Realestate agents & Fees

[rpow53]

My wife and I were interviewing an agent to list our home and he had a fee that he charged that was $995 up front + 1% and then you picked a percentage to pay the agent 2% to 4%. Has anyone ever heard of this? The up front fee was not refundable if the home did not sell.

 

[73ss454]

My wife and I were interviewing an agent to list our home and he had a fee that he charged that was $995 up front + 1% and then you picked a percentage to pay the agent 2% to 4%. Has anyone ever heard of this? The up front fee was not refundable if the home did not sell.

I have never heard of this tecnique. I would guess with the amount of houses on the market and not many of them selling this is a way for the agent to make a few bucks. No way would I pay the up front fee. Just price the house less than your competition and it will sell. You should be able to get an agent to list the house without the fees. As a matter of fact I've heard that if you search on the internet you can get an agent out of the area to list the house for a few hundred bucks. Once it's on mls you should get action if the price is right.

 

[martyb]

I'm a former agent. I can tell you that agents out with clients showing houses will be less likely to show your home unless they stand to make a full commission, whatever the customary amount is in your area. If agent A has a client/customer who is looking for a home in say...the $200K range and they do the research and determine there are 9 houses including yours for sale in that range, and the other 8 sellers are paying full 6% commission and you're paying 4%, then that means the selling agent stands to make more $$ on the sale of the homes paying full commission. Which homes do you think the agent will more likely try to sell? Not exactly ethical or possibly even legal depending on where you live, but factual. It's human nature for selling agents to more aggressively try to sell the homes that will make THEM the most money. Their top priority and fiduciary responsiblity is supposed to be with their customer/client, but facts is facts. As for the upfront fee, if it's customary and normal in your area, you may have litte alternative if the brokers stick together (also illegal as price-fixing in some locales) but I would not like the idea and would try to find an agent who did not work that way. Tough market conditions can cause agents/brokers to become quite "creative" in how they try to make a living.

p.s.

As a Century 21 agent (7 yrs ago) I once showed a home to a prospective buyer that I knew for a fact, as related to me by the listing broker over the phone as we were sitting in the driveway, that would have resulted in a $0 commission for me. I went ahead and showed the property, knowing full well if the buyer wanted that home, then I would be bound by law to do all the paperwork and totally follow through with every detail as if it were a normal sale. I was really glad the buyer decided not to buy the house, but I didn't tell them about the situation until after the showing because I was determined to do the right thing by my client. That's the way it's supposed to work.

 

[RetireeRobert]

My wife and I were interviewing an agent to list our home and he had a fee that he charged that was $995 up front + 1% and then you picked a percentage to pay the agent 2% to 4%. Has anyone ever heard of this? The up front fee was not refundable if the home did not sell.

As a consumer, I have never heard of a deal where "I alone, unilaterally," got to decide whether the agent got 2% or 3% or 4% (after the initial upfront fee).

Or does that mean there was a "menu" of sales services to choose from:
if you wanted barebones package A, you pay 2%; if you want deluxe package B, you pay 4%. That might make some sense.

 

[martyb]

Those kinds of come-ons are out there and being offered by some brokers. Usually it's not something you'll see offered by the bigger name companies in the business, such as Century 21, ReMAx, Coldwell Banker but more likely the smaller agencies. Not always this way, but more so than not. I'm about to put my house on the market, but being a former agent, I'm going to try the FSBO (For Sale By Owner) route first. Since I'm not currently working in the business, I won't be able to get my home listed in the MLS, which will limit my exposure but I'm still gonna give it a try. I do have a few tricks up my sleeve. If the time comes that I have to go with an agent and the MLS, I won't be going with a cut-rate commission agent because as I said on my previous post, that will hurt you more than help you in that it will lengthen the time it takes to sell. Time is money, and every month you have to make an additional mortgage payment is money lost. When I was working in the business, I got plenty of business from FSBO's that didn't work out. Many had the idea they could do it themselves and then went out on a limb and committed to purchase their next house before getting rid of the first one. It didn't take long with 2 mortgages or one mortgage with another one soon on the way to make them pick up my business card and give me a call!

 

[MooreBonds]

I can tell you that agents out with clients showing houses will be less likely to show your home unless they stand to make a full commission, whatever the customary amount is in your area. If agent A has a client/customer who is looking for a home in say...the $200K range and they do the research and determine there are 9 houses including yours for sale in that range, and the other 8 sellers are paying full 6% commission and you're paying 4%, then that means the selling agent stands to make more $$ on the sale of the homes paying full commission.

Martyb, I agree that agents representing buyers will frequently steer clients to houses that offer the buyer's agent higher commissions.

However, I disagree with your reference to the 4%/6% bit.

The seller and the seller's agent can agree to whatever commission they want - whether the seller's agent gets $995, or 1%/2%/3%/whatever - irrespective of whatever commission the buyer's agent is offered.

Now, it may be common for the seller to agree to a certain percentage to be split by the sellers/buyers agents, but the buyer's agent isn't impacted by the commission that the seller's agent is receiving.

If I'm selling a house and agree to the $995 plus 1% commission for my agent, I can offer a buyer's agent 3%, and they couldn't care less that my agent is getting 1%.

 

[Arc]

I have never heard of this tecnique. I would guess with the amount of houses on the market and not many of them selling this is a way for the agent to make a few bucks. .

My way of thinking would lead me to believe that if there were less houses on the market - real estate agents would be more aggressive approaching homeowners. Less houses selling mean less commissions overall but does not mean less real estate agents trying to capture those commissions.

Although - as martyb suggests - if all or most agents in the area are doing the same thing as - that would be different.

Like the rest of you, I'd tell that agent to pound salt.

 

[rpow53]

Agent

The agent I refered to has different packages to offer, the one I refered to in the post is one I was offered to save money. up front fee + 1% plus 3% to the selling agent. I have never seen this before and was stuned when the agent offered it. It seemed like a way for him to make money if he could not sell the home. This is a small agency with only one office. After much thought I WILL be listing with a large national firm.
Thanks for everyone's input.

 

[clifp]

My wife and I were interviewing an agent to list our home and he had a fee that he charged that was $995 up front + 1% and then you picked a percentage to pay the agent 2% to 4%. Has anyone ever heard of this? The up front fee was not refundable if the home did not sell.

My interpertation is that as the selling agent he was going to get $995 +1% and you as the home owner were going to specify the buyer agent fee at between 2-4%.

Personally, I like this model a lot. On a $300K assuming you offer the standard 3% to the buyer agent, you'll save $5K. On the other hand he is protected for having an unrealistic or uncooperative home owner and the $995 covers most of his expenses.

Another model which I think would be interesting to suggest is a sliding commission scale. Let 's that you think the house is worth between $350-400K, you know you could sell the house immediately at $300K. So you give 1% commission on the first 300K but a 5 or even 10% commission on the price above $300K so if the house sells for $400K the agent would get $3K for the first $300K but $5K in commission for the amount above $300K.

 

[martyb]

Martyb, I agree that agents representing buyers will frequently steer clients to houses that offer the buyer's agent higher commissions.

However, I disagree with your reference to the 4%/6% bit.

The seller and the seller's agent can agree to whatever commission they want - whether the seller's agent gets $995, or 1%/2%/3%/whatever - irrespective of whatever commission the buyer's agent is offered.

Now, it may be common for the seller to agree to a certain percentage to be split by the sellers/buyers agents, but the buyer's agent isn't impacted by the commission that the seller's agent is receiving.

If I'm selling a house and agree to the $995 plus 1% commission for my agent, I can offer a buyer's agent 3%, and they couldn't care less that my agent is getting 1%.

OK, I admit I was tired last night an maybe could have read a little closer. If the advertised split to the selling agent is still the customary 3% then there shouldn't be any problems getting the property shown. I was just thinking back to when we'd see the occaisional total lower split (2 or 2.5) to the selling agent) and of course it didn't look as attractive as the full 3% and most agents I knew would avoid that listing like the plague. New agents would still include it in their appointments because they were anxious to sell ANYTHING but for most agents if they had anything else to show they weren't going to show the lower commission property. If the listing agent and his/her broker are willing to work for less money but still pay a different selling agent the normal split, then it will most likely work out OK. Putting the onus on the seller to determine the selling agent's fee is OK as long as the listing agent makes the seller aware of all of the dynamics of the situation. Don't forget, that in this situation it's possible, although not ethical that a listing agent who takes a listing at $995 might not put any effort into marketing or even trying to sell your house himself, instead only relying on other agents to possibly bring a buyer. Also, another scenario could be that your agent, since he stands to collect both sides of the deal if he brings a buyer himself is actually positioning himself for an above-average paycheck. Either way, you sell your house, which is what you wanted anyway, right? It'll work out.

 

[cute fuzzy bunny]

I think this may be the way some agents are responding to the current market conditions, where sellers are still very unrealistic about what they can get for their home. It costs a certain amount for a sellers agent to put a house up for sale...planting the sign, mls listing, advertising, flyers, etc. Sounds like this agent is looking to cover his listing costs and making 1% over that if the property does sell.

The buyers agent fees are pretty interesting. I've gotten away with 2-2.5% in fast moving sellers markets but I think that reduced the looks I got. I've caught my buyers agent not showing me houses because their commissions were under 3% (and I fired them). I had to offer 3.5% on the house I just sold, but it sold pretty quick and nothing else in the area did.

So at this point I'm more inclined to keep the listing agents fees as low as possible, and offer a little extra to the buyers agent. They're salespeople, and salespeople sell to make money. Why overpay one person to maybe help the sell side a little bit when you can entice a hundred buyers agents to help sell the property in exchange for a higher fee?

 

[tryan]

I wouldn't pay a realtor an upfront fee ... they're paid on commision for a reason: to make them hungry to sell homes.

How hard would you work if 1/2 your commision is already paid REGARDLESS of if there's a sale?

 

[W2R]

I wouldn't pay a realtor an upfront fee ... they're paid on commision for a reason: to make them hungry to sell homes.

How hard would you work if 1/2 your commision is already paid REGARDLESS of if there's a sale?

I agree. I feel sorry for realtors in the present housing market!! But it is what it is. I would be more inclined to ask the realtor for comps, and to bend a little on price based on those comps, than to just pay money regardless of a sale. Even better, maybe I'd offer a bonus if the house sold in less than three months. But no flat fee for an unsold house!

 

[Spanky]

This may be a contentious issue -- my feeling is that realtor fee, in general, is a ripoff.
Real Estate Today at www.Infotube.net: Realtor Fee Rip Off -- Why 6 Percent?

 

[Moemg]

It looks like there are a lot more real estate lookers here recently .Every day several people cruise my neighborhood either looking for waterfront bargains or an easy house to rob . I hope it is waterfront bargains.

 

[W2R]

It looks like there are a lot more real estate lookers here recently .Every day several people cruise my neighborhood either looking for waterfront bargains or an easy house to rob . I hope it is waterfront bargains.

I hope so, too.

Seems like nobody is looking or buying here. There are 4 houses for sale on my block (out of about 20), nothing selling, and no buyers at the open houses.

 

[starter82]

I hope so, too.

Seems like nobody is looking or buying here. There are 4 houses for sale on my block (out of about 20), nothing selling, and no buyers at the open houses.

I'd go to open houses, but some of the prices are ridiculous. Houses on the market for 4+ months with no price change. Others lower the price practically every week (little bits at a time). Some of them have been taken off the market. I guess the seller wasn't serious about selling. There's not a house that won't sell at the right price.

 

[Peaceful_Warrior]

As a consumer, I have never heard of a deal where "I alone, unilaterally," got to decide whether the agent got 2% or 3% or 4% (after the initial upfront fee).

Technically, you always have this option. When you're signing the intitial listing paperwork, there's parts of the contract where you specify exactly how much % goes to the buyer agent and how much % goes to the seller agent... though it is not always worded exactly like that.

Most realtors will not inform you of this information, but it's in the contract. And some realtors may choose not to work with you unless you pay enough %.

Fortunately, my realtor was my friend so he not only cut me a % on the commission, but also teaches me all sorts of stuff and has helped me out with other transactions I couldn't use him for (relocation purchase in another state).

 

[FinanceDude]

I also have a good friend that's a successful realtor. The main thing I have learned is that when times are slow, realtors become valuable, because they have access to buyers..........