6% Fee as presented by my realtor seems pretty high!

Particularly on a $700k home.  Is "You get what you pay for" apply here?

What is reasonable, and what should I expect for 6%?
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April 10 2011 - Seven Oaks at Grand Island
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Best Answer
Commissions are always negotiable even after you have signed a contract, your Realtor may help you be able to accept an offer that is lower if it means deducting some of the commissions to make the deal feasablly work for you. BUT, when I have been asked to do this may first question back to the seller is, "Is there something I did wrong in the transaction that warrants me cutting my commissions?" As a full time Realtor there is a lot there goes on behind the scenes that a seller may not realize and I feel it is part of my job to educate the seller on the process of getting the house seen by buyers and other Realtors. Many sellers think the brokers pitch in with the marketing and such but that is not the case. From the begining the Realtor is spending money up front to market the home and is hopeing for a return on that investment. The only way the Realtor will get their investment back is to sell the house. If the house don't sell, the Realtor has lost their investment. So in todays market it is a gamble for many Realtor's who are putting out and may not even be able to get a return. Maybe, we could change the standard and have the seller pay up front for all the marketing the Realtor will do which includes what their time is worth, 3 hour open houses ect... and only pay a 3% commission?
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April 10 2011

Commission may depend on the difficulty of selling the home. For example, a home that is deep in the woods of Vermont with a long dirt road and a log cabin would probably command a higher commission than a Colonial home in a "Leave it to Beaver" type neighborhood; with the same price but different product.

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February 09 2012
Commissions are always negotiable but always make sure your agent is offering a co-op commission to a buyer broker that is competitive with your area..
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February 08 2012
For over fifty years our family has been in the real estate business, watching the business evolve is incredible. The resources we have to market, the technology we have to reach more buyers and the courses...GRI, CRS, ABR...etc are excellent in keeping up on skill and professionalism. 

Our costs are scary to think about, however we have consistently reinvested a large percentage of money back into our marketing and education costs.

WE ARE EVERYWHERE YOU WANT YOUR LISTING TO BE. And this is expensive but our clients deserve the very best from us and have returned time and time again because of it. We are three generations of Realtors serving three generations or more of our community. 

Clients come to us because they see the value in what we offer. Our online costs alone are enough to pay a full time admin. and that does not include the multiple other avenues of marketing and additional services we offer. 

As a buyers agent, I can say that our investment and training into the buyer market is extensive and exciting. 

My only point is, if you are paying a commission go to the obvious source of who is "selling your neighborhood" as long as you work well with that person. Make sure you actually feel as if you're receiving a service that will lead to success.

In some neighborhoods there are multiple homes in the $700K price range. I really hope that if my client likes your home, your listing agent didn't decide for me that my services were worth less, because I work very hard and it benefits you the seller too. 

I wish you the best with the sale of your home.

Kelly











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February 08 2012
If you feel it's high for the Realtor you spoke with, it probably is.  Speak to a Realtor that is capable of properly articulating his/her value proposition, then discuss compensation and see if you can come to an agreement.
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April 20 2011
All these reason that you talk about Pasa are the reasons I could never do Residential Real Estate. There is to much emotion involved when it comes to buying and selling. I deal with the investment side, apartment/multi family type buildings, if the numbers work then it sales. So what I do for my commission when I list a property is cold call everyone in the area that has similar property. I also have to be at ever showing because I don't want anyone to disturb the tenants, mainly residential agents.. This been a good discussion to follow
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April 20 2011
Profile picture for Pasadenan
As they say, if it is not in writing, it is not in the agreement.  And all agent provided buyer representation are highly skewed to benefit the agent with no protection nor benefits for the buyer.  And a similar problem exists with most listing agent agreements.  So, the only "solution" is for the consumer to write the agreement and get the agent to sign it.  And if the agent is "promising" cleaning windows, keeping fingerprints off the windows, painting, curb-appeal landscaping, staging, packing, moving, and storage, then they better provide those services or be found in breach of contract.

I really don't think the agent was promising any of those services for any homes worth less than $300k anyway.  And even if they coordinate such services, he likely just has the client billed for the services or has a mechanics lien placed on the property.

Remember, there is nothing in NAR's code of ethics that states an agent has to be honest.
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April 19 2011
Josh, I'm not here to debate you either.  The phrase "you get what you pay for" is utter stupidity and if you are going to try to say with a straight face that your average full service agent is going to pay out of pocket storage fees, cleaning, painting, handyman repair ect. you are, with all due respect, full of cr*p.
I do know agents who have performed some of these services, but it is usually out of the kindness of their heart for people who were unable to perform or pay for these themselves.  It is certainly not an expectation most agents have regarding what their "normal" duties have.
By the way, my posts are worth far more than 2 cents.  I'm a full service poster and expect at least a buck.
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April 19 2011
I have to say Pasadenan that was a pretty funny video, I think she works in my office.
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April 19 2011
Profile picture for Pasadenan
Well, since you stated that I ALWAYS "get what I pay for", it means that I pay 12% commission for my house to stay on the market 3 years at half of market value, and with the agent doing nothing but putting it in the multiples, never answering the phone, and with the only open houses that the listing agent does stating to all that come through the door, "you don't want this one, there is a much better one in a nicer neighborhood about 5 blocks from here listed for less".

List your House
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April 18 2011
Sure, sometimes you get burned, in 2004 I spent almost 4K on a 1.2M listing that the owner decided not to sell.  BUT - That client has sent me at least 5 clients since then and I have more than made up for that lost investment.  I would define full service as doing whatever it takes to sell the house...  If the house is cluttered, who cares about a few hours of packing if it is the difference between selling and not selling...  I don't have a line drawn in the sand where I stop working for my clients.  Maybe I am wrong here, what do you think full service is?
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April 18 2011
Profile picture for Pasadenan
So "full service" now includes washing windows, full staging including rentals, storage of owners property, and painting all at the agents' cost?

Since when?

Does it also include packing, labeling, shipping and unpacking?
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April 18 2011
Robert,

If your house is priced right, I don't think you will have a problem finding a true "Full Service" agent to take care of you.  If an agent is charging for full service, make sure you are getting full service.  Keep interviewing agents until you find someone confident enough to put their money where their mouth is.

Best of luck!
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April 18 2011
Josh you actually floored me.

I have never heard of an agent paying out of thier own pocket to prep the home with no promise of making the sale.

"... have a cleaning servicing coming and washing every window and corner of the place. He/she may have painting done and some furniture put into storage.
-Food and Wine at Open Houses
-Newspaper Ads
-Handymen
-Carpet Cleaners
All of these things add up"

You get me that agent, and I promise to sign the bottom line tomorrow.
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April 18 2011
Robert,
I will give you a simple answer as to what you should expect for the 6% ...

You should expect a buyer!

And no ... you cannot keep the sign or the lockbox! And yes ... 6% is reasonable.
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April 18 2011
Profile picture for Dunes....
Yawn..

I think the members of the public reading this thread/discussion will determine for themselves who's blowing smoke and who isn't...

I'm OK with that...very OK with that
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April 18 2011
It is high if the realtor does not present his VALUE to you. It is low if the realtor offers tremendous value to you, such as guiding you through the maze of the selling process; marketing and advertising throughout the Internet and in newspapers, magazines and other mediums; providing you with a smooth process with the operational side, dealing with lenders, escrow, title company, buyer's agent and many more.

If the realtor cannot present a sound digital marketing strategy and expenses for an advertising and marketing campaign, then you could perhaps negotiate for a lower amount.
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April 18 2011
Profile picture for Pasadenan
"You always get what you pay for..." -

Thanks for the warning that I never would want you to represent me...
(Can't even "shop" for a pair of jeans nor an insurance policy, and must pay "list" price on a car?)

My response
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April 18 2011
Robert,
You STILL think the actual math is the answer to your question and you actually think Dunes "gets it"?  Let me simplify with a question.

Which agent is worth more, the one who sells your home in one day for $700,000 or the one who sells it after 2 years and several price reductions for $600,000.

The second agent spent more time and money, but the first agent got the result for you.  Do you see the math does not matter?

Dunes - "Telling stories to support your position.."Oh yeah I've had a blah blah" ..WEAK"

I am sorry you think these these actual experiences... stories (aka facts) are weak, they aren't, but I have another for you. 

Last month, I took a listing that had been for sale for 6 months by another agent.  I RAISED the price and sold it in 2 days.  I have no idea what the other agent charged (if they would have sold the home), but I know they spent more time and money on that particular listing than I did.  Not surprisingly the seller thought I was more valuable.
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April 18 2011
Profile picture for hpvanc
It comes down to agents need it to remain opaque to continue the current business and compensation model.  If they have to provide an accounting effective agents will get all of the business and have to cut their rates.  They may make more money that way, but they are hung up on the something for nothing idea and are not willing to take the risk of competing for a piece of a smaller pie. 
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April 18 2011
Profile picture for Dunes....

I'm sure everyone will give your knowledge and comments the value they deserve Josh...
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April 18 2011
Joan, thanks for your two cents but I am not here to debate. :)

Regardless of the opinions or responses of anyone else, my answers will always be based on my knowledge and beliefs and will be unaffected by the feedback of other agents.

The phrase exists for a reason...  If someone walks in offering to do a job for half price, you need to take a serious look at Why... I don't care if it is real estate or someone to clean your bathrooms once week...  As everyone knows and Julie pointed out, commissions are always negotiable.

An exceptional agent in this price range is going to have a cleaning servicing coming and washing every window and corner of the place. He/she may have painting done and some furniture put into storage.
-Food and Wine at Open Houses
-Newspaper Ads
-Handymen
-Carpet Cleaners
All of these things add up. 

We don't know what this agent was doing for the client but its not fair to assume that the agent is just doing basic run of the mill marketing and MLS.  Different agents provide different levels of service.

PS - No response necessary. :)
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April 18 2011
Profile picture for wehelpubuy
Problem is there are too many agents splitting up the pie.  A fairly busy office with 75 to 100 agents might sell 50 to 60 homes a month.  Ten of those agents are going to sell 40 of those homes and let the rest slug it out over the rest of the sales.  In California, 50% of agents sell two or less homes a year and the next 25% sell five or less.  If you're a full time agent where I live (Southern California) and only sell 5 homes (meaning you're well above average) you had better hope they were all at least $700,000 and you got a full 3% because at that you didn't make much money.

The big box real estate industry has to fight for the 6% commission or most of them would go out of business.  They count on the small time agents who only sell two or three homes a year because the office gets a substantial cut of those commissions plus those agents pay office fees all year long.  High producing agents cap out on commission splits early and after five or six sales keep 90% (and very often more) of their commissions.

Those high producing agents are the ones blowing their horns the loudest about what they deserve but they're really riding the coat tails of the rookies who have to keep 6% alive or find other work.
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April 18 2011

Its always good to read at least some of the posts just prior to yours before answering.  Josh, if you had, I can't imagine you would have answered the way you did.
First of all, in what world do you always get what you pay for??  In our profession we all know the lousy agents who charge just as much as great agents.  Please, if that ridiculous phrase could be struck from all agents' vocabulary, I think this profession would be much better off.

Secondly, the posts just prior to yours questioned actual costs, including marketing, that agents pay out of pocket and whether or not it justifies what would be, in this particular case, a 42k commission or even a 21k commission after split.  The mls sells the vast majority of houses and the mls automatically feeds into many other RE sites and with a few clicks and very little cost a property can be listed on every major real estate website.  So....what marketing would a seller have to give up in order to negotiate a lower commission?  

Next time, be respectful enough to read at least a few of the posts before yours, maybe even (gasp!) all of them and then you may end up rethinking what you post.

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April 18 2011
You always get what you pay for... Ask your Realtor if he/she is willing to forgo some of the marketing he/she normal would do for your home in exchange for a smaller commission?  Ask for an explanation of what kind of marketing is being done and how it will benefit you.
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April 18 2011
Profile picture for Dunes....
Well Robert it appears several things happened here..

1. You asked for an actual Answer

2. You thought Agents selling Services could or would actually explain/breakdown the cost of those services..

3. You said something nice about me

4. You wouldn't except Sales pitches as actual discussion

All of the Above means you are obviously a Realtor Hater so they decided to edjumacate somebody else

Interesting thing is there are 3-4 other members of the Public asking the same question at this very time..
They of course are all Realtor haters also..
Good news..any member of the public reading this or the other threads will decide who's blowing smoke and who's not....

Want $42,000 for Services to sell your property and can't explain why that is in anyway justified or break it down to show Bank for the Buck..refuse to do so

SAD very sad





.
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April 18 2011
Dunes... in the most rational, accountable, and thoughtful way gets it.

It is as simple as he states.

No one has yet to show me the numbers, the math.  Dunes... Did!

"Costs a lot" is all I've heard so far.  Give me your worst case example, where it did cost you money (labor and materials) accounted for, subtract that from that commission, and show me your return.  Use a hypothetical example if you wish.  The numbers just don't work.

By the way, if I do list with a realtor, I'm taking the sign with me since aparently I paid for it.
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April 18 2011
Profile picture for Dunes....
OK..Robert pays you $42,000 to sell his Property

1. "That agent will market the home all over the internet (cost money)"

I can go Flat Fee and List on the Local MLS, Realtor.com, Zillow, Trulia and a multitude of other Sites for $500 or less..
That expense to you is?

You are doing some other sort of Internet Marketing?
 What? How much is your "cost"?

2 ."post signs (cost money)"  This must be a Major expense with the
stakes and hammer & all...How much cost..$5000..lol

3. "conduct open houses (cost money)" ..How much you spending on that in time and/or money?..

4. " if you have a real good agent, they can bring the buyer (cost money)."...Yeah apparently $42,000 in this case


"The bottom line is where can the seller draw the bottom line"

True and ya better hope they don't decide to draw it across the Throat of your Industry

And the Broker split ..they get that because they Provide what?
A chair and a desk, computer time, a Franchise name? what?

$42,000 because I sold your house is just so lame IMO

$12,000 more than if the Property sold for $500,000 because you have more expenses...lame IMO

5. "Once in the deal we have inspections to conduct"..Thought the Inspectors conducted those..They cost?.....

6. Emotions to deal with..Try being a Bartender or a Waiter/Waitress

7.Ton of work...Like what?
How many hours for Robert?--10-20-50-100-200?
and your time is worth what per Hour?

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April 18 2011
Many people have a different answer for your question.  The idea of you get what you pay for does apply here, however it is always up for negotiation.  I will let you know as an agent for my buyers, I am not as excited to show listings that offer less than 3%.  As a buyers agent I have to travel around and look at good and bad home and some buyers are so unsure it can take months worth of looking to find the right place.  Once in the deal we have inspections to conduct, we have emotions from the buy to deal with and its a ton of work.
  As a selling agent there is a difference in agents that get the listing and wait for a buyers agent to bring the buyer (which should not earn so much commission), then there is agents that do above and beyond to earn a good commission.  That agent will market the home all over the internet (cost money) post signs (cost money) conduct open houses (cost money) and if you have a real good agent, they can bring the buyer (cost money).
  The market is full of agents that get listing, promise the world and never deliver, because they sit on their BUTTS!  The bottom line is where can the seller draw the bottom line, the sellers agent should know that and adjust anything needed to get the price over the bottom line.  Good luck!
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April 18 2011
Robert,
I would sell your home.
 
This is why sellers hire agents.  Although I rarely have an expired listing, but if I didn't sell it,  I would charge you nothing.

If I chose to accept your listing, I would spend whatever time and money it took to help you prepare the home for sale, professionally stage and photograph it and target the markething to the right buyer for your home.  If you still need an accounting, you are missing the point.
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April 18 2011
Related Questions
6% Fee as presented by my realtor seems pretty high!
Profile picture for Laura McKenna
Latest answer by Laura McKenna
February 09 2012 | 68 answers
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