I can't help it. I am loving Liz's Realtor series! It is perfect - please enjoy! I think it is a great write up and a good way to be able to answer those objections to someone who might find your commission seems too high - WHATEVER THAT COMMISSION IS.
I am a big fan of all business models and strongly believe that commission is negotiable depending on the situation. That being said, this is a great explanation to a client of how we get paid.
What's Your Commission? On Hiring a Realtor Based on their Fee...
I always say (oh well maybe somebody did say it before me) - if the Realtor cannot negotiate their own Commission then how are they going to negotiate the best price possible for your home? Negotiation skills. I would think, given a choice - you would want an aggressive negotiator, not someone that either doesn't believe in their own ability or the value of your home!
The question that begs to be asked is....Why do some Real Estate Agents offer Discounted Fees? Is it because they're the Good Guy? They just want to see more money in your pocket then theirs?
Well there could be a number of reasons:
- they feel that's the only way they can compete
- they have poor negotiation skills
- they have trouble justifying their own worth
- they're hoping to make up for it in volume
- the agent is desperate - any commission is better then no commission
- qualifications/experience of the Realtor
- you're willing to do the marketing instead
- they feel sorry for you
- they believe in pro bono
- having a sign on your lawn is more important then the commission
So let's do a little review.
Did you know that the commission the seller pays is split between the Selling Agent (the person with the buyer) and the Listing Agent (the person with the seller). So if the commission is 6% then typically 3% will go to the Selling Agent and 3% will go to Listing Agent. Sometimes we Realtors assume that you know that! However I'm pretty sure that some of you think we get the whole kit and caboodle!
Do you know that there are Real Estate Companies out there that Do Not put your home on The Mutiple Listing System (MLS)? They have this 'exclusivity' thing happening. They think that their paycheque might be a lot bigger if they do not have to co-operate and share their commission if they get to to List AND Sell your home. Be sure to ask them what portion of the commission you are paying will be going to the Selling Broker. How much longer do you think it will take to sell your home if it's only YOUR AGENT that's trying to sell it? I think I read somewhere that it's like 16:100 odds.
When looking at an MLS Listing - the Selling Agent can see the commission they will be paid. It may not show up on the Public Version - but that information is disclosed in the Realtor's version. Note: It's the Selling Agent that reviews the properties for sale in the MLS and most often choose those they deem appropriate for their buyer. Guess what? Herein lies the conundrum.
Now put yourself in the Selling Agent's shoes. You can sell House A or could sell House B. But house A will pay you $1,000, $4,000, $7,000 or MORE! You have mortgage payment, bills, & children to support. Which house would you like to sell?Did you know that unlike Doctors, Lawyers and Government Employees - Realtors are not paid per hour. But we do take all the risk by putting our time & money into advertising YOUR property in order to get it sold. Chances are we also have an OFFICE cost, MLS Fees, Board Fees and more! Do you know that we only get paid if the Seller sells and the Buyer buys? If they don't our costs are not recovered.
So no - commission is not regulated - there is no set rate if you're selling your home - but it IS a good idea that the commission you're paying the Selling Realtor is in-line with the rest of the comparable houses on the market. Market slow? Well in that case you might even consider offering a greater sales commission or a sales bonus. You say WHAT??? But look at it this way. For every week/month your home doesn't sell - how much will THAT cost you? You get to choose!
Still think you'd like to go with a Discount Broker?
*Please note - this is not meant to suggest that the Commission fee charged is the only criteria - there are many, many different aspects to hiring the right Realtor. Please check out this post: How Do I Find a Good Realtor?
Is It Wrong to Work With More Then One Realtor?
Speaking of Statistics...What's the Difference Between Median Price and Average Price?
If you or someone you know is thinking of Buying or Selling property in Cultus Lake, Chilliwack, Hope, Abbotsford, Langley or anywhere in the Fraser Valley Area of B.C. - or if you would like more information please give Liz Moras of Landmark Realty Chilliwack a call at- 604-799-0459 or e-mail at lizmoras@gmail.com.
Copyright © 2009 By Liz Moras, All Rights Reserved. All photos by Liz Moras ( except the one's I'm in!). All information provided by this author is only an opinion, it is not guaranteed, may be based on information collected from several sources, and may be time sensitive. It is not necessarily representative of the opinions of Landmark Realty Chwk. Ltd..
Courtney Cooper
Seattle Realtor, Owner/Designated Broker/EcoBroker
Cooper Jacobs Real Estate
206-850-8841
(Seattle real estate - search all MLS listings from all companies for FREE), SeattleAfloat.com (Seattle Houseboats), GreenLakeLoop.com (Green Lake Blog), QueenAnneBoulevard.com (Queen Anne Blog), MagnoliaView.com (Magnolia Neighborhood Blog)
About Me:
Seattle real estate has been a big part of my life for well over a decade since I began my career in real estate,but also before that time when I was in the process of purchasing my own first home. Buying your first home can be quite overwhelming,but I have managed to help many first time home buyers along the way.
Move up Seattle buyers and other types of specialized purchasing is a great passion of mine! I love Seattle houseboats and you can find me down on the docks of Lake Union and Portage Bay several times a week. Other aspects of Seattle real estate that I adore include Queen Anne Real Estate,Wallingford Real Estate, Ballard Real Estate, Green Lake Real Estate, Laurelhurst Real Estate, Magnolia Real Estate,andSeattle Waterfront Real Estate.
In addition to being a Seattle residential broker and founder of Cooper Jacobs & Seattle Afloat, I am also a member of CBA (Commercial Brokers Association) and head of the Cooper Jacobs Commercial Division in an effort to provide excellent commercial real estate services to the Seattle commercial real estate industry. With a background in accounting and management, it is my great pleasure to coordinate our Seattle commercial brokers.
About Cooper Jacobs Real Estate's Seattle Branch:
My office at Cooper Jacobs Real Estate LLC is located centrally near all my favorite Puget Sound neighborhoods just a few blocks up from Lake Union in Seattle’s Wallingford. Cooper Jacobs Real Estate is a wonderful place filled with talented Seattle real estate brokers and I count myself extremely lucky that I get to spend so much time with these wonderful people. We specialize in different Seattle neighborhoods and suburbs in both residential and commercial real estate and are all very passionate and excited about each of our favorite Seattle neighborhoods and industries!
©Courtney Cooper ©Cooper Jacobs Real Estate LLC
Go for it girl! I'm honored with the re- blogs :-)
Another excellent post by Liz! Thanks for sharing the wise words, Courtney.
Yea! I am not banned! I added a link on my blog here for Chilliwack real estate and pointed it right to Liz Moran! Thanks:)
Hi Maria:) Liz is cool - I am loving her series on Realtors and choosing the right one!
I'm constantly amazed at how many people have no idea how we're paid. The only way they know is if we tell them!
I'm constantly amazed at how many people have no idea how we're paid. The only way they know is if we tell them!
Courtney: All real estate commissions are negotiable. There is no set rate, period. To suggest so is a violation of the Sherman Anti-trust act. You'd both do well to read up on it http://www.state.ar.us/arec/laws.htm This fact is well known in the real estate industry and negates the premise of the post. Additionally, as a Remax agent, the graph is way off for me.
Good points, all. I personally wouldn't mind going to a retainer model, like attorneys--most of them make the retainer non-refundable, too.
I gotta say that I think the topic is a lot deep than is covered in this blog. For example, the average (or median) price of homes varies all over the country. I live in an area where the average home price is $350,000. At 6%, that's a good sized commission. An agent doen't have to sell a lot of home annually to "get by". But I know places where the average home is $70,000, and at that price, cutting your commission can mean the difference between putting food on the table, and going hungry.
I also believe a lot of my commission depends on the market. Is a house likely to sell, and will it go into escrow before I have to drop a lot of money on advertising? Right now the seller's have an upper hand in Sonoma County. The last 4 homes I've written offers on have sold for above list price with multiple offers within days of going on the market. My last listing was in escrow in 5 days. I didn't have time to send out postcards! I did not have to run ANY advertising. The seller was my friend and owns multiple properties. I would not hesitate to drop my commission for him under those circumstances. Also, what about dual agency? Do I really need to make 6% on a 400,000 home or is there flexibility when I am getting the whole check? Now I stage my vacant listings "for free" but I always charge 6% when I offer that service, because it's hard work, and there's wear and tear on my furnature.
I get a little turned off when I hear people blurting out these can phrases like "you get what you pay for" and I think prospective clients see thru those phrases also.
I'm very flexible with my commission and quite generous to my clients. Don't forget it not just the one sale. You want your clients to be clients for life.
Hey you guys:) I went to bed and got lots of feedback here for a blog I acually didn't write but think is wonderful. Liz has been doing a great series on choosing a Realtor and commissions is definitely a part of choosing a Realtor.
Matt, of course commissions are negotiable and there are no violations in this post. I am well versed on the law and there is no setting of commissions in this post. I am sure Liz is as well and to suggest that we aren't is somewhat of a personal attack which by the way is against the terms of Active Rain.
As for my reasons for reblogging this post, I think it is a great write up and a good way to be able to answer those objections to someone who might find your commission seems too high - WHATEVER THAT COMMISSION IS.
I am a big fan of all business models and strongly believe that commission is negotiable depending on the situation. That being said, this is a great explanation to a client of how we get paid.
Jim - thanks for your thoughts on it - I agree with you that the client sees through these phrases:) and you have a lot of other good points. I don't think you should ever justify your pay by attacking other models:)
Very interesting comments - and I agree that Matt -you should read the post again - to see there is NO contravention - as a matter of fact I state that "So no - commission is not regulated - there is no set rate if you're selling your home".......yes Re/Max does have different breakdown - I worked with them for 15 years and am well aware of what that is (:-) and I'm sure a breakdown of Re/Max fees would be relevant for those who anticipate using a Re/Max Realtor. I have no doubt it would further reinforce that the Realtor's net commission is no where near the 'perceived amount' ...especially in the case of a Re/Max Realtor :-)
Jim - yes the topic is deeper - and this wasn't a treatise on the subject - rather an overview - so the more information the public has on it the better - I look forward to a post by you on the topic......I know it would be helpful. I always feel long comments should be converted into posts in their own right because obviously the commenter has something valuable to contribute to the subject. :-)
I agree Jim - let's see the post! LOL
Great re-blog, Courtney. ...and thanks to Liz for her post. Commissions are a case-by-case study but the ground rules don't really change. Clients need to be aware of how the pie breaks down.