Profile picture for gjstcruz

Do listing commissions decrease as the selling prices increase?

Does a broker get the same percentage for selling a $500,000 house as for selling a $250,000 house. I know commissions are theoretically negotiable, but what is the industry standard?
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013 - North Bergen
We think we've answered this question for you!
  • Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.
 
 

Answers (18)

Best Answer
Profile picture for wesleyternbreeze
gjstcruz,
The answer is yes, the brokerage generally earns the same commission for selling either property.  It is one of the irrational components of the Real Estate pricing structure. 

The majority of your answers here will be: "commissions are negotiable". This is completely accurate and I will echo that statement to free myself of liability, yet that statement avoids the conversation you are really getting at in your question. Commissions are negotiable, but in a quick review of available listings in your area, there is no indication that commissions are correlated to the selling price of the home (south of 2MM anyway).  Commission rates, or at least those offered to buyers agents, seem to be in the 2.5%-3% range, regardless of the selling price.

The truth is, the Real Estate commission model is irrational for this reason and a few more.  The model does not serve the customer efficiently. Whoever figures out a better way to do it will be a very rich person. 
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
With commercial properties, the commission rate stays basically the same.

Walking away goes both ways.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 20 2013
@gjstcruz
The house is a legal three family in North Bergen, NJ.


We are not talking single family home.  We are talking about a multi unit which may be an investment property.  In many brokerages that is considered a commercial property.

When you interview agents be sure you are talking to the right agent.  You need someone experienced with multi units both owner occupied and investment.  Not every agent is experienced dealing with this type of property.

As others have said commissions are negotiable.  When you are dealing with 3 housing units, coordinating showings, advertising to multiple audiences, running ROI numbers etc. agents may not be too keen on making concessions.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 20 2013
Profile picture for SoCal_Engr
"Commissions, for the most part, ARE NOT negotiable, no matter how we try to appease the FTC."

Actually, I have found commissions are negotiable on listing agreements.

#1 - Know what services/circumstances you are negotiating for. It doesn't necessarily work if you just roll in and ask for X%, but if you ask for X% under specific circumstances, it does work.

#2 - Know that "walking away" is part of the negotiation. Just because Realtor 'A' will not discuss the commission structure, doesn't mean that your negotiation is done.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
There is an "industry standard," at least in local markets. 

Regardless of the rationality, brokers generally charge on a commission basis, not on a time & materials basis. 

Commissions, for the most part, ARE NOT negotiable, no matter how we try to appease the FTC. The VARY, from brokerage to brokerage and even agent to agent, but that's not the same thing. Competition just means that there are options for the consumer, not that every provider has to bend on their pricing.

There are flat-fee and discount brokers out there, and if the price of the services is paramount to you, then I suggest you shop brokers who already offer flat-fees or discounts.  Why bother with brokers who want to charge more than you want to pay? Isn't that like going to a restaurant and saying that you only want to pay $4 for the $7 entree? Who does that? You go where the entree is $4!

All the best,
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
There is no industry standard-interview agents, ask to see their work on sold properties on their listings and ask a lot of questions about their marketing plan!
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
Great question, and there is no industry standard. Real estate brokerage commissions are something that cannot be set. Each real estate broker may have some policies regarding what a minimum commission they may list a home at, but I am sure they do not set maximums. My recommendation is for you to find a handful of Zillow Premier agents in your area and interview them all so you can see what they have to offer. I think you will find the process to be interesting with a variety of options for you. Just make sure the real estate agents aren't all from the same office.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
Profile picture for gjstcruz
Thanks for the prompt postings. It does seem irrational that as the price of the property increases the percentage should stay constant. A 100% difference in the gross commission (i.e., between the sale of a property for $250K vs. $500K) is patently significant. It can't be twice as much work and I doubt the agent is twice as good. The more I learn the more nominal "negotiable" appears to be.
I've just begun research as executor of my father's will. The house is a legal three family in North Bergen, NJ. I live out of state, and plan to interview at least three agents but would like to walk in with some knowledge. That's why I'm here. I appreciate the help.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
In my area the percentage is always negotiable but normally 5 apples. 
 What is interesting is that houses that are priced lower usually have a higher percentage and properties in the millions have a lower percentage. Question is which one is more difficult to sell thus taking more effort and time from the agent?   
 In my homeland of Ireland 1% is the standard.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
I my area, The Broker sets the commission rate. It is typically 6% of the selling price. I can be negotiated. You need to interview a few Realtor to see what the going rate is for your market.The real question that most home owners who are selling their home is " what do I get when all said and done?" 
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
Profile picture for sunnyview
Typically no. Agents want a full commission rate whether the house is 40K or 4M. The rate is technically and legally required negotiable on every house no matter the price, but you may find many agents are not willing to drop below a certain percentge. Price fixing is illegal so there is no "typical" or "customary" commission since that is a Federal anti trust issue for agents.

In my area, flat fee offices offer a fee only menu or a 1-2% commission for a partial service listing. The full service commissions I see most often are about 6% with a few crazy agent asking 7% and even fewer offering 5% listings. Your area may be different.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
In reality, commissions DONT decrease as prices increase, even into the millions, at least from my experience........
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
Interview some Realtors and find out what their marketing plan is.  
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
 Talk with a few different Realtor's and find out what the going rate is for your area. 
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
Part 1:  Would  a seller hire a new or inexperienced Realtor to sell a more costly home or would a seller hire a more experienced, efficient and effective Realtor to listing their home?

Part 2:  Would a seller pay more to an experienced Realtor that will sell the seller's home faster, with less stress and to make more money?

Just something to think about. 
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
Hi......a shorter version of Lisa Dalberth's answer.....I agree with her.  If 500k is near the very top of your market you could expect to negotiate lower...but 250k and 500k isn't a significant variance in my area either.  Here, perhaps 800k and up would be reason to lower commissions.

Another point....we, like most areas, use an MLS.  When we co-broke out listings out through it, we need to offer other agencies a minimal accepted percentage.....here it's 2%.  Anything less and selling agents shy away unless they are forced to show the home due to a low asking price.  Double it so my office gets paid...4%.  But that's an absolute minimum.  Mostly we too do 5% and some 6%.

Best,  Paul
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013

While there is no industry standard (national or regional), there are certain rates that tend to be "norms" for a region.  (I will discuss the "norms" for my region at the end of this message...)  Before you agree to any rate, you should understand what these "norms" are for your region and negotiate said rate according to various factors which may impact the rate that a) you are willing to pay and b) you should realistically expect an agent to receive as compensation.

Relative to some of the "factors" to consider:  What are you asking an agent to do?  Is the agent proposing to perform a comprehensive and costly marketing program?  Or is the agent simply going to list it and forget it?  Are they just putting a lockbox on the property and then setting/forgetting?  Or are you asking them to accompany every showing?  Is this a high-volume, fast-paced market?  Or is it a market that typically takes far more time and effort to sell? 

As a specific example, homes in our market (central Massachusetts) tend to list at a 5% rate (usually to be split between Buyer and Seller agents).  However, I have seen this rate as low as 4% and as high as 6%, generally varying on the factors above (among others).  (My firm trends to the higher end, as we provide full-service representation -- i.e. We provide comprehensive marketing, we always accompany showings, etc.)

Relative to variability on selling price:  I have occasionally seen rates vary for homes that are well outside the norm for our region.  (In our market, I do not see a big difference between $250k and $500k, but have seen a difference at $1 million or up.  This will obviously vary by region.)

(Note:  Land, condos, multi-families, etc. may have different norms/factors.  Also, I have not considered "entry-only" services above.)

Good luck!

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
It's always negotiable and never set.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 19 2013
 
Related Questions
Do listing commissions decrease as the selling prices increase?
Profile picture for Mack McCoy
Latest answer by Mack McCoy
November 20 2013 | 18 answers
Be A Good Neighbor

Zillow Advice depends on each member to keep it a safe, fun, and positive place. If you see abuse, flag it. More on our Good Neighbor Policy.

Homes for Sale
  1. 36 Valley Ct, Secaucus, NJ Home For Sale
    36 Valley Ct, Secaucus, NJ 07094

     For Sale: $519,900

    • Beds: 5
    • Sqft: 2331
    • Baths: 3.0
    • Lot: 2178000
  2. 21 Kingswood Rd, Weehawken, NJ Home For Sale
    21 Kingswood Rd, Weehawken, NJ 07086

     For Sale: $3,550,000

    • Beds: 3
    • Sqft: --
    • Baths: 4.0
    • Lot: 98106
  3. 21 Kingswood Rd # 25, Weehawken, NJ Home For Sale
    21 Kingswood Rd # 25, Weehawken, NJ 07086

     For Sale: $3,550,000

    • Beds: 3
    • Sqft: 2602
    • Baths: 4.0
    • Lot: 999999999