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Message
re: Selling my house. Why do I have to pay the buyer's agent?
Posted on 10/14/17 at 11:11 pm to LSUtigerME
Posted on 10/14/17 at 11:11 pm to LSUtigerME
quote:
Almost every sales job works off of some form of % based commission, no? A tiered structure? I just don’t see flat fee ever becoming a reality since there’s a variable/negotiated price and it at least provides some incentive.
When every agency in the nation are in collusion and charge the same fee it is price fixing and a anti-trust law issue. sales jobs other than real estate are free to set commissions and fess at whatever is agreeable between the salesperson and those paying them.
This is a good article on real estate agencies and anti-trust violations.
LINK
"But real-estate brokers should understand that any agreement, express or implied, with a competing brokerage to charge a certain commission, or offer the same commission splits, is a per se violation of the antitrust laws, with both criminal and civil consequences.Jan 28, 2014"
2
Posted on 10/15/17 at 7:55 am to EA6B
I understand your point, but they aren’t in collusion. Each agency is free to negotiate, and many do. Every agent I’ve ever seen post anything online, is always very careful to never mention or discuss commission. I think this also leads to some of the misunderstanding, since there’s little information about commission directly and 6% is still generally recognized as the default.
I’ve seen anywhere from 1% to 3%, individually negotiated for buyer/seller, flat fee listings, tiered commission (6% first 100k and 3% after, split between buyer/seller).
The only thing that can change the commission structure is the market. I think the popularity of FSBO, as well as popular sites like Zillow, has caused a shift. It’s definitely not a set 6% anymore, at least for residential. Large commercial real estate transactions, I have no idea where it falls. But I imagine the market can influence it all the same.
I also believe part of the issue is around qualification and certification to become a realtor. It seems every house wife who finds themselves bouncing around jobs or unhappy wants to get their real estate license.
I’ve seen anywhere from 1% to 3%, individually negotiated for buyer/seller, flat fee listings, tiered commission (6% first 100k and 3% after, split between buyer/seller).
The only thing that can change the commission structure is the market. I think the popularity of FSBO, as well as popular sites like Zillow, has caused a shift. It’s definitely not a set 6% anymore, at least for residential. Large commercial real estate transactions, I have no idea where it falls. But I imagine the market can influence it all the same.
I also believe part of the issue is around qualification and certification to become a realtor. It seems every house wife who finds themselves bouncing around jobs or unhappy wants to get their real estate license.
Posted on 10/15/17 at 10:10 am to Dayman
Ok. Here’s where you don’t understand the business. The agent has a broker. The broker provides the agents office/desk and provides support. So the broker gets a cut and it isn’t a small cut. Additionally there are marketing costs associated
A good agent will hire a stager, pay for professional photos and pay for an inspection so items can be addressed before listing the house.
They don’t just get to pocket all of that money. There can be substantial costs involved.
Now. Should $60k be split because my house sells for $1M? I don’t think so but that’s a matter for a different discussion.
A good agent will hire a stager, pay for professional photos and pay for an inspection so items can be addressed before listing the house.
They don’t just get to pocket all of that money. There can be substantial costs involved.
Now. Should $60k be split because my house sells for $1M? I don’t think so but that’s a matter for a different discussion.
This post was edited on 10/15/17 at 10:14 am
Posted on 10/15/17 at 11:45 am to Dayman
quote:
Essentially, I'm paying for having all the paperwork and title aspects of the sale.
All of that is billed to the buyer in closing costs.
Posted on 10/15/17 at 12:12 pm to LSUtigerME
quote:
I understand your point, but they aren’t in collusion. Each agency is free to negotiate, and many do. Every agent I’ve ever seen post anything online, is always very careful to never mention or discuss commission. I think this also leads to some of the misunderstanding, since there’s little information about commission directly and 6% is still generally recognized as the default.
You will never find anything in writing about the default commission being 6% by design. 60 minutes did a segment on this years ago, they interviewed agents and those representing agencies all over the U.S., they were unable to get a single one to admit that the default commission was 6%. They could not have been more evasive on the subject, they knew if the majority of them admitted the standard commission was 6% that would be evidence of collusion.
Posted on 10/15/17 at 4:37 pm to 13SaintTiger
quote:
Are you able to answer the question or not? Why do I have to pay the BUYER's agent? I understand paying my (seller's agent).
Did you sign a contract stating you pay a listing agent 6%? Did contract state if buyers has agent 3% of that 6% would be commissioned to buyers agent? That’s your answer
This post was edited on 10/15/17 at 5:08 pm
Posted on 10/15/17 at 4:40 pm to EA6B
quote:
When every agency in the nation are in collusion and charge the same fee it is price fixing and a anti-trust law issue. sales jobs other than real estate are free to set commissions and fess at whatever is agreeable between the salesperson and those paying them.
This is a good article on real estate agencies and anti-trust violations.
LINK
"But real-estate brokers should understand that any agreement, express or implied, with a competing brokerage to charge a certain commission, or offer the same commission splits, is a per se violation of the antitrust laws, with both criminal and civil consequences.Jan 28, 2014"
I’ve charged everything from 0% to 10% commission this year. This is retardation.
Posted on 10/15/17 at 6:37 pm to 13SaintTiger
You have to pay your selling agent. They are the ones that will be paying a buyers agent, if they bring an acceptable offer.
If the selling agent finds a buyer, they get the entire 6%.
Don't hate on the agents, hate on the system. The individual agents typically earn their money. But that doesn't mean the entire system isn't flawed
If the selling agent finds a buyer, they get the entire 6%.
Don't hate on the agents, hate on the system. The individual agents typically earn their money. But that doesn't mean the entire system isn't flawed
Posted on 10/16/17 at 7:07 am to 13SaintTiger
We’re closing on our old house Friday. Just went through this.
We sold by owner on Zillow, FSBOBR, etc. If a buyer comes with no agent, problem solved. In our case an agent reached out to us and said a client is interested, are we willing to work with an agent. We said yes at 2%.
Good thing we said yes, otherwise our house might still be on the market. In my opinion, it’s worth the 2% to unload the house.
We sold by owner on Zillow, FSBOBR, etc. If a buyer comes with no agent, problem solved. In our case an agent reached out to us and said a client is interested, are we willing to work with an agent. We said yes at 2%.
Good thing we said yes, otherwise our house might still be on the market. In my opinion, it’s worth the 2% to unload the house.
This post was edited on 10/16/17 at 7:08 am
Posted on 10/16/17 at 9:07 am to 13SaintTiger
I sold a condo recently in Baton Rouge and my agent accepted 5% knowing he’d split it with buyer’s agent.
And you are paying because you’re the only one receiving liquid cash. Buyer can’t give 2.5-3% of the house.
And you are paying because you’re the only one receiving liquid cash. Buyer can’t give 2.5-3% of the house.
Posted on 10/16/17 at 10:13 am to boosiebadazz
quote:
And you are paying because you’re the only one receiving liquid cash. Buyer can’t give 2.5-3% of the house.
This. The reason the seller pays for this, is because it requires less liquid cash up front from the seller. How many buyers of sub $250k houses have an extra $5,000 laying around.
Selling a house is easy, but the selling realtor has a lot of items to pay for too. Professional photographer is $250-500, marketing can be easily into the $1000s. I'm in property management, so don't argue these. People say, I can take just as good of photos....lol no you can't. Professional real estate photos are not easy. Buyers agents can make great money or spend 12 months and look at 30 houses for 100 of hours of time.
And finally, LOL OP when you bought your house the seller paid your agent. Now you are just being a cheap arse.
Posted on 10/16/17 at 11:01 am to baldona
So why does the seller and his agent, decide how much the buyer’s agent is worth? What if the agent did a piss poor job and wasn’t worthy of the full 3% a seller’s agent agreed to as his split, long before that agent actually showed up?
This is my main issue with the business model. I’m all for paying people what their services are worth. But a seller is paying an agent he did not hire.
The seller pays the agent because he has the liquid cash at closing? What about closing costs? Or the actual mortgage the buyer is taking out? The buyer can just as easily pay his agent as the seller can split his end. This would allow each to be negotiated independently, and each to be paid or services retained based on value provided.
This is my main issue with the business model. I’m all for paying people what their services are worth. But a seller is paying an agent he did not hire.
The seller pays the agent because he has the liquid cash at closing? What about closing costs? Or the actual mortgage the buyer is taking out? The buyer can just as easily pay his agent as the seller can split his end. This would allow each to be negotiated independently, and each to be paid or services retained based on value provided.
Posted on 10/16/17 at 12:30 pm to 13SaintTiger
When selling my last house, we worked with a flat fee sellers agent. They sold my house for a fee of $1,250. On a nearly $300k house, that means they made .4% commission. We still included 3% for buyers' agent to get it sold quickly, but could have easily written the contract for lower. This is the only way I will use an agent going forward.
Smart Choice Realty
Smart Choice Realty
This post was edited on 10/16/17 at 12:31 pm
Posted on 10/17/17 at 4:45 am to seawolf06
I just had a situation arise with a realtor for a house I have listed on Zillow that should add to the conversation. She asked for pics of my backyard and parking area. After sending, here is the email exchange.
Realtor:
"Thanks so much for this! I will pass on to my buyers. I guess my next question is, are you will to pay a buyers' agent commission of 3% if my clients decide to make an offer on this property?"
My response:
"If your buyers make a legitimate offer and we're able to negotiate a price that's acceptable I would definitely consider a commission. However, before putting the cart before the horse, I don't want to commit to a certain percentage until a legitimate offer has been made."
Agent follow up:
"Unfortunately, I cannot risk not being compensated."
How is this servicing your client and why should I pay over $20k for providing me with basically nothing especially considering her clients likely found the house.
Realtor:
"Thanks so much for this! I will pass on to my buyers. I guess my next question is, are you will to pay a buyers' agent commission of 3% if my clients decide to make an offer on this property?"
My response:
"If your buyers make a legitimate offer and we're able to negotiate a price that's acceptable I would definitely consider a commission. However, before putting the cart before the horse, I don't want to commit to a certain percentage until a legitimate offer has been made."
Agent follow up:
"Unfortunately, I cannot risk not being compensated."
How is this servicing your client and why should I pay over $20k for providing me with basically nothing especially considering her clients likely found the house.
Posted on 10/17/17 at 6:27 am to nolabuilder
Playing devil's advocate - what conditions would have caused you to not know what % you would pay, assuming a legitimate offer?
Posted on 10/17/17 at 7:06 am to ATLdawg25
Fair question. I most likely would not have paid 3% regardless of the offer considering there was zero service rendered to me, but would have paid somewhere between 2 and 3 assuming her sellers brought me an offer close to my asking price. This is on a $800K plus transaction and don't feel that just sending me an email is worth $20K - $25K. Further, I sent her a follow up email clarifying that I would pay a percentage, but won't commit to a number until the negotiation is further along and have not received any response. I considered this the start of a negotiation and most likely would have agreed to 2% - 2.5% with a legitimate offer, but haven't heard back from the agent.
Posted on 10/17/17 at 8:08 am to pwejr88
quote:
We sold by owner on Zillow, FSBOBR, etc. If a buyer comes with no agent, problem solved. In our case an agent reached out to us and said a client is interested, are we willing to work with an agent. We said yes at 2%.
Good thing we said yes, otherwise our house might still be on the market. In my opinion, it’s worth the 2% to unload the house.
I understand this situation, and I get that it was in your best interest to work with the buying agent and do the 2%. I think that is how it should work in this situation.......to an extent.
What's screwed up though is that if you had said no, then does the buying agent just not show his clients a house that is possibly perfect for them? I totally understand why they'd have no incentive to. I get that. But at that point, the agent really isn't working for the buyer. They are just working for their own commission. So in that sense, I feel a buyer should pay a flat fee for their realtor, and the seller works out their own deal with their realtor. The buyer's agent's commission being based off of a deal the seller has (or doesn't have) with an agent is asinine.
Posted on 10/17/17 at 10:33 am to 13SaintTiger
quote:I think the issue is this, don't you negotiate the % when you list the house? So the % is set before you know if there is even going to be a buyer agent?
The selling agent fee is 3%, the buyer agent fee is 3%. If no buyer agent exist, I pay 3%, not 6
This post was edited on 10/17/17 at 10:36 am
Posted on 10/17/17 at 1:09 pm to LSUtigerME
quote:
I think 6% is pretty universally recognized as the maximum, with most people negotiating smaller or variable commission.
This is correct. I've bought and a lot of property and I've never paid more than 5%.
Posted on 10/17/17 at 1:17 pm to Dayman
quote:
The fact that agents get a percentage of the sales price, as opposed to a flat fee, is absolutely ridiculous.
Real estate isn't the only industry like this. What about restaurants? Think about the waitress at Chili's that busts her arse for a $6-7 tip on a $40 ticket. Then consider the same amount of work (or less) might be done by a waitress at Ruth's Chris down the street while making $20-25 on a $100 serving the same amount of food and drink?
This board always seems to have a hatred for real estate agents without acknowledging all of the other industries that are very similar (food, auto, etc).
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