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What is a standard realtors comission? What should I the (seller ) be getting for all this money?

I may be selling my house first of the year and dont know what to expect.
  • December 20 2010 - US
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Answers (11)

Fees are negotiable and there is NO standard.
As a seller, keep in mind you have in your control the 2 most important marketing tools.
1. The asking price, the lower the price, the quicker it will sell.
2. The commission.  The higher the commission paid to cooperating brokers, the more agents will want to show your property, therefore, it should sell faster (as long as you aren't overpriced for what you have.)
  • December 22 2010
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Master_fisherman:

As you have read all fees are negotiable pertaining to real estate agents. I know that does not help in your decision making. What you may find of significance is evaluating your situation. Do you have a situation that requires specialized service. Such a situation would be: No equity, no savings, broke!  The agent you choose needs to get market value for your home without compromising your future. This agent will need specialized resources.

Do you need to be living in a new location by March 10th? (random date) This means you need to sell the home in 5 weeks! Your agent will have two choices, let a lower price point sell the home or have a strategic marketing instrument to get a good price in five weeks. The latter would require an agent with specialized resources.

Maybe you are a when-ever seller. You have the liberty to keep your home on the market until the economy recovers or the next election. You don't need a well skilled real estate agent to assist with this plan. Unfortuneately, this scenerio means your home will not sell and the real estate agent will not be paid either.

All of this is to make clear that a successful sale of your home accompanied by good terms is far more benefical to your economic results than saving a thousand dollars on a commission. Choose strategic effective marketing rather than the typical reduce the price till it sells program often cited. The former is more costly and substancially beneficial to the bottom line.

  • December 22 2010
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By the way, don't forget in this market, many of the "offers" are asking for seller's concessions, including 3% closing costs, appliances, and a number of corrections or improvements, or at least allowances for paint, carpet, etc.

As there is so much extra inventory presently on the market, and prices are still falling, the buyers believe they have the right to ask you to give away your home, and if you don't, they will just look elsewhere for someone more desperate.

(It still doesn't mean that it is a good time to buy either as most present buyers will be upside-down on their loan, having lost all their down payment equity, in less than 2 years).

  • December 21 2010
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There is a variety of options and prices. First decide if you want to go with a traditional agent who charges a higher commission, or a flat fee MLS Broker who will get your property listed in the Realtors Multiple Listing Service (MLS) and hundreds of the most popular real estate websites out there.  Flat Fee MLS has been a very successful option for home sellers, who want to save their hard-earned equity.  The service typically costs around $500, and includes assistance by a real estate licensee, all the forms necessary to sell, agent-friendly yard sign, and other options you may want to consider.  Statistically, it the MLS listing that is most likely to connect the seller and the buyer.  In fact, MLS listings connect the buyer with the seller more often then open houses, newspaper ads, agent advertising combined.

When choosing a flat fee listing service, make sure you:
1. Call them--Calling the broker is an excellent way to see how responsive and helpful they are.  If you always go to voicemail, that speaks loudly to their responsiveness,  
2. Check their background-the Better Business Bureau website is an excellent place to check (put the company name in at http://bbb.org/),
3. Make sure they guarantee in writing that you will be listed in the Multiple Listing Service used by all the agents in your area, and
4. Check online review websites for negative reviews or compliments from satisfied customers. Any established brokerage should have reviews on independent websites where they can't remove negative comments.

Avoid the lowest price flat fee brokers, there are some very questionable flat fee websites out there, and if you research them you will find out why.  My website has links to reputable brokers in 48 states as well. Good luck with your home sale.
  • December 21 2010
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"make sure you have your agent pay .5 point more to the buyers co-broker then the industry norm" -

In case you are not familiar with what the agents try to hide from the public, when they say "industry norm" they mean 3% listing agent representation (split between the agent and their broker) and 3% selling agent (buyer's) representation (split between the agent and their broker).

If there is a loan for the purchase, these numbers go on the HUD-1 form that is filed with the federal government, so it is "public"; they really can't hide the numbers.

So, 6% total fees is usually the "starting point" for negotiations, and is what someone referred to as "full service", and "discounted" would mean "below" that rate, as the agent is expecting the client to do some of their work.

Remember though, that the 6% is not the only costs in the transaction of a house; after all the inspections, appraisals, corrections, loan applications, preparation, curb appeal, staging, title search, title transfer, closing costs, etc. it comes closer to 10% to 16% total transaction costs.  And if you factor in your time and the buyers time, you may even get up to 25% transaction costs.

So, what you can "expect" is a lot of stress and hassles, and to not get much "return" on your "investment".

But it should also be pointed out that a 2008 HUD study of FHA financed homes indicates that the real estate agent fees were approximately $970 plus 4.5%, so really, that is where you should start your fee negotiation.

As for whether paying 3.5% buyer's agent representation helps sell your home faster or for more... many agents claim so, but there have been no studies indicating this is the case, and many agents claim they don't look at the commission % at all when filtering possible homes for their clients; they are more concerned with getting the right home in the right location at the right price in a timely manner, thus the % commission they will make is not relevant.
  • December 21 2010
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"the negotiation can mean thousands for you." -

And the same agent's say the same thing when they are representing the buyers instead of the sellers!  Now if the same agent is going to increase the price beyond market value, and is going to also decrease the price below market value, what does that really mean?

That after all that "negotiation", all either party is going to get is "market value".

Now, determining what market value is at any given point in time is another issue, but remember, if the listing agent convinces a party to offer more than the property will appraise for, the "funding" contingency will either cause it to fall out of escrow, or will cause the offer to be knocked back down to where it should have been in the first place.

(And that still says nothing about the value in 6 months).

Thousands for you?  As in $3k on a $300k sale?  1%?  And you are paying $18k to get $3k?  If that is "all" you are getting most people would consider that a "rip off".

What you really want to know when checking out agents is their "average total days on the market" for all their listings in the last 3 years, and the % that were removed from the market before they sold.  If it is less than 90 days and less than 5%, the agent will do good by you.  If it is more than 180 days and more than 50%, you don't want to even approach them.
  • December 21 2010
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Master_fisherman - let's keep this simple:

1. Legally,  there is no "standard", "customary" or "usual" commission - all commissons are negotiable.....speak to individual agents to see what they charge

2. Call in a few agents - ask them to present a written marketing plan showing what they will do for you to get your home sold, and a written resume showing their experience in your area....ask questions!

3. Select the agent you feel will do the best job for you - they may or may not be the one with the lowest (or highest) commission......
  • December 20 2010
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Commissions vary as do the services.  The more you pay, the more you should expect.  There are 3 basic plans other than For Sale By Owner.

1.)There are MLS only brokers that charge a flat fee upfront and provide no services. You set the showings, you do the open houses, you negotiate the contract, you coordinate the inspections, you coordinate the closing.  You also pay for any other advertising you want to do.  You pay even if your home does not sell.  Since you are in MLS, your home is available to any agents who are willing to show your home and you will pay them a 3% commission if they sell it.
Most agents prefer to work with another agent on the sellers side rather than an owner, the risk of their buyer having a bad experience is reduced.

2.)There are low service agents or discount service brokers.  They provide minimal services but discount because they don't spend on marketing and/or cannot get business at a higher commission.  If there is no sale, there is no commission.

3,)There is the full service broker that provides more services (usually).  They can include staging, premium advertising and ad placement.   If there is no sale, there is no commission.

There are pros and cons with each.  The key is to understand the services you are getting and the total price you will pay.  The services you get usually determine the price you get.  Most sellers think that the lower the commission, the more money they will receive when the home sells.  Usually this is not the case.  Why? 

The better agents usually do the most, charge the most and are more effective in getting top dollar for your home.  Not all agents are equal to other agents with the same sales model.

The best prices for any home are realized when the home is prepared for sale (staging), use professional quality photos, virtual tours and videos, are marketed  extensively and when a contract is received, is negotiated by some one with great negotiation skills.

Obviously, the staging and quality of photos make you home look it's best and makes buyers want to see the home.  The extensive marketing exposes your home to more buyers (supply and demand) and the negotiation can mean thousands for you.

I have an article on my profile under the testimonials that is called "How Sellers Should Choose a Real Estate Agent" which is very good.  There is also an article on staging.

Good luck in selling your home!
  • December 20 2010
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The lower the price you are willing to sell your home at decreases the time on the market and the time and money the Realtor has to spend on it. That means the less commission  he will take to rep you.
Keep in  mind that the commission that you agree on pays 4 parties.....buyers broker, sellers broker and then those brokers have to divide up the commission dollars with the two agents. If you want to sell fast and for the most money make sure you have your agent pay .5 point more to the buyers co-broker then the industry norm. It's highly motivating and will increase the showings and generate multiple offers hopefully.You want the buyers agent wanting to sell your home. It works great.
  • December 20 2010
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Dear Master_fisherman:   real estate commission is negotiable between the broker/agent and the seller.  The broker that you select may have a minimum that he requires the agents to honor.  You should expect to be fully represented in the marketing and sale of the property, including comprehensive internet marketing and listing of the property on any local MLS service.  The details can be explained by your agent.   Best of luck for a quick sale.
  • December 20 2010
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It will start at 7% and go down to 3%.  make sure you understand what you are buying for the price.

  • December 20 2010
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