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Answers (11)
- Tug of War
- Contributions:1969
Ditto and Thumbs Up Joan
- Michael Emery, "MikeEmery"
- Contributions:7298
I think there is some confusion as to who makes the decision to show a property.
Now days it's the buyer who often first brings the listing to the attention of the agent. And often the agent has already earmarked the property for showing so it becomes a consensus decision.
If I were a client and my agent failed to show me a property because of a .5 percent difference in commission payment, I would drop that agent in a heartbeat.
@ ca1973, it sounds like you have the answers you need to list. Good luck and get it sold!
Now days it's the buyer who often first brings the listing to the attention of the agent. And often the agent has already earmarked the property for showing so it becomes a consensus decision.
If I were a client and my agent failed to show me a property because of a .5 percent difference in commission payment, I would drop that agent in a heartbeat.
@ ca1973, it sounds like you have the answers you need to list. Good luck and get it sold!
- Joan Braunschweiger, "Morris County NJ"
- Contributions:1543
"Make sure he co-ops it at 3% or buyer brokers will not show it!"
Nicholas, enough.
Seriously, some of your posts make me cringe.
Speak for yourself and do not generalize anymore about what the rest of us will or won't do.
- Nicholas Ribeiro, "NicholasRibeiro"
- Contributions:1807
Make sure he co-ops it at 3% or buyer brokers will not show it!
- ca1973
- Contributions:4
Thank you all for the great answers. I understand things better now.
I interviewed four different agents from two different companies, and I noticed their standard commission was 5% when they brought in their contracts (but all of them say they would negotiate). In my opinion, most buyer agents in my area are getting 2.5%, so I don't think this will affect the number of showings.
I think I'm ok with the $350 fee because, at the end of the day, the guy was already super flexible in lowering the commission to 4%, and he's a top producer in the area. He's been showing a lot of dedication. He's already spent several hours with us showing us houses without even having a signed contract yet.
Thank you wordsmth for clarifying the contract term - << or if a purchase agreement is entered into, of the purchase price >>. I thought I'd have to pay the $350 no matter what - even if we didn't sell our home and/or buy a new home.
I interviewed four different agents from two different companies, and I noticed their standard commission was 5% when they brought in their contracts (but all of them say they would negotiate). In my opinion, most buyer agents in my area are getting 2.5%, so I don't think this will affect the number of showings.
I think I'm ok with the $350 fee because, at the end of the day, the guy was already super flexible in lowering the commission to 4%, and he's a top producer in the area. He's been showing a lot of dedication. He's already spent several hours with us showing us houses without even having a signed contract yet.
Thank you wordsmth for clarifying the contract term - << or if a purchase agreement is entered into, of the purchase price >>. I thought I'd have to pay the $350 no matter what - even if we didn't sell our home and/or buy a new home.
- Ofe Polack, "Ofe Polack"
- Contributions:1418
As Realtors we are not allowed to offer counsel on contracts, I suggest that if you have any questions you should run it by a real estate attorney. I also would like to echo David's advice that a lower commission does not attract a lot of buyer agents, think about it!
- wordsmth
- Contributions:361
I agree with Jerry's interpretation.
Regarding the commission, note that it says "(or if a purchase agreement is entered into, of the purchase price) AND $350 processing fee." If there's a purchase agreement, then you pay both. If there's no purchase, then there's nothing to process. The company I'm with charges a similar fee. Agents have no control over it. But it only applies if there's a purchase.
As for the commission, you'll pay 4%. Period. If there's a buyer's agent, that buyer's agent will get 2.5% and your agent (the listing agent) will get 1.5%. So, while he cut your commission by 33% (from 6% to 4%), he actually cut his own share by 50% (from 3% to 1.5%). However, as also noted below, if the other buyer agents in your area generally get 3%, then 2.5% isn't quite as good. That might or might not affect the number of showings you get.
Ask your agent for additional clarification, if needed.
Hope that helps.
- hpvanc
- Contributions:2579
I'm not an attorney, so this is purely opinion on the contract.
If I read the excerpts correctly, you pay your agent 4%+$350 if you sell. If you do not sell you pay the agent $350, which sounds like the agent is reducing the commission if you are willing to pay for some of the upfront marketing expenses regardless of whether you actually sell or not.
Your agent is contracting the 4% + $350 dollars in compensation, out of that compensation they are offering 2.5% to the cooperating sub-agent that actually sells the property.
Additionally, your agent if he sells you a home will, I assume, unless you have a contract on the "buyers" side collect the cooperating commission of ~2.5-3% from the sellers agent for any property you would buy.
Unfortunately in my opinion, there is no good way for consumers to actually negotiate the "buy" side agents commission. The contracts are design so the seller has little choice but to offer what is typical for the area or the property won't get shown, and the contract has been designed so that the buyer is not party to the contract for compensating what is supposed to be their own agent, and has no control beyond asking for a rebate (in states where it is legal).
The US Department of Justice Anti-Trust Division has filed several Price Fixing lawsuits against various boards of real estate agents. What you are looking at and trying to understand is partially driven by the problem that those suits have unsuccessfully tried to address.
If I read the excerpts correctly, you pay your agent 4%+$350 if you sell. If you do not sell you pay the agent $350, which sounds like the agent is reducing the commission if you are willing to pay for some of the upfront marketing expenses regardless of whether you actually sell or not.
Your agent is contracting the 4% + $350 dollars in compensation, out of that compensation they are offering 2.5% to the cooperating sub-agent that actually sells the property.
Additionally, your agent if he sells you a home will, I assume, unless you have a contract on the "buyers" side collect the cooperating commission of ~2.5-3% from the sellers agent for any property you would buy.
Unfortunately in my opinion, there is no good way for consumers to actually negotiate the "buy" side agents commission. The contracts are design so the seller has little choice but to offer what is typical for the area or the property won't get shown, and the contract has been designed so that the buyer is not party to the contract for compensating what is supposed to be their own agent, and has no control beyond asking for a rebate (in states where it is legal).
The US Department of Justice Anti-Trust Division has filed several Price Fixing lawsuits against various boards of real estate agents. What you are looking at and trying to understand is partially driven by the problem that those suits have unsuccessfully tried to address.
- Jerry Moscowitz, "Jerry Moscowitz"
- Contributions:39
I'm in Minnesota but I think I can answer that for you. The 4% you are paying covers both his real estate commission as well as the other realtor that brings the buyer in. It looks like he would keep 1.5% and the other Realtor would get 2.5% ( the blank part would be if he was paying a flat fee to the other Realtor). He may have gone a lower amount because you will be buying a home with him so he will also get paid for that but didn't want to lower the payout to another realtor because it could discourage them from showing your home.
The $350 fee is common with many Real Estate companies, it sometimes is called processing, admin or additional commission and you only pay that out at closing.
I hope this helps.
The $350 fee is common with many Real Estate companies, it sometimes is called processing, admin or additional commission and you only pay that out at closing.
I hope this helps.
- Michael Emery, "MikeEmery"
- Contributions:7298
You should request to have that $350 fee taken out of your listing agreement.
Where I'm from, if the client doesn't pay the fee it comes out of the agents pocket. There is no getting rid of it.
Where I'm from, if the client doesn't pay the fee it comes out of the agents pocket. There is no getting rid of it.
- David Barr, "dpbarr2000"
- Contributions:280
The franchise real estate brokers (Coldwell, Re/Max, etc) usually try to tack on this "processing fee" in addition to the overall fee. You should request to have that $350 fee taken out of your listing agreement. In my opinion, it's a junk fee that goes straight to the brokerage bottom line.
The 2.5% means that your listing will be marketed in your MLS for a 2.5% fee to the buyer's agent, if there is one. If this happens, your agent will get 1.5% of the total 4$%. This part of your agreement is fine, but you should be aware that in a buyer's market, many agents won't show your home first if there are other competitve properties where they can make 3% or 3.5%
The 2.5% means that your listing will be marketed in your MLS for a 2.5% fee to the buyer's agent, if there is one. If this happens, your agent will get 1.5% of the total 4$%. This part of your agreement is fine, but you should be aware that in a buyer's market, many agents won't show your home first if there are other competitve properties where they can make 3% or 3.5%
Question about standard listing agreement
I chose a real estate agent in my area to sell my home and help me purchase a new home. He was flexible to lower his commission to 4%. He emailed me a copy of the standard residential listing agreement contract in California. I have a couple of questions regarding the following terms:
<< A. Seller agrees to pay Broker as compensation for services irrespective of agency relationship(s) either 4.00 PERCENT of the listing price (or if a purchase agreement is entered into, of the purchase price) AND $350.00 PROCESSING FEE as follows... >>
If, for some reason, my home doesn't sell and/or I don't find a home within the time period described in the contract, do I have to pay the broker $350.00? I thought real estate agents wouldn't charge anything if I can't sell my home and/or find a new home. Is this standard?
<< (1) Broker is authorized to cooperate with and compensate brokers participating through multiple listing service(s) (MLS) by offering to MLS brokers out of Broker's compensation specified in 4A either 2.500 PERCENT of the purchase price or (HE LEFT THE FIELD BLANK) >>
I don't understand what this 2.5 percent means. Will my real estate agent only earn 1.5 percent (4 percent - 2.5 percent)? Is this standard? Or am I paying this extra 2.5 percent?
I'm not very good with contracts, so if anyone could help, I'd appreciate.
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