Profile picture for BrianJohnDavis

What is a real estate agent really worth??

In this market, we may lose $ when we sell our home, but do we we really need to pay 2.5 - 3% to each agent for the pleasure?  I understand that they have some value, but if they spend 40 hours on the process, should they reap tens of thousands of $$?  I'd like to negotiate with my potential selling agent(s)....any ideas?
  • May 10 2010 - South of Market
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Answers (33)

Dear BrianJohnDavis,
This is a tough market for sellers even with a great agent helping you. Commissions are negotable and you can discuss your feelings with your listing agent.
  • November 24 2011
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Profile picture for sunnyview
"Sure you can negotiate but usually you get what you pay for."

I can't agree with that. Sellers regularly pay 6% to agents on sales where the agents earned a 2% split at best, but that is not the point since a commission is not a tip where you can slide the scale to suit your satisfaction rating of the transaction.

The point is that clients should put their money where they will get the best job and should choose and agent that will work a marketing plan, will list on the internet, will hold open houses for other brokers or the public, will be professional, will monitor price and will be honest with the seller about condition issues.
  • November 11 2011
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Ok folks, real estate is not that complicated. It's not cold fusion. It's not even as hard as negotiating a business merger (for which the representatives *do* get to actually negotiate). Real estate agents do very little negotiation, despite agents trumpeting up and down that is our value.

I recommend my clients to negotiate far more than they often would on their own and on almost every deal have had clients choose to successfully hold out for an extra 5-10k beyond what they were willing to go in for (in their favor). That is not negotiation. That is having a feel for the market and the other party (through their agent's attitude and other facts I am able to glean from the situation), presenting it to clients (along with current market data, trends, house specific info, etc) so they can make an informed decision. Then I do their bidding.

In most instances we cannot actually negotiate. We can get a read on the other side and share our opinions with our clients who must make their own calls on what they wish to negotiate for. Telling your client "I think you are leaving 10k on the table," or "I bet they'd throw in that sofa you like" is advice on packaging an offer, not active negotiation. In summary, we provide information and recommend. We generally do not negotiate.
  • November 11 2011
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Can you spell FSBO?
  • November 11 2011
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Real Estate is extremely complicated, now more than ever.  A huge part of your agent's value is in their negotiating skill.  Have they taken specialized coursework in negotiating the best sales price for you?  If you realize the value of a strong negotiator, be happy they don't negotiate the fee.  It likely means they will be a stronger negotiator for you, too.
  • November 11 2011
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Profile picture for wetdawgs
Sean writes:   "for every $1 more the agent negotiates for you you will get .97 and he will only get .03."   Hmmm, that's interesting. I've never heard of a commission rate of 3%.    I give Tiffany the thumbs up (I'd give her two if that were an option).

  • November 11 2011
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Sure you can negotiate but usually you get what you pay for. Most experienced agents won't work for low commissions nor should they and it will be harder for buyers agents to show your home for a low commission. Ask yourself, is it really worth it to possibly have problems, stress and most importantly an unsold home just to save a few dollars?
  • November 11 2011
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Profile picture for SeanGlaze
Getting paid as percentage of the sale is how many industries work the issue is that when you are dealing in homes and the transaction is "tens of thousands of $$" everyone notices the commission because it is a larger $ amount but you are comparing to the sale it is a small percentage.  You pay for quality in every industry.  If you want a low price real estate brokerage there are many out there.  If you want more service, expertise, and competence you will have to pay more.  What profit do you think your car dealership makes? Grocery store? gas station? Dentist? Doctor? The amounts seem small when you buy other things because you do not spend $400,000 on gas a year (Fells like we will soon).  
Just as you go to other places that deal with situations all the time it is the same with your Realtor you do not sell houses everyday your Agent does, or should be working everyday, so they know how to attract buyers to se your house and get it sold.
Is every Realtor the best ? No, just as with other industries you do your research.  Although most of us are not, actually worth our weight in Gold thanks wetdawgs, we can help you make more money by getting your house sold for top $.  Remember, depending on your situation, for every $1 more the agent negotiates for you you will get .97 and he will only get .03.

Good luck with the sale of your home.
  • November 11 2011
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I've been exposed to the real estate world my whole life and I think I might suffer from a case of overbearing optimism. I keep thinking one day that agents telling the real story of what they can and cannot do will be enough. I never understand the puffery of trying to make it seem like agents have the equivalent of years of graduate-level education, could negotiate a peace treaty between Israel and Palestine, and have magic "tool kits" with imaginary tools that inspire superhero capes.

Agents are glorified personal shoppers, who also may function as semi-professional counselors, decorators, chauffers, information relayers, naggers and tutors. We aren't allowed to make decisions for clients, act as attorneys, or negotiate much of anything without direction/permission. There is a definite value to the job. There is no need to inflate the value of it since folks who don't value it will not suddenly do so because we've picked a few prime adjectives and metaphors.

  • November 11 2011
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Profile picture for wetdawgs
Tiffany:  You dug up a 51 minute old thread, at least the tail was hot.

The price of gold has increased since the last calculation, but perhaps I was polite on pounds per average agent as I gender averaged.
  • November 11 2011
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@wetdawgs

I was giggling that more than one person made the gold reference on this thread. I'm not sure why people dig up threads from over a year ago without really adding much to the conversation. Oh wait, did I just do that?
  • November 11 2011
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Profile picture for wetdawgs
@Deb:  Out of curiosity, how many hours do you average per residence sale? 

You write "experienced agent is worth their weight in gold".  Let's imagine the average agent weighs 150 pounds - hmmm, at today market price  that it $4,300,000.   

  • November 11 2011
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If I only had to spend 40 hours to get my client's homes sold, or 40 hours to find the right house for my buyer clients. If that were the case and it were that easy, you might have a point, but it's far from the truth.

Remember, to get the best price for your home that the current market will bare with the best terms and conditions, you need to expose your homeo the most buyers out there looking for housing in your location. As a For Sale By Owner, it would cost you far more than you realize to get that exposure and even then it would be impossible.

Many people below point to the knowledge and expertise of Realtors which can't be under estimated but its also the negotiating skills they bring to the table as well. It can be very difficult to negotiate on your own behalf when it comes to your home. It's also very difficult to get a read on the buyers reaction to your home. Feed back is essential for price corrections or to have knowledge of things you can change to make the home more appealing to buyers.

There are all types of agents out there as with any profession but a professional, experienced agent is worth their weight in gold. If you don't believe it, try selling your home on your own for a few months. You may get lucky; the question is will you ever know if you got the best price for your home.

If the general public knew all that goes into selling a home professionally with all the resource available that are part of a Realtor's tools, they would not question a Realtor's worth.
  • November 11 2011
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Here's the good news, real estate compensation is always negotiable.  Certainly your home may be the most valuable asset you own.  When you choose any service professional, you look for the most experienced dentist, doctor, attorney, and so forth.  You make sure they have a good reputation, perhaps they have been referred to you, to insure you the get the best service and result. 

It is no different in the real estate industry.  A seasoned professional will discuss the hundreds of decisions that must be made from the point of contact through to a successful sale & closing including your collecting the proceed of the sale.  

If it was easy, everyone would be doing it.
Make sure you are "getting what you pay for", in terms of experience, professionalism, market knowledge, sales skills, promotional and marketing strategies, network & connections, their continuing education, risk management record-plus their sales record, client testimonials, as well as a personal interview to make sure you are entirely comfortable with your representative and their process as it meets your needs.  Choose carefully.

If your real estate agent makes it seem easy, then they have done their job.   From a personal standpoint, this is a challenging job, requiring complete dedication and devotion, countless hours, Believe me....we do, and proudly so!

  • November 10 2011
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Realtors are worth every penny in today's market. Surprised to hear that coming from a SF realtor? Statisically speaking, working with a professional and reputable realtor is advantageous in that your home is marketed and negotiated to achieve the greatest value in comparison to homes that are sold by owners (FSBO). Hiring a real estate attorney to represent you is a consideration to save on costs. But can an attorney reach the buyers? Market you home? Negotiate the offer for best terms & conditions? Can you? Research FSBO listings and talk to the owners, to get a realistic perspective. Explore flat fee MLS service companies. If it's 40 hours or 400 hours, a good realtor will guide, protect, and work in your best interest. Yes, everything is negotiable. Why not interview 3 agents, talk to real estate attorney(s), and explore these FSBO online services. All the best.
  • May 17 2010
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You know, there are limited service companies out there that will do little more than put your listing in the MLS for you if that's a direction you want to go. You may save 1%-2% but you're a little higher up on the totem pole than a FSBO.

An alternative way to look at this: I don't think my mechanics truly earn their $60/hr labor, so I take my business elsewhere. Elsewhere they're going to charge the same amount for labor, but they'll make sure the job is done correctly.

Hope this helps a little!

  • May 16 2010
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You simply get what you pay for.  Statistics show that home sell on average much higher when listed with a Realtor than if you were to try to sell it yourself.  Time is money and in the market you need every competitive edge you can get.  Every resource must be exhausted and an agent has many more resources than you.  You can't sell your home based on luck, it takes lots of research, many hours marketing, staging with a discerning eye, strong negotiating skills, hosting broker and public open houses to get the word out.  On the surface it looks like an agent makes a lot of money in one commission but a lot of time and money goes in to it and the agent usually walks away with much less than half the commission once the broker takes their fees and marketing/time is factored in.  I honestly believe you get what you pay for, some agents are worthless, but others are very aggressive and earn their worth by getting you the most money for your home in the least amount of time.

  • May 13 2010
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Profile picture for ronpeterson1
If the buyer's agent can get you a 3% higher price or sell your  home 6 months earlier, the commission is worth it. Your strategy is to ask 3% to 10% more than what you want to net from selling your home. If a buyer comes in without an agent, feel free to accept an offer that is at what you want to net. Get an appraisal from an independent appraiser to determine what you should be able to get. Also, get a home inspection to see if you need to make any repairs or drop the price to make those repairs.

I am selling my home now. I started advertising in Zillow which has a good means of displaying information about my home. I also tried Yahoo and Craigs list. I have tried the weekly paper and the metropolitan paper.

The sign in front of my house seems to work better than those other advertising media.

I am now starting to use a fixed fee MLS agent and will be paying any buyer's agent a 3% commission. 



  • May 12 2010
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Tiffany, is right you could perform our job for yourself.   With dedication to educating yourself, developing buyer databases, handling paperwork, accurately value your home and advertise consistently in a variety of media and get your property on hundreds of websites? 

Truthfully they probably would put less than 40 hours of work into actually selling your home.  However, the work they do behind the scenes developing leads is where you benefit most!

Btw if your gonna lose money when you sell, consider renting the property out until the market turns around. 
Hope this helps. 
  • May 12 2010
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The listing fee is not set, so yes, you can negotiate with the agent. If the commission is to low, there may be a problem with other agents wanting to show that property.

Agents are great because they help you with the legal aspect of the sell. They make sure that all necessary items are disclosed and they(me being one) make sure your rights are protected. In case of any legal action are necessary
  • May 12 2010
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Profile picture for SoCal Engr
@ Tiffany - You're way too realistic and level-headed to be an agent. Didn't you like grape? I'm sure there are other Kool-Aid flavors available.

@ Mike (and other agents) - Yours is the second recent post indicating that buyer agents will not present FSBO properties to their clients, even if they are willing to pay a buyer-side commission. Is this because you are protecting your client's interests or your seller=side commission? It's comments like this that make you, as an industry, look like you are desperately trying to protect your monopoly on the RE market from the inroads caused by the Internet...and failing.

Note: Feel free to answer the question, but from a consumer perspective, that was a rhetorical question.
  • May 12 2010
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I think in this competitive market, you need every edge you can get.  That being said, make sure you are getting what you pay for.  If your listing agent is doing their job, they are spending a lot of time, energy and money to help you sell your house.  Remember most buyers still use real estate agents, and those agents probably aren't selling fsbo properties. Isn't that all you really need to know?
  • May 12 2010
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Katja:

The truth of the matter is we do for others what they could do for themselves. If the seller doesn't want a traditional agent, they are not your target market. The types of agents available are diversifying for that reason. There are lots of buyers and sellers that do want to outsource the effort and expertise to an agent.
  • May 12 2010
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Hello BrianJohnDavis!

Wow, you must have some interesting "real estate" past! Where is this hostility coming from?
I don't "reap tens of thousands"; I work very hard for it.
When choosing a "discount service" make sure what is included; get it in writing. Otherwise you maybe surprised how "discounted" the results are.
I'm confronted every day with homeowners which have to advertise for their own homes, show it themselves to tire kickers and not approved "lookers", print flayers and hold open houses.In addition there is no one out there for you who can spend hours on, sometimes very unpleasant, discussions with all parties involved, and this 24/7. Could be a mess!
Go to Realtor.org and check the 2009 profile of buyer's and seller's. You will be surprised to see that an agent is able to sell your home quicker (time is money too!) and at a better price than you will be ever able to do it it yourself.
By the way...I would suggest trying to sell your home without Realtor rather than hire a "selected services agent". It's like the question "If you would like to have a Hamburger with your Big Mac?". Why just don't take a bun, scrap of lettuce and onion ring? It will be much cheaper!
  • May 12 2010
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Check to see if there are agents in your area offering a'la carte services. You can pick and choose what you do an don't want to have included.
  • May 12 2010
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Profile picture for sunnyview
You can try a flat fee MLS service to try to list it yourself. Make sure you do your research, understand the time/marketing commitment it takes to sell by owner and price it right the first time so you don't turn off potential buyers.
  • May 12 2010
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To answer your question Realtors are worth their weight in gold for the wealth of their knowledge, experience & perserverence that no for sale by owner can duplicate, copy or sell as effectively as a real estate agent.Property owners have been using real estate agents to sell properties for over a hundred years & will continue to do so for years to come.My advice is to select an agent on their credentials & experience not by choosing the agent that promises you an unrealistic selling price.Then,compensate them well & it will sell.
  • May 12 2010
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Brian, I think you are missing the point.  Agents would not be inclined to put money and effort into marketing your property if somebody else might scoop in and sell it (you might be surprised at how much it actually costs to market a home properly and aggressively).  From the sounds of it, I'd say that you a more inclined to go the FSBO route.  Best of luck in your endeavors and keep us updated.
  • May 12 2010
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Profile picture for BrianJohnDavis
Can't we give all the agents a chance???  Why should I agree to exclusivity??  I can clean it up, pay someone for flyers, MLS...  But the selling should be open to all agents in this market. `
  • May 11 2010
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If you find a good agent, I'd say they are worth their weight in gold.  If you dind one that's just going to drop a sign in the yard and sit back and wait for a check, then I'd say they're worth absolutely nothing.  And I've seen both versions of these agents in my years of selling.

Most agents are willing to negotiate a listing agreement, but don't let price alone be the deciding factor on which agent (if any) to go with.  I can get my Lasik laser vision surgery done for less money at Cheapo Lasik, but I think I'd rather spend the money and go to Quality Lasik if the results are going to be much better.  Dealing with agents can be the same way.  Some will be willing to list your house for as little as 4% or even a flat rate, but just be sure you know what type of services you are going to get from the agent, and follow up with their references.  If they truly do provide good quality service at a low rate, they should have plenty of people willing to sing their praises.

  • May 11 2010
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