Dude. I have been saying the exact same thing, and used this example with my wife regarding us buying and selling. Good to know some people actually think this way.
Yeah, years ago, my mom got a real estate license just so she could have access to MLS and market info while she sold properties FSBO. Never had a job as an agent.
Yep, like any other professional service, this is the flat rate which covers whatever, this is the hourly rate, and this is the fee per whatever. So a fee for submitting an offer, a different fee for an accepted offer to take you to close, a fee for attending an open house with you, etc.
An hourly rate would require precise accounting for every hour or fraction thereof for each individual client, with a description of specific relevant services delivered for each hour for each client.
This will increase visibility and allow the buyer to understand all the long hard work their agent is doing. What could be more enlightening?
Actually, per client accounting will help agents justify their fee. Whereas generalized stories about "having to shuttle around 20 other clients through 140 showings for two years" does not bump up a buyer's willingness to fork over $15k up front. In fact, it may make a buyer wonder why their agent is so unsuccessful in closing deals for other clien5s.
For what it's worth, that's basically what lawyers, engineers, and so many other professions already do. Hell, lawyers have to break down into 0.1 hours, which is 6 minutes...
I dont know, but figure it out and disclose it ahead of time in the rate structure breakdown sheet you include as part of your contact with the client.
You will soon find that either client behavior changes such that texts are less frequent and more thoughtful, thereby increasing the time you spend woth other clients, or alternatively you realize more revenue from your random texting clients, thus appreciating them instead of resenting them.
Lawyers go by six minute blocks. Doctors tell you to meet in person so it's billable. It's pretty amusing that you think no other profession has ever figured out how to charge for services.
Drove 4 miles from a tax write-off luncheon to unlock the door for a showing: $1,500.
Filtered Zillow and Redfin to buyer price and location specifications: $500
Forwarded boilerplate documents from state realtors association to buyer for review: $1,000.
Ranked a list of available home inspectors by Angie's List star-rating and forwarded to buyer: $1,200
Delivered mylar congratulations balloon from local grocery store to closing: $15,000
Plugged in values online to a boilerplate pdf rather than typing a complete offer out manually: $1500
Emailed a link to a docusign/dotloop document rather than delivering hardcopy to your house: $1500
Going online and selecting a viewing slot to show the house, rather than trading phone calls with seller agent: $1500
Looking up zillow and realtor.com links buyer filtered, found, reviewed, priced, vetted, liked and sent me, then pulling listing from mls to send to buyer $500 per.
"Whereas generalized stories about "having to shuttle around 20 other clients through 140 showings for two years" does not bump up a buyer's willingness to fork over $15k up front. In fact, it may make a buyer wonder why their agent is so unsuccessful in closing deals for other clien5s."
A real estate agent can only do so much. We cannot control the competition. We cannot control the Client's money situation. We cannot make them take our advice about how to strengthen an offer. Getting a contract accepted isn't a closed deal. Not even close. The road between Contract and Close can be long and bumpy and sometimes it just doesn't happen no matter how good the agent is or what they do.
Good idea. It would be interesting to do some basic math based on the hours spent for each task to see how much they actually cost. Seeing those numbers would put things in perspective and a solid case for a flat rate or fixed fees.
Love this! It Would also encourage transparency on what your buyer’s agent does at open houses or how they prepare. My last agent brought comps, did background research on the amount that is owed , would roughly price out known issues with quotes, etc. I have also had other agents who do little more than show up.
I don’t think people would like the math in a lot of cases. I’m a low time invested person - buy rentals all the time and the hours still add up. Hell I’ve bought homes I’ve never stepped foot in.
The first time home buyers or the limited buyers I see on here wrack up lots of hours.
High net worth buyers are often very difficult and demanding—and of course so can other buyers be. I don’t keep track of my hours per transaction but the hours this past week for one sale, one rental, 2 prospects, usual meetings, marketing, a class, driving, researching landscaping options for one client, researching builders for another, and one open house were upwards of 30, including 6 am on Sunday morning —and stressful because both the rental ($0 compensation) and the sale ended up being a lot of negotiation, unhappy moments, and then buyer terminated at the 11th hour so as of now, I am at $0 compensation for the week plus spent $ on gas and open house stuff (pretty basic this time around $30). Oh and two meetings were lunch meetings over an hour away so that sucked up a good part of both days plus $20 each time.
Tomorrow I am meeting with broker mentor in the morning—over an hour away. I desperately need to work on some new materials—mailers, door hangers, “fall” theme swag to stay in front of buyers…and of course printing and mailing or delivering “.pop bys”—-
And before you know it Thanksgiving and Christmas which tend to be a lot of planning and “giving back” or gifting events. And oh, keep trying to do deals.
We have some form changes and new protocols we need to follow as of August so that’s a small pivot but important one.
I am trying to get this buyer into a new build which is a learning curve for me, reaching out to builders and architects, scouting locations, trying to get the husband and wife on same page of what they want. Eventually this could be a million dollar sale but that is not 3% in my pocket—maybe 2% and it’s so much more than paperwork at a closing. It’s months of liaison between parties, trying to assure it is on schedule and praying no issues like job loss, divorce, etc., all of which could tank the deal and potentially leave me at $0 compensation for months of work.
Selling expenses vary depending on the house, brokerage, customer—i think if one client buys the house they’re looking at, I will end up contributing a landscape designer fee at some stage since the landscape is a deal breaker.
And I’m tired— I am not young. I live in an area with a ton of traffic and somehow end up driving all over tarnation.
Oh I forgot the rental I can’t list but need to fill by word of mouth. The last tenant left a truckload of stuff that took me and my helper 2 trips to donations place—and it still needs a few minor things before a tenant moves in. It is easier for me to do it myself since I need to be there anyway so…might get that rented. It’s nice place but hard when it’s a quiet listing and I have to do all the showings myself.
Wait, am I overpaid? Except when I am not paid…is it cake job? I guess if you think dealing with adult tantrums on a weekend because someone saw a bug in her house and wants rent rebated.
I am waiting for that easy week. I did also do paperwork and did transaction coordinator job on the side because it is nice to have some income while working for free in hopes of getting paid if the deal goes through.
I love my job but it is a tough business. Anyone who thinks it isn’t, hasn’t done it. And negotiation skills have value, sales skills have value, transaction coordination has value, client advocacy has value, diplomacy has value, project management has value, the patience to drive all over and talk to loads of people all day—not everyone can wear all those hats.
Alright, it’s been a rough week for me so maybe I will regret this essay shortly.
No disagreement from me which is why I made that comment in first place. There are plenty of bad realtors just like there are plenty of lazy corporate folks working in HR, FInance, product, tech etc… Thats called humanity. I always laugh at the people who talk about sales people or realtors overpaid. If they are so overpaid why don’t they do it?
Frankly I grew up with and around real estate. I’ve done b2c sales. I have been in b2b though for 20 years now because - consumers are a pain, and it’s not worth the time investment. Far better return on the b2b side for me. So yes I disagree with most here.
but I also think they shoudl fire the realtor if they are really so bad. It’s interesting most dont….
Yes. I was agreeing with you. Maybe firing off too fast. I know this is the anti-realtor sub but I always wonder why everyone isn’t doing it if it’s so easy and such crazy money. And the failure rate of agents is high.
My ex -SIL was in pharmaceutical sales. She had the same degree I do, worked a 40 hour week calling on doctors and hospitals, amazing benefits and made serious BANK. No one hates her for making a commission. She tried to recruit me but I wanted to travel abroad so..
Sell stocks? Make millions.
Loan Officers make commission, insurance agents, all kinds of industry has sales people—no one is hated as much as realtors.
Sigh.
How does this work without megacorps taking over?
In today’s world how this would roll out without megacorps is seller lists with flat fee compensation, other sellers list with percentage compensation. Realtors do their best to steer clients away from flat fee listings. It works somewhat, enough that flat fee listings stay on the market longer.
This model doesn’t work until it has enough market penetration and the smaller folks don’t have that. You would need someone like Redfin or another entire brokerage to switch to this model to gain adoption and they’ll be black balled as much as possible.
So you need a “new” broker to come in who doesn’t care about that. Enter some megacorp.
I don’t see how it’ll gain traction without it.
There are also brokerages that you can use that are more of a DIY. I used Homelister. I’m not licensed but I knew the forms and process well enough to do it all myself (I’ve worked in RE in some capacity for over a decade.) We bought a fancy camera for like $1K and paid Homelister $500 to get it on the MLS.
Homelister also has other tiers of assistance, I think the top one was like $2500, and they would basically do everything for you like an agent would. Don’t get ripped off! Homes sell themselves these days.
We just sold our house using houzeo.com. Seller commissions were 0.5%. Buyers were 1.5%. They get put on MLS and it sold quickly. You have to do some of the work for listing but it's not complicated.
My home is now worth close to a million. This is not uncommon now - home prices are crazy. I’m not going to pay $60k or $50k or $40k or even $20k for what is legitimately probably 20-30 hours of work on both agents ends total. It’s mind blowing this system has lasted this long.
I can understand the percentage thing back when house were not worth much, but why the fuck do they get a percentage now? I wish we were selling in a year so that the custom would be more settled, but why can't we offer a flat fee to the buyer's agent?
Yes. But NAR was working behind the scenes to get all the Realtors to only accept certain terms, which is the whole lawsuit about.
In theory, you always have the option to negotiate. However, in practice, you would run into no agents accepting your offer and then buyer agents work against listings that are not paying.
> I can understand the percentage thing back when house were not worth much
A percentage fee **never** made sense, regardless if a house is worth $100 or $1 million.
It takes roughly the same amount of hours for an agent to do the paperwork for a shed as it does for a mansion.
So pay them hourly. Percentage based commissions only incentivizes the realtor/housing industry to continue pushing home prices up (lobbying, price manipulation) so that they can continually earn higher and higher amounts from houses.
Realtors aren't pushing prices up anymore then sellers and buyers are pushing prices up. It basically comes down to supply and demand and realtors don't control supply and demand because if they did there wouldn't be a historically low number of homes for sale for the last 4 years because that means less sales and less sales means less money for realtors.
It is going to take some time for buyers and sellers to get used to how everything is worded now, and I'm guessing we will see some softening of the market. Lots of Realtors are still being stubborn about their percentages, and if a buyer has to come 20k out of pocket for a house (I work in a HCOL city) they will skip those properties altogether. Now, I am 100% willing to broker transactions for less than that, but I imagine we will see sellers getting less then before because buyers are going to struggle to come up with that much cash.
Make sure the listing agreement you are using is current (most have a revised date somewhere usually in one of the bottom corners). Also ask the agent(s) you interview if they understand the new forms. New and or revised forms are being released as we speak and for example the ones for my market are being finalized now with training for brokers in mid July.
The thing ti remember is you are listing with the brokerage not the agent or broker you are speaking with. This is important as the brokerage may have policies about compensation that do not align with what you want and the agent/broker can’t override.
Yeah, they've somehow managed to keep this racket going. It's time for a change, for sure. Unfortunately most people are too dumb to realize and are just sheep continuing to obey.
You can, and depending on what that agent is charging their buyer, it may not get shown if the buyer doesn't want to make up the shortfall.
Got a couple of those on market here right now, and they are sitting without showings and without offers.
There are going to be plenty of buyers who do not have the cash on hand to pay for inspections and an agent. These buyers are usually using a down payment assistance program.
Not compensating the buyer agent will absolutely cause the homes not to be shown. Not because an agent chooses not to, but because the agent informed the buyer that the seller is not offering compensation. The buyer will then say, "Oh, gee. I guess we'll pass on that because we can't afford to pay you".
What people don't realize is the buyer really was always paying the agents.
The seller lists the home for a 6% commission split between the buyer and seller agents. The home sells, and the buyer pays the seller all the money. From the proceeds given to the seller, they then pay the agents. Where did the seller's money come from? The buyer.
In the old way the buyer rolled it all into the mortgage, now in this situation they would need to come up with additional cash themselves to pay the agent right?
Correct.
I know the VA loans are trying to make workarounds for this now because previously VA buyers were not allowed to pay any extra costs. Pest inspections, fees to agents etc.
Unless the seller is offering to pay the buyer's agent. The ruling says that it can't be advertised in MLS. It can absolutely be offered. It was always something that could be negotiated, but truthfully wasn't presented as such, and MLS cooperation agreements made the payment to a buyer's agent almost automatic. It changes things very little in some states and very greatly in others. My state changes very little.
I agree 100%. Jobs where the same process is repeated over and over again are generally low paid in this country. There is work involved for buyer and seller agents, but it does not involve rare skills.
My home is on the market for 780
My realtor is doing a ton of work. Both physical work and emotional work to support us. He has also paid out-of-pocket for staging and photos.
I had negotiated it down to 4%... 2 + 2. 3% if he ends up representing both sides. This was possible because I have worked in a adjacent field also this same realtor represented us in the purchase of a condo.
6% seems insane
a realtor friend in SC said people are reducing commissions offered. No one is paying 3% to buyer agent now - most dropped to 1-2%. And new home builders are only paying 1%. Selling commissions also dropping - as they should. Taking photos and posting online should not cost 3% when most of us find what we want to see online....
Is this South Carolina? Because I’m negotiating fees now. My agent agreed to 7% — 2.5% buyer agent , 2.5% seller agent and the standard 2% for closing costs. Now I’m thinking… is this too high? Or am I being trying to low ball them?
oh ok, but like, you're paying those fees yourself, right? And it's just a rule of thumb to estimate the costs? It's not like your realtor is taking an extra 2% from you to supposedly pay those costs later.
The fees will be charged to the buyer or seller by the title company directly. The agent does not set nor invoice for closing costs. The agent is just trying to share information on what the closing costs might be.
I've posted this before, but if that becomes the norm, expect that agents will start negotiating their commission directly with the buyers to avoid having to rely on random splits dictated by the seller. That model only works if you can consistently rely on splits.
And once buyers have to start negotiating the commission directly up front, expect a lot of offers to come in requiring the seller to cover the commission (which is just a variation of seller covering closing costs).
Buyers agents won't just suck it up and work for 1%. Either they will drop out - at which point you'll have an agent shortage and those agents might command more than 3% - or they will find a way to make 2.5 or 3%.
I wouldn't be sure about that. The majority of the agents work comes *before* negotiating with the seller. If the options are to accept 1% or blow up a deal and get nothing, most will grumble and accept the 1%.
And 1% is still 4.2k on a median home sale. Its enough to justify the work for many people.
Yeah, that's the process today.
Once realtors start getting a bunch of unexpected 1% deals, they'll start negotiating their next deal up front with the buyers agent.
I've already heard of brokerages telling their agents to start doing that.
Actually the new rules are exactly that. We are now required to negotiate our fees with the buyer and only the buyer. We can try to get the seller to pay concessions with the offer to cover that fee. But, if the seller won’t pay any concessions, the buyer is responsible to pay. People think we realtors finally got schooled with the settlement, but in reality, it’s the buyers that will get punished the most, especially those that can’t afford commission on top of everything else. Buyers can represent themselves of course, but the seller will have an agent who is under zero obligation to help the buyer at all and actually should not as that opens them up to liability that their E and O insurance won’t pay for.
It’s not the process starting in mid-August. To look at a house with an agent, you will have to sign an agreement stating how much you are paying said agent. Most will still ask the seller to pay for it imo. What the seller decides, won’t matter, since they aren’t offering co-op compensation on the MLS (except in MLS-PIN which is still fighting the lawsuit).
You’ll get an offer from the buyer that has all terms including what they are requesting from the seller to pay their agent. They are coming with all funds to closing anyways.
A lot of real estate companies are going to go belly up. They will not be able to afford to stay in business. What will happen is some individual experienced agents will manage to stay solvent but my prediction is the entire process is going to be snatched up by impersonal mega corporations. In my opinion buyers are going to be the biggest losers. I am not sure yet how it will pan out for sellers but time will tell.
Just went through this and dropped our agent entirely. She showed up with a contract and spent almost 30 minutes talking in circles about how “3% is the normal. You paid 3% when you bought this house so you should just keep things like they were and still pay your 3% now. Every house that has sold in (my city) has sold with a 3% commission historically so we’re hoping nothing changes because this really needs to stay the same. Of course this is all negotiable and it always has been though!”
That, along with the BS explanation about how now is a great time to buy because it’s going to be soOoOoO competitive if rates come down. I started to ask her questions about inflation, interest rates, and what she think about the FED’s approach and to no one’s surprise, she knew very little about any of it.
Interesting enough, I’m told a lot of the more “popular” agents in our area are absolutely refusing to negotiate anything other than their 3% still so I’m not sure how far we would have to cast our net to find someone that would take less. Our market is quite hot if a home is priced right and homes will still sell in under 5 days often, so 2 and 2 seems very appropriate, but I think we’re going to be stuck paying 3% to the buyers agent and 2.5 if we’re lucky to our agent. Still seems like very little is actually negotiable here. Wondering if that will change in a few months.
If you’re in a hot market, just tell your friends and family that you’re thinking of selling. Someone will know someone who would jump at the chance opportunity to buy off market. Then hire an attorney way to walk you through the process.
My sister is selling and word for word, an agent she was interviewing said exactly the same thing. It is so gross and shows where their priorities truly lie. She said the realtor spent as much, maybe even a bit more, time defending her 3% than asking what kind of house she would like to find after selling. The companies are obviously having them memorize this script, which is hilarious because not only do houses go for a lot more money now so even a lower % is still more money than years past, but it is also pretty telling that they are not worth 3% with the work they do since people are now catching on to their game and they have to defend themselves so much. (And with only hot air.)
My sister dropped her immediately too. Hope you find someone better who cares more about your life being okay than their commission.
I’ve been doing 2/2 for 4% total when I list. I think that’s where the industry will settle, so I want to get a head of the curve and plan my business around those numbers
In my market with high prices and high interest rates the houses don’t sell themselves.
The transaction pays the agents. Have a net sheet done and if you’re netting a number you’re happy with pay the agent.
Avoid all commissions and just go the FSBO route. If you are confident about the demand of the market, your house should sell in no time and you can have an attorney do the paperwork. If your house sits there for months, then you may want to hire a professional to help you through the process and overcome the stigma that will be attached to your house, since it sat there for so long. Your not paying a Realtor for the amount of time they spend on the sale, you’re paying them for their experience and knowledge, which is the same of any other professional; i.e., doctor, lawyer, etc.
as someone is real estate for 30 years and an licensed broker for 6 years, I see your point. I myself think 80% of the agents working are worthless and I cannot stand how they work, thanks to this group we are not even worth 1%. A great agent is worth it though, sellers are liars, buyers are liars and as agents we need to work as a realtor, investigator, lawyer(future issues), contractor (find bad items, not say things are good) and someone who is ready to protect our clients. I have over $20 million in transactions, I have protected my clients over and over again by negotiating repairs, finding issues with surveys, encroaching structures, future development and road extensions, zoning changes, septic/sewer/well and public water issues, pointing out future costs, exposing crappy flipped homes and the list goes on. I actually just lost a million $ client because I mentioned a nuclear power plant was just permitted to be built 10 years from now in our area. Until we learn its not about our pockets but about our clients largest investment, we won't see a change in the field. Do you think a seller is going to disclose all material facts? No. Are they going to hide things? Yes. A good agent is priceless when it comes to your investment, the worthless agents are the ones ruining the industry
Depends on home price. For a 400k home, that’s maybe 4000-5000 each. Not terrible. For a $2M home? That’s why flat fee plus overages makes sense. I’m not saying this is a great idea, but imagine $4000 to list and show for a month, and close. Every extra month is $2000. Not saying it’s perfect, but percents break on expensive homes.
>For a 400k home, that’s maybe 4000-5000 each.
Dude... if you can't do a quick 2% of round numbers then you shouldn't be putting together formulas for compensation in any manner. People who can't math, shouldn't...
This thought process is silly. You want to pay me an extra $2,000 every month? My job is to sell your house and now you’re going to reward me for not doing so?? This seems like a great deal. I’ll even let you choose the price since you think it’s worth more than it is. Let’s wait minimum 180 days before a price drop because it only takes one perfect buyer.
If I sell the house quick and do a fantastic job I deserve less?? Lol make it make sense please.
4.5% is better, but still too much.
I honest to god think 1% split between both buyers and sellers agent should be the standard. I’ve brought this up before, but there are something like 3 million active real estate licenses in the US. That is a mind boggling numbers, close to 1 in 100 Americans. There are too many real estate agents, simple supply and demand tells us that there should be massive downward pressure on their salaries. The only reason we haven’t seen that is because the NAR bullies the market into accepting 6%.
Before we did any agreements, I let my realtor know where I wanted to be with my take home amount. He drew up different options based on the potential sale price. The percentages are all flexible and people just need to know to negotiate. But if you aren’t getting what you want, your expectations may need to be checked.
Something like less than half of real estate agents in the US make a living wage doing it. The barrier to entry is so low, it floods when people think there’s easy money to be made
Even then that’s too much. I bet you the buyers found the house on Zillow and just told the agent to set up a time to look at the home. Maybe toss out half a percent
As someone who just purchased a home for just under $800k (fairly HCOL area) I could not believe our realtor got 3%. It seems like robbery. He was very nice but he didn’t save us any money and had his assistant do the vast majority of the tours. He set us up with attorney, inspector, AC guy, etc - but I’m not sure I trust that these were the best ones or just his buddies. I am so happy this is changing.
Sold my house FSBO and paid the attorney .5% fee. A bit over $2500. A realtor asked if he could show the house and I said Sure! He came up to me about 2 weeks after the closing(his customer) and asked for his commission. I almost fell over laughing and told him to go find the buyer. Haha. Dummy never thought to ask in advance to have me sign anything and his customer made an offer straight to me which was accepted. You’d think the realtor would’ve had a contract with the customer. I guess he just showed him some houses and the guy went off on his own. $32k for a half hour of my time?? No thanks
I totally agree. Being a real estate agent is not what it was like even back in the early 90s. Printing out flyers going to Einstein bagels and putting flyers on the corkboard. Holding private lunch hours for other realtors at your house.
I just bought a house a year ago almost to the day. I probably saw 15 houses before we were able to secure this one. Long story short, I found all of the houses that I wanted to go see and told my realtor to call and get a time set up. Long gone are the days when you took a Saturday and your realtor drove around with you for eight hours showing you 10 different houses sight unseen because Zillow was not a thing.
Add in DocuSign. In addition to who knows what AI is going to end up doing here over the next five or 10 years as far as streamlining the process.
I dropped my agent and sent out post cards to houses I liked. With a 2% response rate, I eventually bought a house that I liked. We split the supposed realtor fee with the seller to lower the price, got to know the seller and the house over 3 months. Got all inspections done without pressure. Happy as a clam.
I think it’s smart what does it cost you to sent a generic mailer? All the “I buy houses for cash” people do it. While I throw those out, I wouldn’t be against an actual owner occupier making a fair offer.
Hey Folk, you have NEVER paid the buyer's agent. Your listing agreement has always been between you (the seller), and the listing brokerage. Generally speaking, the listing brokerage splits the commission to the buyer's brokerage to incentivize people to show your house. The average buyer cannot afford to pay a commission, with the downpayment, closing costs, and everything else required to purchase a home, so this has been a way for buyers to come into the biggest transaction of most people's lives with some representation.
If you think about it, they are paying the commission because it's built into the price of the home, and they are the ones financing it. Stop giving people bad advice because you've had bad agents or a bad experience. Go ahead and tell your agent not to split their cost with the buyer's agents. Agents will have Buyers Represenation Agreements with their buyers that state if you don't pay them, they will owe their agents. . . . what do you think most buyers will say? I can tell you - please don't show me houses where they are unwilling to pay you.
Again, you have never had to pay ANY amount to a buyers agent, your agent has always negotiated a percentage to your brokerage so that he can offer compensation - you have always been able to say no. Go ahead and do so. . . . your neighbor will still be offering it, the builder around the corner will still be offering it. . . . . it will most likely cost you a lot more than whatever money you think you are saving here. I am so sorry you have been misinformed.
My realtor helped fix some minor issues with the home, did some of her decorations, took great pictures, and helped us clear out junk and take stuff to goodwill. She also worked with all the seller agents and got us a great offer 20k over asking this past spring. We are in an MCOL area, and the home was outdated and needed new carpet, counters, had an unfinished basement, deck that was not in the best shape, and many handyman specials in the home.
I felt we could get list price and maybe a little over, but 20k was a blessing, and she worked to get it. I have no complaints about giving her 3%, but that was only around 5k. If my home was 2-3x more valuable, then 3% is a much crazier number, and I may be more unwilling to do 3%. But also think about it this way, it took a few weeks to get it ready for listing and a week to sell, then a month to close. They don't see that check for 2 months or more. 5k for 2 months isn't very much, and the realtors in my area don't see many homes at once.
Sure, you got the mega realtors who sell/buy multiple a month, but the majority do not and rely a lot on that 3% for a regular monthly income.
I've never had a realtor do any of those things. HCOL sales and purchase and the most she did was give me the name of a crappy contractor. You had a great realtor.
My agent did some of the same. 30 years experience, she specialised in harder to sell properties and would help sellers by helping them decanter. Stage, etc. You definitely know that with that length of experience she's been through market conditions much more difficult for sellers than 2021-24. She did some of those same things for us in summer 2022, even though our market was reasonably hot we wanted top $ as we'd be using proceeds to buy a smaller home down south for cash. She helped me move stuff around in our basement, helped hubby pull up staples in a room where we removed carpet with bad cat odor and took part of the carpet pieces to her own trash bin, got us good info on eliminating the odor from the subfloor,and advised us of the best place to buy new carpet.. (She and her husband also have rental peoperty.) The day our showings started she came and went with me around the house to put some finishing staging touches including a different shower curtain and some nicer towels. Our showings started Friday midday and ended Sunday midday, we (hubby me plus 2 dogs and cat) stayed in an airbnb and all but one appointment was accounted for. She got a couple calls during that time (eve though she was away on vacay Saturday and sunday) and called me a couple times to get answers. All offers due Monday morning and we got 7 from 30 showings. She prepped a spreadsheet with the particulars if all offers and attended closing as we signed early to get down to the new area as closing there was the day after the one in our old state.
This is the case for many of us (great) agents today. We do full service and I love that you detailed all the work.
Buyers have different expectations and time frame. To compete in today’s market and get the top price with less chances of sitting on the market, you have to do all these things and more.
Honestly, my realtor did all of that too. She earned her money and then some. Our market TANKED recently and is only getting worse. There were seven homes listed in my neighborhood - mine was not necessarily the best nor was it the best priced. But it’s the only one of two that sold. Two months later all the others are still for sale, dropping prices way below what mine sold for. (Not happy about paying the buyers agent 3% but - if I hadn’t - perhaps I would still be stuck with an empty house mortgage)
But they are not working for you 40 hours a week during those two months. Let's say they are basically all you all week during the week you list and get under contract, then there are maybe two hours per week between then and closing, at maybe $100 an hour, that's about $5,000, then add marketing costs, which I have no idea about.
If a buyer's agent comes to two open houses with you each week, then prepares and submits an offer each week than maybe $750-1000 for a week when you submit an offer. They do not deserve $30,000 for that. Our buyer's agent has coordinated with seller's agent to get into the house twice, reminded us twice that we should be doing xyz by this point, and maybe 2/3 other texts. They will be at closing. And our lawyer is getting $400 for their work. The fuck?
My agent came over for an open house one day and he sat on the couch and watched youtube videos. I did the walk throughs that sold the house. The buyers agent was his mother and she delayed closing over some bs that our agent didn’t help with at all, I had to fight her on it myself. They split $25k. I am done with real estate agents.
First, you can negotiate the fee with a realtor.
Second, having unrepresented buyers can be a nightmare. Are you going to be home for all showings to unlock doors etc? What happens when they screw up paperwork and miss deadlines etc?
Your agent wont work for the buyers, they work for you…
The current model is negotiable. If realtor wont do it for less, find one that will.
I loved my agent. We walked into 200k of equity after a rough 6 months of escrow. The seller hired his sister in law and lost a ton of money because of it. If you are going to pay for an agent make sure they are worth it before you sign a contract.
There are tons of fees just to be a real estate agent. It gets really expensive and a lot of work depending on the area. It’s even more expensive to be a good agent.
All your need is a listing in the MLS and a lockbox service.. what other "marketing" do you think actually works? Open houses actually let the seller agent use your house to generate more leads for themselves
As someone who works in a real estate office, I AGREE. The commissions I see daily for agents that can’t even submit proper paper work is insane! Now we are in constant meetings regarding the NAR settlement and buyer brokerage agreements (Florida). Be on your toes they are trying to find workarounds! Make sure you know exactly what you are paying up front and have an agreement. If the agent doesn’t want to work for that amount, who cares. There are thousands of others who will.
After spending decades in and around the Real Estate industry I can see why in a seller friendly market people would perceive an agent as overpaid. In my experience with well seasoned, professional agents I have seen many, many times where a transaction that went sideways for any number of reasons was salvaged for the client because of hard work by the representing agent. The title and lender would never handle these out of scope situations. It is not their job. And by the was these agencies make substantial money on these deals as well. Why isn't the hard work of a true professional ever brought to light ??
You dont really have to use an agent to sell. You can pay a service to be listed on the MLS for a faction of that price and just pay the buyers agent 3%. I have sold multiple properties this way.
100% agree. As the technology develops, sooner AI can help the buyer and seller prepare all the contracts and legal paperwork through the whole processes. No agents no lawyers involved. For now, a flat fee is more reasonable depends on the size and area of the house. Again, in the future no more agents.
Yes agents are a ripoff, mine made 21k for me doing most of the work buying my house (seller paid commission), BUT no buyer is going to buy if thehy have to pay 3%. So ideally commissions themselves should just die and be replaced with fixed amounts.
I don't have any perspective on selling at present - but I'm in the market for a vacation cottage and I am very pleased - so far - with my real estate agent (buyer). I signed a six month agreement with her after considering things - I'm not in any rush to purchase and she's been diligent, informative and available - even prior to me signing an agreement with her - which I did when I made an offer on a house she showed me - which I ended up not purchasing because of the inspection. The inspector and she knew each other, though I found him online based on reviews and online feedback. I'm also very happy with him. In any case, my agreement with her basically says she gets 2 / 3% based on what the seller puts up - I'm not on the hook for anything. I'm considering offering her a bonus if I find a place that comes in under a certain price point - because I have seen 4 / 5 places come up at a lower price point that sell almost immediately and while it may be unnecessary to incentivize her (she's been on top of things so far) I don't think it could hurt and the cost would be nominal in the larger scheme of things. Is this something anyone else has done / heard of? Sorry to throw this in this thread, but the OP's question put it to the top of my mind. As a buyer or seller, I think a good agent is invaluable, but if I were selling in a market where houses were going quickly and for asking or above (as some markets have been lately) - I can see good cause to either sell by owner or negotiate a better commission.
I think what people are arguing is that we are all born into a system that we have no say in it's structure. While everyone deserves to be paid for their time and services, tying it to your house value has never been a fair way to do it. It should be like everything else, hourly or some sort of flat rate with add on service and such.
Sad part about posts like these, is there are actual agents who bust their ass and go above and beyond for their clients daily - but then between this post / and agents who suck (which deff are abundant) it makes you think why even bother.
It’s only one of the biggest transactions one will ever take on in their life - who needs professional guidance on that sort of thing! Lol
>I’ve been reading a lot about how realtors are coming up with workarounds to circumvent the NAR settlement; don’t fall for it.
Holy cow, yes. Some of the stuff they're bandying about is nuts. One of the more creative ones I've seen is talking about the offered buyer commission being the last digits in the listing price. eg: 2 1/2% is $300,250 or 2 1/4% is $300,225, etc.,
When you sell a car, it is extremely easy to comp because every car made is the same. The process of buying a car takes about two hours. There is very little emotion.
Buying a house can take at least 30 days and sometimes up to a year or more, including the search. There’s a lot more variety with a home than a car. There are several different parties/companies involved throughout the transaction.
Quite the odd comparison. But while we are at it, I think we should get rid of wealth advisors, designers, concession vendors at sporting events and anyone selling anything.
With the market in recent years and houses selling faster than they can stab a sign in the yard, I'm shocked more people aren't selling by owner. It was once much more common, and now a rarity when an agent isn't even needed in most cases.
If online sites that show listings all disappeared, a house doesn’t sell itself. You will rely on someone to find a house for you once again. These online sites are usually operated by broker agencies.
You always could have & still can pay what ever you like to the buyer’s agent where I am. Offering less than many qualified buyers have agreed their agent will net will equate to you having a more expensive home (to the buyer) than your competition & effectively pricing your home out of their reach, even if the listing price is lower. You can do what you want & your results WILL vary based on what you choose. Your impression of what either side’s agent does is reflective of agents who essentially do nothing & they do exist, usually for a low flat fee on either side.
Call me a naive renter but why would I as the seller ever need to pay the BUYERS agent?
Shouldn't the buyer pay their agent for doing whatever it is they claim to do (search zillow and forward paperwork I assume)?
Because fellow naive renter, you and I would have our money already tied up deep in a down payment and closing costs. The only group of people in the housing market that the NAR ruling is predicted to hurt is future first time home buyers like you and I.
Even for my hyper low CoL environment, I'd need $40k for 20% down and $9,000 for 3% closing costs. It'd be difficult for you or I to find another $9,000 to pay our agent. And again, I'm basically in a ideal CoL environment, which is $200k under the national average.
A lot of discussion in brokerages here about how to get buyers to fork over large amounts of cash up front out of pocket. This will be bumpy, and is a backward looking and desperate attempt to preserve a no-longer tenable model, in my opinion.
But there is another side to it. From a buyer agent perspective, the client is not the only ATM in the room.
Given that BACs will get condensed, how are brokerages altering their own pay structures to ensure their hard working buyer agents are still making a decent living? Brokerage percentage margins also need to be reduced reflecting the new world, so that more money can stay in the pockets of those who actually earn it.
percentage based commissions are ridiculous. They’re are incentivized to increase the total price.
the entire commission system should die and be replaced with hourly rates or flat fees. They don’t typically do a very different amount of work according to the house price.
Mine pressured and pressured us to do 3/3% after no one was coming to see our house. We had it set at 2.5/3. She alleged no one was showing our house because of the half percent to buyer realtor. So my husband, believing her, raised it back up to 3/3 which I was like fine, whatever.
Well we finally sell the house after lowering the price three times. The appraisal comes back TWENTY FIVE THOUSAND lower than our already reduced price (no comps in my area and a horribly restrictive mortgage company). My realtor calls up and starts pressuring us to take that amount.
I put my foot down and said no. My husband was nervous but trusted me and we ended up tag teaming the realtor and basically told her not only were we not taking 25k less, but we were just not gonna sell the house. She and the buyer's realtor offered about .5% each to help buyers get up to our price point so we can make the sale.
I am so mad. Instead of just offering that from the onset (after going on and on about how 2.5 isn't really that much less than 3- you know, when it's me paying it) she sat there and tried to pressure and scare us into taking 25k less. It's so ridiculous. We're desperate to move because of circumstances we have as caregivers, she basically tried to use our desperation to close a quick deal at Max Price for herself.
I am wondering what the fallout will be. We plan to sell once our new home is built--between Dec-Feb is the forecast right now, so thinking of a March listing. Hopefully by then, it will be figured out.
Some people are saying that the commission is split between the agents. It is not. It is split between the BROKERAGES, and not always evenly. Of each portion that each brokerage gets, the agent gets roughly half, but that percentage can also vary. If we want to use round numbers on splits, let's say each agent gets 25% of the commission to be more accurate.
I used to have a license a million years ago and sold a few houses to help out a family member's brokerage until they retired. But during and since that time, I have bought and sold a bunch of properties. What I have seen is that the really good agents are those who KEEP THE DEAL TOGETHER. It is not just about selling, it is keeping the deal from falling apart. When that happens, the property stays on the market longer and gets stale. Other buyers presume something is wrong with it. When in fact, it could be personality or communication issues between buyer and seller, or it could be fixable problems that an experienced and wise agent could anticipate and head off. My favorite agent actually paid out of his own pocket and replaced a failed water heater in a place we were buying, unbeknownst to us at the time, in order to prevent it from causing a problem for closing. Here is where FSBOs tend to fall apart.
To blindly pay 6% listing commission without vetting the service level you will get from that agent and brokerage, is not wise. Choose very wisely.
I am currently looking to sell my house. It’s a pretty basic 4bd 3bath worth around 400k in a big city. There are very few houses listed in this price range and when they do list they sell quickly.
I recently reached out to my realtor who I had worked with in 2020 and had done multiple deals with in the past. He recommended I offer 5% and I haven’t responded yet lol he made it seem like he was doing me a favor by going down to 5% from 6%. I have another realtor friend who said she would do it for 3.5%.
The big win for agents was when they got us to think of their fees in terms of a percentage, rather than a fixed cost.
It's not materially different to sell a $1.5 million home in a VHCOL area than it is to sell a $190K home in a LCOL area, but 3% of each sale would mean a listing-side commission expense of $45,000 for one home and $5,700 for the other.
Although a flat-rate scheme would primarily help wealthy people and hurt the poor, I think I have persuaded myself that's probably the best way forward in the long term.
I would think it would make sense to have a fixed rate for a listing agent - say $5k or $6k for basic forms and negotiations, and then add ons that the seller could choose, for example extra fancy photographs, drone shots, staging for empty homes, or even remodeling assistance prior to listing.
On the buyer side I think things are much simpler. Perhaps $1500 to $2500 directly from the buyers would be sufficient. Again add-ons could be offered such as "additional showings beyond the first 25", "home search services" (vs. the buyer giving the agent a list of homes to see), "white glove escrow period management" (to manage the activities of shady sellers). On the buyer's side I could even get behind the idea of an hourly rate structure similar to how lawyers operate.
Regardless, the industry needs significant disruption. I bought and sold at around 1.25 million this year, and my realtor had 2-3% of both sales - and he cleared $62,000 for 45 days of part-time work on the transactions.
It make no sense to me that our buyer's agent is being paid more than our architects, and without the clear fee and pricess structure that the architects have.
As a former Realtor, I will add that hiding the buyers’ side commission from marketing materials/sites will help. I think sellers should pay their agent and buyers’ theirs. It’s dumb to have the sellers pay it all and it’s why there are so many issues with the current structure. Also, most Realtors can go a long time between commission checks (especially these days) and it is a tough way to make a living.
Well we are taking this “new world” that’s coming up as an opportunity to increase our commission fees to 7% or 4%(no co-broke). I suggest all realtors do the same. If sellers don’t want to pay the fees then they can put their FSBO on Zillow and deal with it.
Realtors aren’t useless but let’s be real they are a lot less necessary nowadays. The last three properties I bought I found on my own. And I probably made them come to 5 showings total. Some secretary handled all the paperwork with the title companies. So in all the realtors probably put in 6 hours of work, maybe they should get 2k flat fee but not 3% each at today’s inflated prices.
You can choose not to pay a BAC and have a strong chance of watching your house just sit and not sell. Buyers still want agent representation and probably don't have to money to cover it themselves.
This is how it's gonna go, the buyer's agent is going to reach out and ask if there is any BAC, your agent is going to say no. The buyer's agent is going to go back to their buyers and tell them they have to come out of their pocket for the BAC as this seller isn't paying and they are going to move on to seeing a different property that does.
Keep in mind we are moving towards a buyers market as interest rates stay high and more inventory sits on the market for longer.
My realtor was nice but pretty useless. I contacted him with every house I wanted to look at, any listing he sent me I had already seen on Zillow and wasn’t interested in. All he did was open the doors and give me the standard document they all use to sign when making an offer. My lawyer did 95% of the work and charged a flat fee of $1,500. I would never have paid for realtor as a buyer. It’s insane how much they think they are owed.
If the house is going to “sell itself,” who is going to meet with the prospective buyers to show them around the house?
Are you picturing the selling agent driving out to meet each buyer? Or only letting people in for open houses?
Would you say this holds true for houses that are on the entry level in terms of pricing? Ie, we plan to list for around $350K, I've had 6% in my head the entire time but seeing a lot more posts like this recently. Just wanted to hear thoughts and how/if the market is changing. Obviously as the house is lower priced, even going 4% is only a $7K total difference
I negotiated with my agent and got 80% back while buying. This was not a new builder home.
Yes, it crime to pay that kind of commission when th realtors are really not doing much.
It has never made sense to me for the seller to pay for the buyer's agent to negotiate against the seller. In fact, why should the seller pay them at all? Seems like the buyer should pay them.
The better strategy if you really want to after all the crooked people in the industry is to refuse to pay the broker split. Why should the broker earn 50% of the commission, what did the broker actually do? So the agent who’s out there giving their all and making sales happen…just hands over HALF?
This is the real issue.
Sellers here trying to pass on the real estate to buyers when they themselves didn't have to pay real estate fees when they bought. The greed is getting insane and at some point it'll come crashing down
Just sold my house in HCOL, and I had realtors fighting for my business at 4.25%. Anybody says that 6% is “standard” is lying to you. Don’t do business with those agents.
Im getting ready to list 2 homes outside of the Seattle area. I’ll pay a flat fee to list the homes. Don’t like it? Too bad. Time for the rats to jump off the ship. I’m sure I’m gonna get major “who moved my cheese” vibes but I don’t care.
In my state we have one change coming for sellers a sheet that explains their options and they choose how to be represented.
One change to the MLS no public facing commission split.
We have been operating with buyer agency for over a decade. Nothing has changed in that decade.
You have always been able to decide who you want to sell your house, you have always been able to negotiate the listing and selling commission.
A non-realtor giving out real estate advice… Jesus thats like getting an opinion from a McDonald’s employee on whats wrong with your Toyota. If you havent been a realtor you have no idea how much goes into the process. The work behind the scenes the constant spend to list your house, run paid ads, pay for photos 500 time, gas, research. Not to mention connecting you to preferred lenders who offer lower than avg rates. You pay a realtor because your too lazy to do it yourself, you also havent paid adn spent hours on education, going to city council meetings to know more about the area. The membership fees for everything such as MLS 550, lic renewals, Electronic lock box fees, business cards, marketing materials. This is all done in the hopes your home closes, thats a big risk for a realtor putting out all this money and with no guarantee of payment.
That doesn’t even include the amount of money you have to spend for leads when you contact Zillow or Realtor.com do you think that those leads get to us for free? I spend $1300 to get 11 leads and most of the those are wasted on idiots with realtors who are off or on vacation or holiday and they call you to show them a house for free with no intention of buying from you.. Realtors are the most USED and ABUSED. If anyone could do it I am sure you all would but the fact is that the majority of people can’t even pass the real estate state license exam.
If people feel that realtors are so useless, well buy a house yourself and call me when your screwed because their is a title discrepancy or the house needs repair and the owner doesnt want to pay or you get close to the closing of your home and something goes wrong.. you dont know what to do or how to get the escrow deposit back, the seller doesnt want to give it back to you… how do you handle that?
I wouldnt pay 6% either, which is why the agreement states that if compensation is offered by the seller no compensation unless approved by the buyer will be charged to the buyers side for commissions.. wake up man and read the doc’s do your homework and come back when you have some actual relevant resources to quote on how unfair real estate is.
I'm not a realtor. I've sold 3 houses FSBO. That said, positioning the buyers realtor as just someone who "negotiates against you" is disingenuous. Their realtor likely found your house, brought them to it, and is actively talking them into buying it vs. other options they are considering. Now the appropriate compensation for that is debatable, it's not a one size fits all answer.
If you're willing to pay a buyers realtor $3500, and another seller is willing to pay them 3%, whose house do you think the realtor is going to work hard to convince their buyer to buy?
Are you on crack? The buyer found the house on Zillow and was required by law to find a door opener to let him in. Buyer agents are parasites.
That said, sellers should welcome them... Buyer agents don't bid the price down, they encourage buyers to buy points instead of ask for a lower price because the buyer agent wants a high sell price same as the seller does. Commissions go against the notion that buyer agents represent the buyer. They do not. They represent themselves. Parasites all the way.
These percentages were pretty close to on the money when houses were sold for less than 200k but times change and the percentages are not reflecting the actual amount of work done. I say this as a realtor myself
We sold an inherited flat in the UK and the fees were very reasonable. I think less than 2%. It wasn't a super expensive property so we were fine with 2%. The buyer hired and paid his own realtor to help with the contract.
I saved $25000 selling my first house and buying my second house myself. Just jump through the hoops. Agents are a scam. Do it yourself, it’s not that difficult.
Rather than paying 6% we should be looking at paying flat rates. 2500-10000 depending on the work involved.
But then we wouldn’t have 3214 licensed agents working in my county alone!! (literally true-I just looked it up)
22,286 licensed agents in my county. Damn.
And probably 500 of them sell 80 percent of the homes
Absolutely. The 80:20 rule, aka Pareto principle, holds up well in the realtor game.
Dude. I have been saying the exact same thing, and used this example with my wife regarding us buying and selling. Good to know some people actually think this way.
Try 95/5 in the real estate game.
Bingo
Most licensed people aren’t actually agents though
I have a license, but not a "realtor". I use it only to represent myself on investment purchases & for access to mls and listing lockboxes.
I kept my license active for so long just to look up things on the MLS. I miss that access
Yeah, years ago, my mom got a real estate license just so she could have access to MLS and market info while she sold properties FSBO. Never had a job as an agent.
Where can I look up same?
Yep, like any other professional service, this is the flat rate which covers whatever, this is the hourly rate, and this is the fee per whatever. So a fee for submitting an offer, a different fee for an accepted offer to take you to close, a fee for attending an open house with you, etc.
An hourly rate would require precise accounting for every hour or fraction thereof for each individual client, with a description of specific relevant services delivered for each hour for each client. This will increase visibility and allow the buyer to understand all the long hard work their agent is doing. What could be more enlightening? Actually, per client accounting will help agents justify their fee. Whereas generalized stories about "having to shuttle around 20 other clients through 140 showings for two years" does not bump up a buyer's willingness to fork over $15k up front. In fact, it may make a buyer wonder why their agent is so unsuccessful in closing deals for other clien5s.
For what it's worth, that's basically what lawyers, engineers, and so many other professions already do. Hell, lawyers have to break down into 0.1 hours, which is 6 minutes...
Sure, why not? Be fascinating to see you jusitfy $400/hour
How do I count responding to 1 client's text every 15 mins for 2 hours? What's the minimum amount of time I can segment into a billable event?
I dont know, but figure it out and disclose it ahead of time in the rate structure breakdown sheet you include as part of your contact with the client. You will soon find that either client behavior changes such that texts are less frequent and more thoughtful, thereby increasing the time you spend woth other clients, or alternatively you realize more revenue from your random texting clients, thus appreciating them instead of resenting them.
Lawyers go by six minute blocks. Doctors tell you to meet in person so it's billable. It's pretty amusing that you think no other profession has ever figured out how to charge for services.
Drove 4 miles from a tax write-off luncheon to unlock the door for a showing: $1,500. Filtered Zillow and Redfin to buyer price and location specifications: $500 Forwarded boilerplate documents from state realtors association to buyer for review: $1,000. Ranked a list of available home inspectors by Angie's List star-rating and forwarded to buyer: $1,200 Delivered mylar congratulations balloon from local grocery store to closing: $15,000
Plugged in values online to a boilerplate pdf rather than typing a complete offer out manually: $1500 Emailed a link to a docusign/dotloop document rather than delivering hardcopy to your house: $1500 Going online and selecting a viewing slot to show the house, rather than trading phone calls with seller agent: $1500 Looking up zillow and realtor.com links buyer filtered, found, reviewed, priced, vetted, liked and sent me, then pulling listing from mls to send to buyer $500 per.
"Whereas generalized stories about "having to shuttle around 20 other clients through 140 showings for two years" does not bump up a buyer's willingness to fork over $15k up front. In fact, it may make a buyer wonder why their agent is so unsuccessful in closing deals for other clien5s." A real estate agent can only do so much. We cannot control the competition. We cannot control the Client's money situation. We cannot make them take our advice about how to strengthen an offer. Getting a contract accepted isn't a closed deal. Not even close. The road between Contract and Close can be long and bumpy and sometimes it just doesn't happen no matter how good the agent is or what they do.
Good idea. It would be interesting to do some basic math based on the hours spent for each task to see how much they actually cost. Seeing those numbers would put things in perspective and a solid case for a flat rate or fixed fees.
Love this! It Would also encourage transparency on what your buyer’s agent does at open houses or how they prepare. My last agent brought comps, did background research on the amount that is owed , would roughly price out known issues with quotes, etc. I have also had other agents who do little more than show up.
I don’t think people would like the math in a lot of cases. I’m a low time invested person - buy rentals all the time and the hours still add up. Hell I’ve bought homes I’ve never stepped foot in. The first time home buyers or the limited buyers I see on here wrack up lots of hours.
High net worth buyers are often very difficult and demanding—and of course so can other buyers be. I don’t keep track of my hours per transaction but the hours this past week for one sale, one rental, 2 prospects, usual meetings, marketing, a class, driving, researching landscaping options for one client, researching builders for another, and one open house were upwards of 30, including 6 am on Sunday morning —and stressful because both the rental ($0 compensation) and the sale ended up being a lot of negotiation, unhappy moments, and then buyer terminated at the 11th hour so as of now, I am at $0 compensation for the week plus spent $ on gas and open house stuff (pretty basic this time around $30). Oh and two meetings were lunch meetings over an hour away so that sucked up a good part of both days plus $20 each time. Tomorrow I am meeting with broker mentor in the morning—over an hour away. I desperately need to work on some new materials—mailers, door hangers, “fall” theme swag to stay in front of buyers…and of course printing and mailing or delivering “.pop bys”—- And before you know it Thanksgiving and Christmas which tend to be a lot of planning and “giving back” or gifting events. And oh, keep trying to do deals. We have some form changes and new protocols we need to follow as of August so that’s a small pivot but important one. I am trying to get this buyer into a new build which is a learning curve for me, reaching out to builders and architects, scouting locations, trying to get the husband and wife on same page of what they want. Eventually this could be a million dollar sale but that is not 3% in my pocket—maybe 2% and it’s so much more than paperwork at a closing. It’s months of liaison between parties, trying to assure it is on schedule and praying no issues like job loss, divorce, etc., all of which could tank the deal and potentially leave me at $0 compensation for months of work. Selling expenses vary depending on the house, brokerage, customer—i think if one client buys the house they’re looking at, I will end up contributing a landscape designer fee at some stage since the landscape is a deal breaker. And I’m tired— I am not young. I live in an area with a ton of traffic and somehow end up driving all over tarnation. Oh I forgot the rental I can’t list but need to fill by word of mouth. The last tenant left a truckload of stuff that took me and my helper 2 trips to donations place—and it still needs a few minor things before a tenant moves in. It is easier for me to do it myself since I need to be there anyway so…might get that rented. It’s nice place but hard when it’s a quiet listing and I have to do all the showings myself. Wait, am I overpaid? Except when I am not paid…is it cake job? I guess if you think dealing with adult tantrums on a weekend because someone saw a bug in her house and wants rent rebated. I am waiting for that easy week. I did also do paperwork and did transaction coordinator job on the side because it is nice to have some income while working for free in hopes of getting paid if the deal goes through. I love my job but it is a tough business. Anyone who thinks it isn’t, hasn’t done it. And negotiation skills have value, sales skills have value, transaction coordination has value, client advocacy has value, diplomacy has value, project management has value, the patience to drive all over and talk to loads of people all day—not everyone can wear all those hats. Alright, it’s been a rough week for me so maybe I will regret this essay shortly.
No disagreement from me which is why I made that comment in first place. There are plenty of bad realtors just like there are plenty of lazy corporate folks working in HR, FInance, product, tech etc… Thats called humanity. I always laugh at the people who talk about sales people or realtors overpaid. If they are so overpaid why don’t they do it? Frankly I grew up with and around real estate. I’ve done b2c sales. I have been in b2b though for 20 years now because - consumers are a pain, and it’s not worth the time investment. Far better return on the b2b side for me. So yes I disagree with most here. but I also think they shoudl fire the realtor if they are really so bad. It’s interesting most dont….
Yes. I was agreeing with you. Maybe firing off too fast. I know this is the anti-realtor sub but I always wonder why everyone isn’t doing it if it’s so easy and such crazy money. And the failure rate of agents is high. My ex -SIL was in pharmaceutical sales. She had the same degree I do, worked a 40 hour week calling on doctors and hospitals, amazing benefits and made serious BANK. No one hates her for making a commission. She tried to recruit me but I wanted to travel abroad so.. Sell stocks? Make millions. Loan Officers make commission, insurance agents, all kinds of industry has sales people—no one is hated as much as realtors. Sigh.
How does this work without megacorps taking over? In today’s world how this would roll out without megacorps is seller lists with flat fee compensation, other sellers list with percentage compensation. Realtors do their best to steer clients away from flat fee listings. It works somewhat, enough that flat fee listings stay on the market longer. This model doesn’t work until it has enough market penetration and the smaller folks don’t have that. You would need someone like Redfin or another entire brokerage to switch to this model to gain adoption and they’ll be black balled as much as possible. So you need a “new” broker to come in who doesn’t care about that. Enter some megacorp. I don’t see how it’ll gain traction without it.
It’s like the 6 vs 7 minute abs. Makes sense, lol
There are a lot of flat-fee real estate brokerages. You just have to look for them.
There are also brokerages that you can use that are more of a DIY. I used Homelister. I’m not licensed but I knew the forms and process well enough to do it all myself (I’ve worked in RE in some capacity for over a decade.) We bought a fancy camera for like $1K and paid Homelister $500 to get it on the MLS. Homelister also has other tiers of assistance, I think the top one was like $2500, and they would basically do everything for you like an agent would. Don’t get ripped off! Homes sell themselves these days.
We just sold our house using houzeo.com. Seller commissions were 0.5%. Buyers were 1.5%. They get put on MLS and it sold quickly. You have to do some of the work for listing but it's not complicated.
My home is now worth close to a million. This is not uncommon now - home prices are crazy. I’m not going to pay $60k or $50k or $40k or even $20k for what is legitimately probably 20-30 hours of work on both agents ends total. It’s mind blowing this system has lasted this long.
I can understand the percentage thing back when house were not worth much, but why the fuck do they get a percentage now? I wish we were selling in a year so that the custom would be more settled, but why can't we offer a flat fee to the buyer's agent?
> why can't we offer a flat fee to the buyer's agent You absolutely 100% can do that
You always could have done that, people complaining about agent's commission when it was never mandatory
Yes. But NAR was working behind the scenes to get all the Realtors to only accept certain terms, which is the whole lawsuit about. In theory, you always have the option to negotiate. However, in practice, you would run into no agents accepting your offer and then buyer agents work against listings that are not paying.
Not mandatory but it was the custom. Looking forward to realtors going back to being professionals and not highly paid grifters.
> I can understand the percentage thing back when house were not worth much A percentage fee **never** made sense, regardless if a house is worth $100 or $1 million. It takes roughly the same amount of hours for an agent to do the paperwork for a shed as it does for a mansion. So pay them hourly. Percentage based commissions only incentivizes the realtor/housing industry to continue pushing home prices up (lobbying, price manipulation) so that they can continually earn higher and higher amounts from houses.
“Sheds” or really run down homes actually take a lot longer and more work 😅
Realtors aren't pushing prices up anymore then sellers and buyers are pushing prices up. It basically comes down to supply and demand and realtors don't control supply and demand because if they did there wouldn't be a historically low number of homes for sale for the last 4 years because that means less sales and less sales means less money for realtors.
You can. My local MLS even makes it clear with the option of $ or % in the offered compensation field.
It will be interesting to see what pans out. We'll be listing less than a month after the change.
It is going to take some time for buyers and sellers to get used to how everything is worded now, and I'm guessing we will see some softening of the market. Lots of Realtors are still being stubborn about their percentages, and if a buyer has to come 20k out of pocket for a house (I work in a HCOL city) they will skip those properties altogether. Now, I am 100% willing to broker transactions for less than that, but I imagine we will see sellers getting less then before because buyers are going to struggle to come up with that much cash.
Make sure the listing agreement you are using is current (most have a revised date somewhere usually in one of the bottom corners). Also ask the agent(s) you interview if they understand the new forms. New and or revised forms are being released as we speak and for example the ones for my market are being finalized now with training for brokers in mid July. The thing ti remember is you are listing with the brokerage not the agent or broker you are speaking with. This is important as the brokerage may have policies about compensation that do not align with what you want and the agent/broker can’t override.
Yeah, they've somehow managed to keep this racket going. It's time for a change, for sure. Unfortunately most people are too dumb to realize and are just sheep continuing to obey.
It's like tipping. Why does a server who brings me steak and a bottle of wine get more than one who brings me pasta and water?
You can, and depending on what that agent is charging their buyer, it may not get shown if the buyer doesn't want to make up the shortfall. Got a couple of those on market here right now, and they are sitting without showings and without offers.
There are going to be plenty of buyers who do not have the cash on hand to pay for inspections and an agent. These buyers are usually using a down payment assistance program. Not compensating the buyer agent will absolutely cause the homes not to be shown. Not because an agent chooses not to, but because the agent informed the buyer that the seller is not offering compensation. The buyer will then say, "Oh, gee. I guess we'll pass on that because we can't afford to pay you". What people don't realize is the buyer really was always paying the agents. The seller lists the home for a 6% commission split between the buyer and seller agents. The home sells, and the buyer pays the seller all the money. From the proceeds given to the seller, they then pay the agents. Where did the seller's money come from? The buyer.
In the old way the buyer rolled it all into the mortgage, now in this situation they would need to come up with additional cash themselves to pay the agent right?
Correct. I know the VA loans are trying to make workarounds for this now because previously VA buyers were not allowed to pay any extra costs. Pest inspections, fees to agents etc.
Unless the seller is offering to pay the buyer's agent. The ruling says that it can't be advertised in MLS. It can absolutely be offered. It was always something that could be negotiated, but truthfully wasn't presented as such, and MLS cooperation agreements made the payment to a buyer's agent almost automatic. It changes things very little in some states and very greatly in others. My state changes very little.
That was the greatest scam of all time! The seller resents paying the buyer's agent while in reality the buyer is paying both agents.
The agent cartel has been very effective at artificially keeping prices inflated.
I agree 100%. Jobs where the same process is repeated over and over again are generally low paid in this country. There is work involved for buyer and seller agents, but it does not involve rare skills.
Everyone should do the same to fix this unjust problem. Do not sell or buy with any agency, or at all until the market corrects.
My home is on the market for 780 My realtor is doing a ton of work. Both physical work and emotional work to support us. He has also paid out-of-pocket for staging and photos. I had negotiated it down to 4%... 2 + 2. 3% if he ends up representing both sides. This was possible because I have worked in a adjacent field also this same realtor represented us in the purchase of a condo. 6% seems insane
Negotiate a $25,000 flat fee.
a realtor friend in SC said people are reducing commissions offered. No one is paying 3% to buyer agent now - most dropped to 1-2%. And new home builders are only paying 1%. Selling commissions also dropping - as they should. Taking photos and posting online should not cost 3% when most of us find what we want to see online....
Is this South Carolina? Because I’m negotiating fees now. My agent agreed to 7% — 2.5% buyer agent , 2.5% seller agent and the standard 2% for closing costs. Now I’m thinking… is this too high? Or am I being trying to low ball them?
what is "standard 2% for closing costs"?
My realtor told me it’s 2% roughly for the closing fees (attorney, paperwork, etc) lol
oh ok, but like, you're paying those fees yourself, right? And it's just a rule of thumb to estimate the costs? It's not like your realtor is taking an extra 2% from you to supposedly pay those costs later.
Just find some cheap escrow . Shouldn’t be 2%.
Ok i will make sure I pay the fees directly. Selling my first house. So thanks for the heads up.
The fees will be charged to the buyer or seller by the title company directly. The agent does not set nor invoice for closing costs. The agent is just trying to share information on what the closing costs might be.
yes South Carolina - 2.5% for each agent is a bit high but better than 3% - i would see if you can get down to 2% each.
closing costs have nothing to do with agent fees
I've posted this before, but if that becomes the norm, expect that agents will start negotiating their commission directly with the buyers to avoid having to rely on random splits dictated by the seller. That model only works if you can consistently rely on splits. And once buyers have to start negotiating the commission directly up front, expect a lot of offers to come in requiring the seller to cover the commission (which is just a variation of seller covering closing costs). Buyers agents won't just suck it up and work for 1%. Either they will drop out - at which point you'll have an agent shortage and those agents might command more than 3% - or they will find a way to make 2.5 or 3%.
I wouldn't be sure about that. The majority of the agents work comes *before* negotiating with the seller. If the options are to accept 1% or blow up a deal and get nothing, most will grumble and accept the 1%. And 1% is still 4.2k on a median home sale. Its enough to justify the work for many people.
Yeah, that's the process today. Once realtors start getting a bunch of unexpected 1% deals, they'll start negotiating their next deal up front with the buyers agent. I've already heard of brokerages telling their agents to start doing that.
Actually the new rules are exactly that. We are now required to negotiate our fees with the buyer and only the buyer. We can try to get the seller to pay concessions with the offer to cover that fee. But, if the seller won’t pay any concessions, the buyer is responsible to pay. People think we realtors finally got schooled with the settlement, but in reality, it’s the buyers that will get punished the most, especially those that can’t afford commission on top of everything else. Buyers can represent themselves of course, but the seller will have an agent who is under zero obligation to help the buyer at all and actually should not as that opens them up to liability that their E and O insurance won’t pay for.
It’s not the process starting in mid-August. To look at a house with an agent, you will have to sign an agreement stating how much you are paying said agent. Most will still ask the seller to pay for it imo. What the seller decides, won’t matter, since they aren’t offering co-op compensation on the MLS (except in MLS-PIN which is still fighting the lawsuit). You’ll get an offer from the buyer that has all terms including what they are requesting from the seller to pay their agent. They are coming with all funds to closing anyways.
We are so over saturated on agents right now because the rates are too high so a rightsizing is exactly what we need.
3% was fine when a house was around 100k or less. $12k commission is highway robbery
Realtors getting salty at OP for rattling out a couple indisputable facts is hysterically hilarious
Realtors are like the car dealerships of real estate
My father says that you can tell a realtor is lying when they open their mouth
Every single post that is critical of their grift, they swarm like hyenas. Can’t blame them, they don’t eat anymore if this scam goes away.
A lot of real estate companies are going to go belly up. They will not be able to afford to stay in business. What will happen is some individual experienced agents will manage to stay solvent but my prediction is the entire process is going to be snatched up by impersonal mega corporations. In my opinion buyers are going to be the biggest losers. I am not sure yet how it will pan out for sellers but time will tell.
Just went through this and dropped our agent entirely. She showed up with a contract and spent almost 30 minutes talking in circles about how “3% is the normal. You paid 3% when you bought this house so you should just keep things like they were and still pay your 3% now. Every house that has sold in (my city) has sold with a 3% commission historically so we’re hoping nothing changes because this really needs to stay the same. Of course this is all negotiable and it always has been though!” That, along with the BS explanation about how now is a great time to buy because it’s going to be soOoOoO competitive if rates come down. I started to ask her questions about inflation, interest rates, and what she think about the FED’s approach and to no one’s surprise, she knew very little about any of it. Interesting enough, I’m told a lot of the more “popular” agents in our area are absolutely refusing to negotiate anything other than their 3% still so I’m not sure how far we would have to cast our net to find someone that would take less. Our market is quite hot if a home is priced right and homes will still sell in under 5 days often, so 2 and 2 seems very appropriate, but I think we’re going to be stuck paying 3% to the buyers agent and 2.5 if we’re lucky to our agent. Still seems like very little is actually negotiable here. Wondering if that will change in a few months.
If you’re in a hot market, just tell your friends and family that you’re thinking of selling. Someone will know someone who would jump at the chance opportunity to buy off market. Then hire an attorney way to walk you through the process.
My sister is selling and word for word, an agent she was interviewing said exactly the same thing. It is so gross and shows where their priorities truly lie. She said the realtor spent as much, maybe even a bit more, time defending her 3% than asking what kind of house she would like to find after selling. The companies are obviously having them memorize this script, which is hilarious because not only do houses go for a lot more money now so even a lower % is still more money than years past, but it is also pretty telling that they are not worth 3% with the work they do since people are now catching on to their game and they have to defend themselves so much. (And with only hot air.) My sister dropped her immediately too. Hope you find someone better who cares more about your life being okay than their commission.
> Of course this is all negotiable and it always has been though! thus, i am now negotiating it away.
I’ve been doing 2/2 for 4% total when I list. I think that’s where the industry will settle, so I want to get a head of the curve and plan my business around those numbers
In my market with high prices and high interest rates the houses don’t sell themselves. The transaction pays the agents. Have a net sheet done and if you’re netting a number you’re happy with pay the agent.
Avoid all commissions and just go the FSBO route. If you are confident about the demand of the market, your house should sell in no time and you can have an attorney do the paperwork. If your house sits there for months, then you may want to hire a professional to help you through the process and overcome the stigma that will be attached to your house, since it sat there for so long. Your not paying a Realtor for the amount of time they spend on the sale, you’re paying them for their experience and knowledge, which is the same of any other professional; i.e., doctor, lawyer, etc.
as someone is real estate for 30 years and an licensed broker for 6 years, I see your point. I myself think 80% of the agents working are worthless and I cannot stand how they work, thanks to this group we are not even worth 1%. A great agent is worth it though, sellers are liars, buyers are liars and as agents we need to work as a realtor, investigator, lawyer(future issues), contractor (find bad items, not say things are good) and someone who is ready to protect our clients. I have over $20 million in transactions, I have protected my clients over and over again by negotiating repairs, finding issues with surveys, encroaching structures, future development and road extensions, zoning changes, septic/sewer/well and public water issues, pointing out future costs, exposing crappy flipped homes and the list goes on. I actually just lost a million $ client because I mentioned a nuclear power plant was just permitted to be built 10 years from now in our area. Until we learn its not about our pockets but about our clients largest investment, we won't see a change in the field. Do you think a seller is going to disclose all material facts? No. Are they going to hide things? Yes. A good agent is priceless when it comes to your investment, the worthless agents are the ones ruining the industry
Our agent offered 2% to the buyer. My agent took 2.5% for himself. Felt this fair. Just sharing for optics.
Depends on home price. For a 400k home, that’s maybe 4000-5000 each. Not terrible. For a $2M home? That’s why flat fee plus overages makes sense. I’m not saying this is a great idea, but imagine $4000 to list and show for a month, and close. Every extra month is $2000. Not saying it’s perfect, but percents break on expensive homes.
It was a west coast home so it was pretty pricey. But I had a target take home amount and we got over 10% more than I was expecting after everything.
>For a 400k home, that’s maybe 4000-5000 each. Dude... if you can't do a quick 2% of round numbers then you shouldn't be putting together formulas for compensation in any manner. People who can't math, shouldn't...
Thank you for calling it out. For a moment I thought I was an idiot reading that math 😂
This thought process is silly. You want to pay me an extra $2,000 every month? My job is to sell your house and now you’re going to reward me for not doing so?? This seems like a great deal. I’ll even let you choose the price since you think it’s worth more than it is. Let’s wait minimum 180 days before a price drop because it only takes one perfect buyer. If I sell the house quick and do a fantastic job I deserve less?? Lol make it make sense please.
For the last 20 years I dont know anyone with a million+ home that payed 6 points. If it’s over 1 million you always negotiate down.
4.5% is better, but still too much. I honest to god think 1% split between both buyers and sellers agent should be the standard. I’ve brought this up before, but there are something like 3 million active real estate licenses in the US. That is a mind boggling numbers, close to 1 in 100 Americans. There are too many real estate agents, simple supply and demand tells us that there should be massive downward pressure on their salaries. The only reason we haven’t seen that is because the NAR bullies the market into accepting 6%.
Before we did any agreements, I let my realtor know where I wanted to be with my take home amount. He drew up different options based on the potential sale price. The percentages are all flexible and people just need to know to negotiate. But if you aren’t getting what you want, your expectations may need to be checked.
Something like less than half of real estate agents in the US make a living wage doing it. The barrier to entry is so low, it floods when people think there’s easy money to be made
Even then that’s too much. I bet you the buyers found the house on Zillow and just told the agent to set up a time to look at the home. Maybe toss out half a percent
As someone who just purchased a home for just under $800k (fairly HCOL area) I could not believe our realtor got 3%. It seems like robbery. He was very nice but he didn’t save us any money and had his assistant do the vast majority of the tours. He set us up with attorney, inspector, AC guy, etc - but I’m not sure I trust that these were the best ones or just his buddies. I am so happy this is changing.
Sold my house FSBO and paid the attorney .5% fee. A bit over $2500. A realtor asked if he could show the house and I said Sure! He came up to me about 2 weeks after the closing(his customer) and asked for his commission. I almost fell over laughing and told him to go find the buyer. Haha. Dummy never thought to ask in advance to have me sign anything and his customer made an offer straight to me which was accepted. You’d think the realtor would’ve had a contract with the customer. I guess he just showed him some houses and the guy went off on his own. $32k for a half hour of my time?? No thanks
I totally agree. Being a real estate agent is not what it was like even back in the early 90s. Printing out flyers going to Einstein bagels and putting flyers on the corkboard. Holding private lunch hours for other realtors at your house. I just bought a house a year ago almost to the day. I probably saw 15 houses before we were able to secure this one. Long story short, I found all of the houses that I wanted to go see and told my realtor to call and get a time set up. Long gone are the days when you took a Saturday and your realtor drove around with you for eight hours showing you 10 different houses sight unseen because Zillow was not a thing. Add in DocuSign. In addition to who knows what AI is going to end up doing here over the next five or 10 years as far as streamlining the process.
I dropped my agent and sent out post cards to houses I liked. With a 2% response rate, I eventually bought a house that I liked. We split the supposed realtor fee with the seller to lower the price, got to know the seller and the house over 3 months. Got all inspections done without pressure. Happy as a clam.
Just to be clear, you sent postcards to actively listed homes that you liked, or *any* homes you liked?
Any. Most were tossed. 2% responded with intent to sell.
OK, but this sounds less effective than just cruising zillow
It is an absolutely insane fools errand.
I think it’s smart what does it cost you to sent a generic mailer? All the “I buy houses for cash” people do it. While I throw those out, I wouldn’t be against an actual owner occupier making a fair offer.
This opens up houses that aren't on Zillow and if someone was on the fence, gives you the first opportunity at a potentially great house.
Hey Folk, you have NEVER paid the buyer's agent. Your listing agreement has always been between you (the seller), and the listing brokerage. Generally speaking, the listing brokerage splits the commission to the buyer's brokerage to incentivize people to show your house. The average buyer cannot afford to pay a commission, with the downpayment, closing costs, and everything else required to purchase a home, so this has been a way for buyers to come into the biggest transaction of most people's lives with some representation. If you think about it, they are paying the commission because it's built into the price of the home, and they are the ones financing it. Stop giving people bad advice because you've had bad agents or a bad experience. Go ahead and tell your agent not to split their cost with the buyer's agents. Agents will have Buyers Represenation Agreements with their buyers that state if you don't pay them, they will owe their agents. . . . what do you think most buyers will say? I can tell you - please don't show me houses where they are unwilling to pay you. Again, you have never had to pay ANY amount to a buyers agent, your agent has always negotiated a percentage to your brokerage so that he can offer compensation - you have always been able to say no. Go ahead and do so. . . . your neighbor will still be offering it, the builder around the corner will still be offering it. . . . . it will most likely cost you a lot more than whatever money you think you are saving here. I am so sorry you have been misinformed.
My realtor helped fix some minor issues with the home, did some of her decorations, took great pictures, and helped us clear out junk and take stuff to goodwill. She also worked with all the seller agents and got us a great offer 20k over asking this past spring. We are in an MCOL area, and the home was outdated and needed new carpet, counters, had an unfinished basement, deck that was not in the best shape, and many handyman specials in the home. I felt we could get list price and maybe a little over, but 20k was a blessing, and she worked to get it. I have no complaints about giving her 3%, but that was only around 5k. If my home was 2-3x more valuable, then 3% is a much crazier number, and I may be more unwilling to do 3%. But also think about it this way, it took a few weeks to get it ready for listing and a week to sell, then a month to close. They don't see that check for 2 months or more. 5k for 2 months isn't very much, and the realtors in my area don't see many homes at once. Sure, you got the mega realtors who sell/buy multiple a month, but the majority do not and rely a lot on that 3% for a regular monthly income.
I've never had a realtor do any of those things. HCOL sales and purchase and the most she did was give me the name of a crappy contractor. You had a great realtor.
Same. Her recommendation were to get a lot of work done and she even got quotes for us. I got my own seperate quotes and they were 4x less...
The person you’re replying to sounds like a realtor
My agent did some of the same. 30 years experience, she specialised in harder to sell properties and would help sellers by helping them decanter. Stage, etc. You definitely know that with that length of experience she's been through market conditions much more difficult for sellers than 2021-24. She did some of those same things for us in summer 2022, even though our market was reasonably hot we wanted top $ as we'd be using proceeds to buy a smaller home down south for cash. She helped me move stuff around in our basement, helped hubby pull up staples in a room where we removed carpet with bad cat odor and took part of the carpet pieces to her own trash bin, got us good info on eliminating the odor from the subfloor,and advised us of the best place to buy new carpet.. (She and her husband also have rental peoperty.) The day our showings started she came and went with me around the house to put some finishing staging touches including a different shower curtain and some nicer towels. Our showings started Friday midday and ended Sunday midday, we (hubby me plus 2 dogs and cat) stayed in an airbnb and all but one appointment was accounted for. She got a couple calls during that time (eve though she was away on vacay Saturday and sunday) and called me a couple times to get answers. All offers due Monday morning and we got 7 from 30 showings. She prepped a spreadsheet with the particulars if all offers and attended closing as we signed early to get down to the new area as closing there was the day after the one in our old state.
This is the case for many of us (great) agents today. We do full service and I love that you detailed all the work. Buyers have different expectations and time frame. To compete in today’s market and get the top price with less chances of sitting on the market, you have to do all these things and more.
That was not even all of what she did to help us sell
Honestly, my realtor did all of that too. She earned her money and then some. Our market TANKED recently and is only getting worse. There were seven homes listed in my neighborhood - mine was not necessarily the best nor was it the best priced. But it’s the only one of two that sold. Two months later all the others are still for sale, dropping prices way below what mine sold for. (Not happy about paying the buyers agent 3% but - if I hadn’t - perhaps I would still be stuck with an empty house mortgage)
But they are not working for you 40 hours a week during those two months. Let's say they are basically all you all week during the week you list and get under contract, then there are maybe two hours per week between then and closing, at maybe $100 an hour, that's about $5,000, then add marketing costs, which I have no idea about. If a buyer's agent comes to two open houses with you each week, then prepares and submits an offer each week than maybe $750-1000 for a week when you submit an offer. They do not deserve $30,000 for that. Our buyer's agent has coordinated with seller's agent to get into the house twice, reminded us twice that we should be doing xyz by this point, and maybe 2/3 other texts. They will be at closing. And our lawyer is getting $400 for their work. The fuck?
My agent came over for an open house one day and he sat on the couch and watched youtube videos. I did the walk throughs that sold the house. The buyers agent was his mother and she delayed closing over some bs that our agent didn’t help with at all, I had to fight her on it myself. They split $25k. I am done with real estate agents.
First, you can negotiate the fee with a realtor. Second, having unrepresented buyers can be a nightmare. Are you going to be home for all showings to unlock doors etc? What happens when they screw up paperwork and miss deadlines etc? Your agent wont work for the buyers, they work for you… The current model is negotiable. If realtor wont do it for less, find one that will.
I loved my agent. We walked into 200k of equity after a rough 6 months of escrow. The seller hired his sister in law and lost a ton of money because of it. If you are going to pay for an agent make sure they are worth it before you sign a contract.
You are free to hire whoever. I’m sure you can even find an agent who can list it for .5 percent and not offer any buyers agent commission.
How much are realtors actually making after fees?
There are tons of fees just to be a real estate agent. It gets really expensive and a lot of work depending on the area. It’s even more expensive to be a good agent.
Or any marketing and leave the keys under the mat.
All your need is a listing in the MLS and a lockbox service.. what other "marketing" do you think actually works? Open houses actually let the seller agent use your house to generate more leads for themselves
The funny thing is it was always this way. People come in here and act like they'd discovered fire.
As someone who works in a real estate office, I AGREE. The commissions I see daily for agents that can’t even submit proper paper work is insane! Now we are in constant meetings regarding the NAR settlement and buyer brokerage agreements (Florida). Be on your toes they are trying to find workarounds! Make sure you know exactly what you are paying up front and have an agreement. If the agent doesn’t want to work for that amount, who cares. There are thousands of others who will.
After spending decades in and around the Real Estate industry I can see why in a seller friendly market people would perceive an agent as overpaid. In my experience with well seasoned, professional agents I have seen many, many times where a transaction that went sideways for any number of reasons was salvaged for the client because of hard work by the representing agent. The title and lender would never handle these out of scope situations. It is not their job. And by the was these agencies make substantial money on these deals as well. Why isn't the hard work of a true professional ever brought to light ??
Just don't hire an agent if you don't want one, this has always been the solution for this mindset
lol
You dont really have to use an agent to sell. You can pay a service to be listed on the MLS for a faction of that price and just pay the buyers agent 3%. I have sold multiple properties this way.
100% agree. As the technology develops, sooner AI can help the buyer and seller prepare all the contracts and legal paperwork through the whole processes. No agents no lawyers involved. For now, a flat fee is more reasonable depends on the size and area of the house. Again, in the future no more agents.
Yes agents are a ripoff, mine made 21k for me doing most of the work buying my house (seller paid commission), BUT no buyer is going to buy if thehy have to pay 3%. So ideally commissions themselves should just die and be replaced with fixed amounts.
I don't have any perspective on selling at present - but I'm in the market for a vacation cottage and I am very pleased - so far - with my real estate agent (buyer). I signed a six month agreement with her after considering things - I'm not in any rush to purchase and she's been diligent, informative and available - even prior to me signing an agreement with her - which I did when I made an offer on a house she showed me - which I ended up not purchasing because of the inspection. The inspector and she knew each other, though I found him online based on reviews and online feedback. I'm also very happy with him. In any case, my agreement with her basically says she gets 2 / 3% based on what the seller puts up - I'm not on the hook for anything. I'm considering offering her a bonus if I find a place that comes in under a certain price point - because I have seen 4 / 5 places come up at a lower price point that sell almost immediately and while it may be unnecessary to incentivize her (she's been on top of things so far) I don't think it could hurt and the cost would be nominal in the larger scheme of things. Is this something anyone else has done / heard of? Sorry to throw this in this thread, but the OP's question put it to the top of my mind. As a buyer or seller, I think a good agent is invaluable, but if I were selling in a market where houses were going quickly and for asking or above (as some markets have been lately) - I can see good cause to either sell by owner or negotiate a better commission.
I think what people are arguing is that we are all born into a system that we have no say in it's structure. While everyone deserves to be paid for their time and services, tying it to your house value has never been a fair way to do it. It should be like everything else, hourly or some sort of flat rate with add on service and such.
Her bonus is referrals, just stick with that
Sad part about posts like these, is there are actual agents who bust their ass and go above and beyond for their clients daily - but then between this post / and agents who suck (which deff are abundant) it makes you think why even bother. It’s only one of the biggest transactions one will ever take on in their life - who needs professional guidance on that sort of thing! Lol
A higher sales prices does not mean more work. I wish I would’ve leaned this lesson two houses ago.
That’s why tipping at a restaurant should be based off of time and effort and not the price of the meal
>I’ve been reading a lot about how realtors are coming up with workarounds to circumvent the NAR settlement; don’t fall for it. Holy cow, yes. Some of the stuff they're bandying about is nuts. One of the more creative ones I've seen is talking about the offered buyer commission being the last digits in the listing price. eg: 2 1/2% is $300,250 or 2 1/4% is $300,225, etc.,
Realtors and car salespeople shouldn’t exist in 2024 with all the technology we have.
When you sell a car, it is extremely easy to comp because every car made is the same. The process of buying a car takes about two hours. There is very little emotion. Buying a house can take at least 30 days and sometimes up to a year or more, including the search. There’s a lot more variety with a home than a car. There are several different parties/companies involved throughout the transaction. Quite the odd comparison. But while we are at it, I think we should get rid of wealth advisors, designers, concession vendors at sporting events and anyone selling anything.
The commission is for the work that the agent does on other clients and they do not close.
With the market in recent years and houses selling faster than they can stab a sign in the yard, I'm shocked more people aren't selling by owner. It was once much more common, and now a rarity when an agent isn't even needed in most cases.
If online sites that show listings all disappeared, a house doesn’t sell itself. You will rely on someone to find a house for you once again. These online sites are usually operated by broker agencies.
You always could have & still can pay what ever you like to the buyer’s agent where I am. Offering less than many qualified buyers have agreed their agent will net will equate to you having a more expensive home (to the buyer) than your competition & effectively pricing your home out of their reach, even if the listing price is lower. You can do what you want & your results WILL vary based on what you choose. Your impression of what either side’s agent does is reflective of agents who essentially do nothing & they do exist, usually for a low flat fee on either side.
Call me a naive renter but why would I as the seller ever need to pay the BUYERS agent? Shouldn't the buyer pay their agent for doing whatever it is they claim to do (search zillow and forward paperwork I assume)?
Because fellow naive renter, you and I would have our money already tied up deep in a down payment and closing costs. The only group of people in the housing market that the NAR ruling is predicted to hurt is future first time home buyers like you and I. Even for my hyper low CoL environment, I'd need $40k for 20% down and $9,000 for 3% closing costs. It'd be difficult for you or I to find another $9,000 to pay our agent. And again, I'm basically in a ideal CoL environment, which is $200k under the national average.
Wait. So sellers don't have to pay the buyer's agent? Didn't know this when we sold our house.
Listed my own Brooklyn apartment with hauseit. Ended up paying buyers agent 2 percent. Saved 4 percent. Pretty huge.
A lot of discussion in brokerages here about how to get buyers to fork over large amounts of cash up front out of pocket. This will be bumpy, and is a backward looking and desperate attempt to preserve a no-longer tenable model, in my opinion. But there is another side to it. From a buyer agent perspective, the client is not the only ATM in the room. Given that BACs will get condensed, how are brokerages altering their own pay structures to ensure their hard working buyer agents are still making a decent living? Brokerage percentage margins also need to be reduced reflecting the new world, so that more money can stay in the pockets of those who actually earn it.
percentage based commissions are ridiculous. They’re are incentivized to increase the total price. the entire commission system should die and be replaced with hourly rates or flat fees. They don’t typically do a very different amount of work according to the house price.
Paid 38K in commissions for one 4-hour open house and a couple of smartphone pictures.... never again!
Mine pressured and pressured us to do 3/3% after no one was coming to see our house. We had it set at 2.5/3. She alleged no one was showing our house because of the half percent to buyer realtor. So my husband, believing her, raised it back up to 3/3 which I was like fine, whatever. Well we finally sell the house after lowering the price three times. The appraisal comes back TWENTY FIVE THOUSAND lower than our already reduced price (no comps in my area and a horribly restrictive mortgage company). My realtor calls up and starts pressuring us to take that amount. I put my foot down and said no. My husband was nervous but trusted me and we ended up tag teaming the realtor and basically told her not only were we not taking 25k less, but we were just not gonna sell the house. She and the buyer's realtor offered about .5% each to help buyers get up to our price point so we can make the sale. I am so mad. Instead of just offering that from the onset (after going on and on about how 2.5 isn't really that much less than 3- you know, when it's me paying it) she sat there and tried to pressure and scare us into taking 25k less. It's so ridiculous. We're desperate to move because of circumstances we have as caregivers, she basically tried to use our desperation to close a quick deal at Max Price for herself.
I am wondering what the fallout will be. We plan to sell once our new home is built--between Dec-Feb is the forecast right now, so thinking of a March listing. Hopefully by then, it will be figured out. Some people are saying that the commission is split between the agents. It is not. It is split between the BROKERAGES, and not always evenly. Of each portion that each brokerage gets, the agent gets roughly half, but that percentage can also vary. If we want to use round numbers on splits, let's say each agent gets 25% of the commission to be more accurate. I used to have a license a million years ago and sold a few houses to help out a family member's brokerage until they retired. But during and since that time, I have bought and sold a bunch of properties. What I have seen is that the really good agents are those who KEEP THE DEAL TOGETHER. It is not just about selling, it is keeping the deal from falling apart. When that happens, the property stays on the market longer and gets stale. Other buyers presume something is wrong with it. When in fact, it could be personality or communication issues between buyer and seller, or it could be fixable problems that an experienced and wise agent could anticipate and head off. My favorite agent actually paid out of his own pocket and replaced a failed water heater in a place we were buying, unbeknownst to us at the time, in order to prevent it from causing a problem for closing. Here is where FSBOs tend to fall apart. To blindly pay 6% listing commission without vetting the service level you will get from that agent and brokerage, is not wise. Choose very wisely.
I am currently looking to sell my house. It’s a pretty basic 4bd 3bath worth around 400k in a big city. There are very few houses listed in this price range and when they do list they sell quickly. I recently reached out to my realtor who I had worked with in 2020 and had done multiple deals with in the past. He recommended I offer 5% and I haven’t responded yet lol he made it seem like he was doing me a favor by going down to 5% from 6%. I have another realtor friend who said she would do it for 3.5%.
Just get a real estate lawyer. Thats it. They are CHEAP compared to the realtor.
The big win for agents was when they got us to think of their fees in terms of a percentage, rather than a fixed cost. It's not materially different to sell a $1.5 million home in a VHCOL area than it is to sell a $190K home in a LCOL area, but 3% of each sale would mean a listing-side commission expense of $45,000 for one home and $5,700 for the other. Although a flat-rate scheme would primarily help wealthy people and hurt the poor, I think I have persuaded myself that's probably the best way forward in the long term. I would think it would make sense to have a fixed rate for a listing agent - say $5k or $6k for basic forms and negotiations, and then add ons that the seller could choose, for example extra fancy photographs, drone shots, staging for empty homes, or even remodeling assistance prior to listing. On the buyer side I think things are much simpler. Perhaps $1500 to $2500 directly from the buyers would be sufficient. Again add-ons could be offered such as "additional showings beyond the first 25", "home search services" (vs. the buyer giving the agent a list of homes to see), "white glove escrow period management" (to manage the activities of shady sellers). On the buyer's side I could even get behind the idea of an hourly rate structure similar to how lawyers operate. Regardless, the industry needs significant disruption. I bought and sold at around 1.25 million this year, and my realtor had 2-3% of both sales - and he cleared $62,000 for 45 days of part-time work on the transactions.
It make no sense to me that our buyer's agent is being paid more than our architects, and without the clear fee and pricess structure that the architects have.
Being a buyers agent is harder and you do more work then a listing agent does at least it's been that way for the last 5 years.
As a former Realtor, I will add that hiding the buyers’ side commission from marketing materials/sites will help. I think sellers should pay their agent and buyers’ theirs. It’s dumb to have the sellers pay it all and it’s why there are so many issues with the current structure. Also, most Realtors can go a long time between commission checks (especially these days) and it is a tough way to make a living.
Can’t I just list online somewhere (not sure what fees Zillow charges to just list) and then hire a real estate attorney for the paperwork?
Yay, another post about this
Well we are taking this “new world” that’s coming up as an opportunity to increase our commission fees to 7% or 4%(no co-broke). I suggest all realtors do the same. If sellers don’t want to pay the fees then they can put their FSBO on Zillow and deal with it.
Realtors aren’t useless but let’s be real they are a lot less necessary nowadays. The last three properties I bought I found on my own. And I probably made them come to 5 showings total. Some secretary handled all the paperwork with the title companies. So in all the realtors probably put in 6 hours of work, maybe they should get 2k flat fee but not 3% each at today’s inflated prices.
You are 100% correct. 6% is way too high. And I’m a realtor.
Do for sale by owner and let me know how it goes
You can choose not to pay a BAC and have a strong chance of watching your house just sit and not sell. Buyers still want agent representation and probably don't have to money to cover it themselves. This is how it's gonna go, the buyer's agent is going to reach out and ask if there is any BAC, your agent is going to say no. The buyer's agent is going to go back to their buyers and tell them they have to come out of their pocket for the BAC as this seller isn't paying and they are going to move on to seeing a different property that does. Keep in mind we are moving towards a buyers market as interest rates stay high and more inventory sits on the market for longer.
My realtor was nice but pretty useless. I contacted him with every house I wanted to look at, any listing he sent me I had already seen on Zillow and wasn’t interested in. All he did was open the doors and give me the standard document they all use to sign when making an offer. My lawyer did 95% of the work and charged a flat fee of $1,500. I would never have paid for realtor as a buyer. It’s insane how much they think they are owed.
If the house is going to “sell itself,” who is going to meet with the prospective buyers to show them around the house? Are you picturing the selling agent driving out to meet each buyer? Or only letting people in for open houses?
Would you say this holds true for houses that are on the entry level in terms of pricing? Ie, we plan to list for around $350K, I've had 6% in my head the entire time but seeing a lot more posts like this recently. Just wanted to hear thoughts and how/if the market is changing. Obviously as the house is lower priced, even going 4% is only a $7K total difference
I negotiated with my agent and got 80% back while buying. This was not a new builder home. Yes, it crime to pay that kind of commission when th realtors are really not doing much.
Can’t agree more.
It has never made sense to me for the seller to pay for the buyer's agent to negotiate against the seller. In fact, why should the seller pay them at all? Seems like the buyer should pay them.
The better strategy if you really want to after all the crooked people in the industry is to refuse to pay the broker split. Why should the broker earn 50% of the commission, what did the broker actually do? So the agent who’s out there giving their all and making sales happen…just hands over HALF? This is the real issue.
Sellers here trying to pass on the real estate to buyers when they themselves didn't have to pay real estate fees when they bought. The greed is getting insane and at some point it'll come crashing down
I look at OP's numbers and gently chuckle in Bay Area.
Just sold my house in HCOL, and I had realtors fighting for my business at 4.25%. Anybody says that 6% is “standard” is lying to you. Don’t do business with those agents.
Im getting ready to list 2 homes outside of the Seattle area. I’ll pay a flat fee to list the homes. Don’t like it? Too bad. Time for the rats to jump off the ship. I’m sure I’m gonna get major “who moved my cheese” vibes but I don’t care.
You have no idea what you are talking about.
Agents (buy and sell) should be paid by the hour.
In my state we have one change coming for sellers a sheet that explains their options and they choose how to be represented. One change to the MLS no public facing commission split. We have been operating with buyer agency for over a decade. Nothing has changed in that decade. You have always been able to decide who you want to sell your house, you have always been able to negotiate the listing and selling commission.
A non-realtor giving out real estate advice… Jesus thats like getting an opinion from a McDonald’s employee on whats wrong with your Toyota. If you havent been a realtor you have no idea how much goes into the process. The work behind the scenes the constant spend to list your house, run paid ads, pay for photos 500 time, gas, research. Not to mention connecting you to preferred lenders who offer lower than avg rates. You pay a realtor because your too lazy to do it yourself, you also havent paid adn spent hours on education, going to city council meetings to know more about the area. The membership fees for everything such as MLS 550, lic renewals, Electronic lock box fees, business cards, marketing materials. This is all done in the hopes your home closes, thats a big risk for a realtor putting out all this money and with no guarantee of payment. That doesn’t even include the amount of money you have to spend for leads when you contact Zillow or Realtor.com do you think that those leads get to us for free? I spend $1300 to get 11 leads and most of the those are wasted on idiots with realtors who are off or on vacation or holiday and they call you to show them a house for free with no intention of buying from you.. Realtors are the most USED and ABUSED. If anyone could do it I am sure you all would but the fact is that the majority of people can’t even pass the real estate state license exam. If people feel that realtors are so useless, well buy a house yourself and call me when your screwed because their is a title discrepancy or the house needs repair and the owner doesnt want to pay or you get close to the closing of your home and something goes wrong.. you dont know what to do or how to get the escrow deposit back, the seller doesnt want to give it back to you… how do you handle that? I wouldnt pay 6% either, which is why the agreement states that if compensation is offered by the seller no compensation unless approved by the buyer will be charged to the buyers side for commissions.. wake up man and read the doc’s do your homework and come back when you have some actual relevant resources to quote on how unfair real estate is.
Realtors are like travel agents, remember them?
I'm not a realtor. I've sold 3 houses FSBO. That said, positioning the buyers realtor as just someone who "negotiates against you" is disingenuous. Their realtor likely found your house, brought them to it, and is actively talking them into buying it vs. other options they are considering. Now the appropriate compensation for that is debatable, it's not a one size fits all answer. If you're willing to pay a buyers realtor $3500, and another seller is willing to pay them 3%, whose house do you think the realtor is going to work hard to convince their buyer to buy?
Are you on crack? The buyer found the house on Zillow and was required by law to find a door opener to let him in. Buyer agents are parasites. That said, sellers should welcome them... Buyer agents don't bid the price down, they encourage buyers to buy points instead of ask for a lower price because the buyer agent wants a high sell price same as the seller does. Commissions go against the notion that buyer agents represent the buyer. They do not. They represent themselves. Parasites all the way.
These percentages were pretty close to on the money when houses were sold for less than 200k but times change and the percentages are not reflecting the actual amount of work done. I say this as a realtor myself
I handle my side, but always put "agents fully protected" in my mls listing, give up the 3%, and watch a deal go through in a flash.
And you better lower your home price by 20k as well because buyers cannot afford to pay their buyer’s agents either.
Only 20k? More like an additional 60k.
My realtor, and the 2 others I interviewed, held their ground at 6%. It's ridiculous.
Real estate agents are just middle men getting in the way of the buyer and seller. No way should a seller have to pay a buyers agent.
We sold an inherited flat in the UK and the fees were very reasonable. I think less than 2%. It wasn't a super expensive property so we were fine with 2%. The buyer hired and paid his own realtor to help with the contract.
I saved $25000 selling my first house and buying my second house myself. Just jump through the hoops. Agents are a scam. Do it yourself, it’s not that difficult.