Negotiate Real Estate Commission?
- Thread starter Juruense
- Start date
Most agent's aren't going to negotiate the commission because their broker/company will not allow it. If you don't want to pay for a Realtor's services, then sell the house as a FSBO. If you just want to get it listed in the MLS, then go to a discount broker and pay them $50-500. They'll enter it into the system but do no marketing, representation, etc for you.
I've negotiated commission on every house I've ever bought. Usually 4.0% - 4.5%<br>
The catch is that I've always bought new homes so the builder pays a 3% commish to my agent (my agent then pays a split to her broker). From the 4.0%, 1.0% goes to my agent's broker for marketing and listing fees and 3% to the buyer's agent of my current home. You should be able to structure something like this.
The catch is that I've always bought new homes so the builder pays a 3% commish to my agent (my agent then pays a split to her broker). From the 4.0%, 1.0% goes to my agent's broker for marketing and listing fees and 3% to the buyer's agent of my current home. You should be able to structure something like this.
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Good luck with it.
In the market here, it isn't common. My parents had over $12,000,000 in sales last year and lowered their commission on 2 homes out of around 80 sold.
Thanks for wishing me luck, I am looking for feedback from home owners who actually have experience selling houses...
Also interested in people's experiences with FSBO.
I'm just giving you my realistic opinion from seeing hundreds of home sales as a buyer, seller, builder, and agent. :shrug: If you don't like it, you should have made your initial post more specific.
Here is my $0.02 worth of opinion..........from some background I have been trying to sell my house in the Detroit area for 18+ months.
I started out FSOB for 3 months because I wanted to be cheap and thought that I could do all the marketing work myself by e-mailing local agents, flyers, Craigslist, and for sale by owner signs at busy intersections near my house. All I got was agents calling me trying to sign me up and telling me they wouldn't bring anyone through without listing with them, crackheads and section 8 welfare moms calling from CL wanting to rent, and the city tearing my signs down (this got expensive to keep buying signs)
Then I moved on to my sister-in-law.....a very good agent who was now working part time at a bar because the Detroit market was so bad. She was doing it for 4% (1% to her and 3% to a buyer's agent). I did most of marketing, building virtual tours for her, and getting frustrated because her second job was getting in the way of showing the house and doing the things a full time agent would do. After 9 months with her I moved on to a full time agent creating WWIII in my family between my wife and her sister.
Immediately with a full time agent and listing it at 7% (3% for my guy and 4% for a buyer's agent) I got 20+ showing in a matter of a month or two. Unfortunately at this point my house was worth significantly less than what I had owed because of the downward spiraling market and I was forced into a short sale to get out of the house....delaying the process even further. Hopefully the deal with my buyer will be finalized in the next week or two and one of the most stressful events in my life will finally be over.
The bottom line with Realtors is that it is an old-school good old boys network and if you are not participating with them they just won't show your house.
A 4% listing will give 1% for your guy and 3% to the buyer's agent....this is the absolute minimum that will get you another agent to bring a buyer into your house. Generally your own agent will do little to no marketing, put it on the MLS and on their company web site with only one picture, and if they do show a customer your house they will most likely steer them to a different property they have listed to get a higher commission (this advise is directly from my agent)
A 5% listing will give you a 2%/3% split and yield little more than a 4%. A 6% will get you in the game with 10K+ other guys trying to sell their houses in this horrible market.
A 7% will give your guy 3% and a buyer's agent 4%..........a better incentive for them to show your house over the guy's down the street.
It all comes down to how long you can afford to leave it on the market. If you have a $150K house with a $1000 a month mortgage payment every month extra it is on the market will cost you another $1000 of mortgage payments. 1% commission is $1500, 2% is 3000, 3% is $4500. Most sales are averaging 6-9-12 months depending on market you are in. Trying to be cheap on a commission will add another 3-6 or more months. An extra 6 months adds up to 6K in mortgage plus probably another $1500 in fees like utilities and upkeep on the property if you are not living in the house any more. Tack that 6 months on to a normal 6 months of "time listed" and it quickly blows past what an extra 2% or 3% would cost you.
If I had just bit the bullet right away, listed with top notch agent, paid the 7% I would of probably got close to my asking price. Instead I was cheap, chased the downward spiral of pricing going down and after 18 months I am finally selling my house at a 100K loss on a short sale that has essentially destroyed my credit.
Of course if you're not in a hurry or need to move and can afford to ride out the storm and wait for some magical buyer to appear through your adds in Craigslist or at the local supermarket..........go for the FSOB route.
Just prepare yourself for one of the biggest stress events you have ever experienced in your life.
I started out FSOB for 3 months because I wanted to be cheap and thought that I could do all the marketing work myself by e-mailing local agents, flyers, Craigslist, and for sale by owner signs at busy intersections near my house. All I got was agents calling me trying to sign me up and telling me they wouldn't bring anyone through without listing with them, crackheads and section 8 welfare moms calling from CL wanting to rent, and the city tearing my signs down (this got expensive to keep buying signs)
Then I moved on to my sister-in-law.....a very good agent who was now working part time at a bar because the Detroit market was so bad. She was doing it for 4% (1% to her and 3% to a buyer's agent). I did most of marketing, building virtual tours for her, and getting frustrated because her second job was getting in the way of showing the house and doing the things a full time agent would do. After 9 months with her I moved on to a full time agent creating WWIII in my family between my wife and her sister.
Immediately with a full time agent and listing it at 7% (3% for my guy and 4% for a buyer's agent) I got 20+ showing in a matter of a month or two. Unfortunately at this point my house was worth significantly less than what I had owed because of the downward spiraling market and I was forced into a short sale to get out of the house....delaying the process even further. Hopefully the deal with my buyer will be finalized in the next week or two and one of the most stressful events in my life will finally be over.
The bottom line with Realtors is that it is an old-school good old boys network and if you are not participating with them they just won't show your house.
A 4% listing will give 1% for your guy and 3% to the buyer's agent....this is the absolute minimum that will get you another agent to bring a buyer into your house. Generally your own agent will do little to no marketing, put it on the MLS and on their company web site with only one picture, and if they do show a customer your house they will most likely steer them to a different property they have listed to get a higher commission (this advise is directly from my agent)
A 5% listing will give you a 2%/3% split and yield little more than a 4%. A 6% will get you in the game with 10K+ other guys trying to sell their houses in this horrible market.
A 7% will give your guy 3% and a buyer's agent 4%..........a better incentive for them to show your house over the guy's down the street.
It all comes down to how long you can afford to leave it on the market. If you have a $150K house with a $1000 a month mortgage payment every month extra it is on the market will cost you another $1000 of mortgage payments. 1% commission is $1500, 2% is 3000, 3% is $4500. Most sales are averaging 6-9-12 months depending on market you are in. Trying to be cheap on a commission will add another 3-6 or more months. An extra 6 months adds up to 6K in mortgage plus probably another $1500 in fees like utilities and upkeep on the property if you are not living in the house any more. Tack that 6 months on to a normal 6 months of "time listed" and it quickly blows past what an extra 2% or 3% would cost you.
If I had just bit the bullet right away, listed with top notch agent, paid the 7% I would of probably got close to my asking price. Instead I was cheap, chased the downward spiral of pricing going down and after 18 months I am finally selling my house at a 100K loss on a short sale that has essentially destroyed my credit.
Of course if you're not in a hurry or need to move and can afford to ride out the storm and wait for some magical buyer to appear through your adds in Craigslist or at the local supermarket..........go for the FSOB route.
Just prepare yourself for one of the biggest stress events you have ever experienced in your life.
In 2000 I Sold my own house in San Diego back when the market was at it's peak.
I bought a book called "For Sale By Owner in California for Dummies" at Borders Book Store. It had all the Legal Forms in it for the Offer to Purchase and stuff.
Really pissed of all the realtors in the neighborhood. They kept stealing my signs and throwing them in the bushes. ****'em, I kept buying more and putting them back up right next to their signs.
Took me 1 month to sell it and I got $100,000.00 more for my house than ANY other house in the neighborhood. The Banks couldn't even give an appraisal because there were no comps in the neighborhood even close, but the buyer knew the house was worth every penny. Took all the paperwork to Chicago Title and they basically handled everything else from there.
At the going rate of 6% Commission I saved almost $40,000.00. I'm sorry to say, there isn't anything a Realtor does that is worth $40,000.00 for the sale of a Single Family Home, not after I did all the work to get it ready.
Purchased in 2000 for $279,000.00
Sold in 2005 for $647,000.00
I bought a book called "For Sale By Owner in California for Dummies" at Borders Book Store. It had all the Legal Forms in it for the Offer to Purchase and stuff.
Really pissed of all the realtors in the neighborhood. They kept stealing my signs and throwing them in the bushes. ****'em, I kept buying more and putting them back up right next to their signs.
Took me 1 month to sell it and I got $100,000.00 more for my house than ANY other house in the neighborhood. The Banks couldn't even give an appraisal because there were no comps in the neighborhood even close, but the buyer knew the house was worth every penny. Took all the paperwork to Chicago Title and they basically handled everything else from there.
At the going rate of 6% Commission I saved almost $40,000.00. I'm sorry to say, there isn't anything a Realtor does that is worth $40,000.00 for the sale of a Single Family Home, not after I did all the work to get it ready.
Purchased in 2000 for $279,000.00
Sold in 2005 for $647,000.00
Good stuff, thanks!
Found this in the course of researching: 10 Things Your Real Estate Broker Will Not Tell You - Education Center - Yahoo! Finance
Anyone ever use For Sale By Owner (FSBO): Sell your Home, House or Condo; Buy Real Estate; Get an MLS Listing
Found this in the course of researching: 10 Things Your Real Estate Broker Will Not Tell You - Education Center - Yahoo! Finance
Anyone ever use For Sale By Owner (FSBO): Sell your Home, House or Condo; Buy Real Estate; Get an MLS Listing
I bought and sold with the same agent and she had to work on lowering commission because I was a qualified buyer. My house also sold in 11 days (2006) because my wife really has a keen sense of style and taste. IMO, these people have a license to steal. My agent's best line was " my strategy is to lower the listing price to attract more traffic." Real genius.
I'm from indiana, just south of fort wayne, and my parents house has been on fsbo.com for almost a year now. They've had alot of calls but no serious buyers. The way I think about it is the seller is trying to save money buy doing it themselves and some of the buyers are the same way trying to save money instead of going through an agent. Everyone is trying to save money these days. Better be willing to wait it out or negotiate, good luck man.
I've worked with two Major agencies, Exit, and Long&Foster. Had a 5% agreement with the L&F agent and 5.5 with the Exit Agent. Absolutely negotiate! Depending on your market, and how much they are moving deals would determine their ability to come down on commission.
What I have done recently with some of my investment property is I paid a service a flat fee of $300 to put the property on MLS and offered a full 3% commission to the selling realtor. This along with pricing the property realistically has been a very successful approach.
I sold my old house FSBO, I sold it three months ago and it only took me 3 weeks have a contract and the home in escrow and we closed within two weeks. In Texas you can go to any title company or online and get the contract paperwork. The process is very easy and it was not worh it to me to pay someone for something I could do myself. All I did was stick a sign in the yard, put it on craigslist and a few forums. I sold it to the second couple that looked at the home. The couple that bought it did not have a buyers agent so I paid zero comission to sell the house.
my last house my realtor took his own pay to 1% without me asking. everyone will tell you that paying less than 2.5% to the buyers realtor will not get the house shown. while this may be true, those crooks have an obligation to show ANY home that meets their clients needs, not just what pays them the best money. thats how it is supposed to work anyway.
what it comes down to is that the realtor works for you, and you decide what to pay them. if they dont like than find another, in these times they are out there just begging for some work. dont be afraid to take advantage.
what it comes down to is that the realtor works for you, and you decide what to pay them. if they dont like than find another, in these times they are out there just begging for some work. dont be afraid to take advantage.
FordSVTFan's plan is the route I would take, you can even throw in a $500 cash bonus to selling agent.
Go to a site like zillow.com and get an idea of what your house might be worth,and be sure to price it right.
Go to a site like zillow.com and get an idea of what your house might be worth,and be sure to price it right.
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