Negotiating a RE broker's fee in low inventory market

[J Grant]

The suit seems misguided - on what planet do buyers pay commissions to RE agents to be so-called "buyer's agents?? that would mean the buyer pays out of pocket raterh than the commission coming from the sale proceeds and then distrubted.

There is the listing agent, who lists the property and then there is the selling agent - (who brings the buyer ) very few sales agents defined as true "buyer;s agents," and most agents sign a statement that the y are dual agents or represent the transaction and not the buyer

Now, price fixing the commission rate itself is another matter, and the traditional 6% might have gotten that way due to an agreement between brokers, whether stated or implicit, not to lower it or pay much attention to listings offering a lower commission.

 

[Sandra Koutsopoulos]

Actually, there generally have been 4 parts to the commission: Listing Broker who controls the $$$, listing agent (under listing broker's authority), selling broker, and selling agent who receives his portion of commission that the selling broker gets per his contract with his broker.

In the past, most of the hard-knuckled financial negotiating was done by listing brokers while taking the listing, and the fruits of those negotiations were set out in the MLS co-broke percentages/dollars.

I'm speculating that selling agents typically are disinclined to be confrontational or demanding with buyers, especially wishy-washy ones, to get them to sign on the dotted line. But if they don't have an agreement to be paid from somebody, where's the income? Might have to see a lot of folks' brains being re-wired.
On the sweet side, if a "buyer" wants to see a bunch of houses for recreational and entertainment purposes, being confronted with paying a cash deposit upfront against services would certainly cool that waste of an agent's time, and extract a genuine commitment.

 

[Terrel L. Shields]

20% of the agents generate 80% of the sales so a reduction of 60% of the dead weight agents should have little if any impact

Well, the Pareto effect would still apply regardless how many agents drop out. The best will get better, and the rest will have the crumbs. And, again, outside of land, an agent is almost always a good thing. Land, it seems to me, is for a specialist or you'd be just as well to do it yourself. Even as an appraiser were I to list my property, I'd use an agent. My nephew was a broker once, but he listed his house when he sold it in town and it sold quickly.

Last year I appraised a tract of bare land. It had sewer but it was a dedicated sewer to a school and cannot be hooked up to - it's pumped to the very corner of the property to empty into a gravity line. Some knucklehead listed it and touted it having sewer along one side...No. $45k an acre. No buyers. Dropped to $35k. Just heard it is pending sale at HALF the listing...guess what I appraised it for and guess what? The agent was from 40 miles plus away. You gotta vet your agents.

 

[J Grant]

Actually, there generally have been 4 parts to the commission: Listing Broker who controls the $$$, listing agent (under listing broker's authority), selling broker, and selling agent who receives his portion of commission that the selling broker gets per his contract with his broker.

In the past, most of the hard-knuckled financial negotiating was done by listing brokers while taking the listing, and the fruits of those negotiations were set out in the MLS co-broke percentages/dollars.

I'm speculating that selling agents typically are disinclined to be confrontational or demanding with buyers, especially wishy-washy ones, to get them to sign on the dotted line. But if they don't have an agreement to be paid from somebody, where's the income? Might have to see a lot of folks' brains being re-wired.
On the sweet side, if a "buyer" wants to see a bunch of houses for recreational and entertainment purposes, being confronted with paying a cash deposit upfront against services would certainly cool that waste of an agent's time, and extract a genuine commitment.

The selling agent's payment commission agreement comes from the listing agents ( and their respective brokers ), correct?

Buyers brokers are so rare I was surprised to see it come up in the suit unless they were incorrectly calling the selling broker a buyer broker - of course, some listing agents also sell the property /find the buyer, in which case they keep the whole enchilada-

 

[Fernando]

Research “flat fee” brokerage - search Home Avenue as an example. They can put your house on the MLS for about $500. You still probably need to offer the buyer’s agent money, but apparently NAR just agreed to changes in buyers compensation, so that can be negotiated separately.

View attachment 85848
Agree you want to invest in staging and quality photos. First impression is everything.

I was surprise the NAR came to a settlement. I thought NAR had the money to appeal and fight to the Supreme Court.

 

[Raven59]

The true value of a real estate agent lies in their ability to bring a deal to a successful close, rather than just listing and selling the property. In today's market, anyone can list a property and get market exposure through various channels, but the knowledge and expertise required for all the after-contract details is where an agent's value truly shines. These details require time and experience, which most property owners lack in their toolbox.

 

[Fernando]

There's a big shot realtor sending out flyers offering sellers ridiculously low commission (other agents known to hate him).
Since few listings here listing agents can get their commission with less effort than buyer agents.
His strategy is a limited time offering and if property gets a ratified offer like within few weeks, seller pays low commission.
Either this agent is desperate for work or a genius in "encouraging" seller to accept an offer within few weeks of listing date.

 

[Fernando]

5% total commission is more common than 6% around here.
When homes have median of $2 million, that's good chunk of change.
In other states I heard median price is like $450,000. At 6%, that's still not a lot of money.

 

[Cob]

Having retired from appraising a couple years ago, my wife and I are ready to downsize and move south. Having sold my mother's condo myself (with the services of my lawyer) about 5 years ago, I did consider doing this once again or possibly using a cut-rate service. But at this point we decided that, with all the other headaches involved in moving we just don't have the time or energy to deal with things.
But I am considering doing some hard negotiating with any potential listing broker based on the following conditions of our current market:
Like a lot of places, there is currently an extremely low inventory of homes for sale in the school district, even when taking the moderate to low level of demand that is typical for this market. The typical DOM has gone from 20-30 days back when I worked as an appraiser to 1-7 DOM. The fact that it seems that there are a lot of realtors chasing fewer listings makes me think I would be unwise to accept a "standard" 6% commission.
I was thinking offering my preferred realtor a 5% fee with 3% going to the listing side and 2% to the buyer's agent. While ordinarily this might depress the response to the listing, I would think that market conditions would mean far less in this case.
Is it possible to offer different fees to each side? Does anyone have any thoughts as to the wisdom of doing this?

I am a Realtor and my last 2 or 3 listings in the Austin area were done exactly like this, it was done with the seller giving 5%, I took 3% as the listing agent and gave the buyers 2%, I stated this on the listing on MLS, each time the buyers agent did NOT flinch or make a fuss about it, one did submit an offer and on the contract listed 3% to them, I called and pointed out it was only 2%, they made the change and sent the contract back with 2% listed for them.

 

[andrew81]

edit//

never mind lol