 9:39 am to bamaswallows
quote:
Tell Realtor you’ll use her as dual agent on new house if she sells your old house for 3.5% total. Win win
See my earlier post. No way I would put my home on the market with a 3.5% commission while others are listed with a 6% commission.
You're basically offering selling agents 1.75% when they can get 3% elsewhere.
Posted on 7/25/18 at 10:22 am to AUtigR24
quote:
See my earlier post. No way I would put my home on the market with a 3.5% commission while others are listed with a 6% commission. You're basically offering selling agents 1.75% when they can get 3% elsewhere.
You've drawn a line in sand saying whatever commission you negotiate as listing agent will be split 50/50 with sellers agent. Let me propose a hypotethical.
Say you have a 1M listing agreement that will sell quickly and all seller is willing to offer is 3.5% total commission, but wants you to offer buyers agent 3% of that and you only take .5%.
For that, they will sign an exclusive buyers rep agreement with you for a full 3% commission and are buying a house in the 1.5-2.0M ballpark.
Go.
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