Real Estate Sale Fees

[doneat54]

Planning on listing the primary home for sale next spring (maybe sooner) and living at the lakehouse full time. Did a little spreadsheet to calculate the proceeds of the sale after cap gain taxes and realtor fees. For what we might list the house for, at the standard 6%, the realtor fee would be between $42k, and $45k

I just can't do that. That is insane. Especially in a hot market.

One part of me (as I have done before) just wants to tell the realtor "this is what I need to walk away with", and let them add whatever fee they want to make it work. Be the fact is, I would still be foregoing $42k.


We have a realtor that we really like (we we paid 6% to her office last year when she sold some land of ours, quickly, and for more than what I thought we could get), but that 6% was about a third of what this house would be.


DW and I discussed FSBO tonight.

Anyone sold some high dollar property and was able to negotiate a lower fee? If the market is this hot next spring, would I be in better position to negotiate? Anyone ever FSBO?

That realtor saii she hates this market now, last time she talked. She has 13 100% cash buyers wanting homes and she can't find any.

 

[teej1985]

Use UpNest.com and agent will bid, I found a guy who would rebate 40% of commission. Of course, this only works if the house will sell itself, the guy giving you 40% rebate might not have as good marketing as the one who keeps all their commission.

 

[rodi]

Verify if 6% is still the going rate. Here in San Diego (super hot, super expensive area) realtor fees are running 5% and discount brokers like Redfin are even less.

When a 50 year old 1500sf 'fixer' sells for around $1M, 6% is ridiculous. Realtors are making plenty of money with their half of the 5%. (seller and buyer agents split the commission).

 

[Souschef]

In Real State School, we were told commissions are negotiable.With the current market, with so many agents chasing so few listings, I would negotiate a much lower commission.

 

[harley]

I've done a successful FSBO, but it was with someone approaching me about my late DM's house. That was super easy.

We also tried FSBO about 2 years ago, on a nice TH in a hot market. We got some interest and visits based on our Zillow listing, but people seemed to be afraid of pulling the trigger. We had documentation showing how easy it is, but the buying public has been deeply indoctrinated about the need for a realtor to manage the "complexities" of closing and title searches and what not.

We ended up listing it with an agent, but for 4% (2.5% for the buyer's agent). We'd done all the upfront work with the advertising, staging, etc. We sold in a week or so, and the realtor didn't have to do much of anything. It still cost us $20K for very little work. It's almost as much of a ripoff as a FA who just puts you in index funds.

 

[RetiredAndLovingIt]

You can negotiate fees especially of you've used the agent before.
In the past year my son has sold two houses, bought two houses and his wifes parents have also bought a house all with the same realtor. I don't know what they negotiated but I'm sure it was at least 1% off and probably more. I haven't asked but I'd guess that they got a deal at 4% for each sale/purchase, the houses all sold in days and at big bucks.
I've also noticed that people are letting everyone in the local facebook and other neighborhood groups that they will be listing their house soon and if anyone is interested they will get first chance to make an offer and possibly save some commission if they can agree to use the same realtor for both the sale and purchase. My son's wife did that on both their rentals as well, unsure if that's where they got buyers but I saw a ton of interest in the comments.

 

[Retireby45ish]

I think real estate agents are the most overhyped and overpaid job out there. Not worth what they collect, definitely for the seller. They don’t do anything other than open a few doors and walk around! But unfortunately, as someone mentioned on the thread, it is a societal standard that says that if you aren’t listing through an agent then something must be wrong with you or the house.

I’d do anything to see a company come along and just match buyers and sellers or cut the rate to something more reasonable like 1-2% for their services. Especially in this market where stuff basically sells itself.

If I were you And you have a good idea of what your house sells for then try the FSBO route. The only way a realtor is worth it is if it’s an illiquid market where they control all the buyers too and can steer them toward their own listings vs yours. That’s what happened to me when we sold a few months ago. But it killed me to have to use them at 5%. Was a tiny town and they have a monopoly. All they wanna do is get it sold. Mine wanted me to list $50k lower than I wanted. Glad I didn’t listen to them as it sold quick. Self interested to line their own pockets.

 

[W2R]

Everything's negotiable. At least, that was my experience in the past.

 

[CaliKid]

Just go 4% with the realtor and let a pro handle it. Most people do not pay 6%.

 

[NgineER]

We sold a house FSBO in 2012. Piece of cake as long as it is priced right. Key is to get it on MLS, otherwise you won’t get nearly as much traffic. With everything being automated and online, buyers realtors can’t prescribe your listing away from customers. The key is to offer the full share of a buyers realtor fees.

Worked in a buyers market, should be even better in a sellers market.

 

[HI Bill]

I think real estate agents are the most overhyped and overpaid job out there. Not worth what they collect, definitely for the seller. They don’t do anything other than open a few doors and walk around!

I'm not a realtor, and have sold one condo by owner. I'd have to disagree, in certain situations. Realtors offer guidance, help the seller ask the right price, and if they're excellent at their job, can help you maximize you return. In selling my wife's condo, the realtor suggested just how much to do in the way of repairs/upgrades, how much to ask, virtually staged the unit, and held an open house. He set a deadline for offers, and in just 5 days, we had two over-asking price offers. If we had priced too high, the unit could have been on the market for a half year or more, as happened to a lot of units in the building.

I sold a house worth only $180K, and the realtor more than earned her 3% (less the office's cut). I bought a house at $1M house, and the buyer's agent probably spent 8 hours on the whole deal. Talk about a high hourly rate ($30K/8 hours = $3,750/hour). So, it depends on the value, the condition of the house, how much prep you're willing to do, etc.

Unfortunately, the MLS has the market cornered, and most realtors don't like to help buyers with Redfin listings, since other agents have 'lost out' on higher commissions.

If you have access to the forms, and knowledgeable, and are able to find your own buyer, you can do FSBO. You have to do the legwork. It probably took my buyer and I about 10 hours in filling out forms, working with the escrow company, etc. I saved $6K in commissions and lowered the sale price by half of that.

 

[SecondCor521]

We sold a home FSBO in 2006 and it was one of the smoothest transactions we had done to that point, and that's saying something since we were going through a divorce at the time.

Our FSBO charged us a flat fee ($1500 or so IIRC) and we got a 1/4 page spread in their magazine for three months, a yard sign, and an MLS listing. We did everything else ourselves. We priced it a bit high to begin with (on purpose), had a number of showings but no offers, reduced the price, ended up in a bit of a bidding war between two over-list-price offers and sold it, all in about 30-35 days.

I don't recall if we offered 3% to buyers' agents, I think we didn't. I think we took the position that if they wanted a buyer's agent, they could pay them out of their own pocket. I think we sold it to some people who didn't have an agent.

I then bought my next house without a buyer's agent. Worked totally fine for me and I had no qualms about it at all. The seller had an agent in that case and they got their 3% from the seller. Among other things I offered 3% less for the house because I didn't have a buyer's agent, and the seller was apparently OK with that. It helped that it was a bit of a buyer's market around here at the time (late fall 2006).

 

[RetiredAndLovingIt]

You can negotiate fees especially of you've used the agent before.
In the past year my son has sold two houses, bought two houses and his wifes parents have also bought a house all with the same realtor. I don't know what they negotiated but I'm sure it was at least 1% off and probably more. I haven't asked but I'd guess that they got a deal at 4% for each sale/purchase, the houses all sold in days and at big bucks.
I've also noticed that people are letting everyone in the local facebook and other neighborhood groups that they will be listing their house soon and if anyone is interested they will get first chance to make an offer and possibly save some commission if they can agree to use the same realtor for both the sale and purchase. My son's wife did that on both their rentals as well, unsure if that's where they got buyers but I saw a ton of interest in the comments.

Update, 6% is the norm, they paid 5%.
Personally I would have tried for 4%, they didn't even try.

 

[Joylush]

My realtor sells mine for 3.5%. She has to give the buyer’s agent 2.5% so she gets 1%. Remember they also have to share their commission with their broker.

I get a good deal because I have easy to sell properties and more than one. But it’s not uncommon to find a realtor who will list for 4-5%.

 

[Teacher Terry]

My realtor wrote 5% into the paperwork which surprised me because 6 is typical here.

 

[Mr. Tightwad]

5% in Southern California.

 

[harley]

I'm not a realtor, and have sold one condo by owner. I'd have to disagree, in certain situations. Realtors offer guidance, help the seller ask the right price, and if they're excellent at their job, can help you maximize you return.

I don't think anybody said relators don't add value. Just not enough for the fee they charge. In these days of $500K+ homes have you ever seen one do $30K worth of work? That's an absurd amount for what they do. And I know they split that with the buyer's agent, but that's just a kickback for someone bringing in a customer. At least the seller's agent is doing a little work. I think at today's home prices (in major markets at least) 2% or maybe 3% split 2 ways would be fair for the work that is performed. 5-6% is highway robbery.

 

[savory]

We had luck with a FSBO company. They offered tiers of support for a flat fee. Its ncluded an MLS listing and other sale support. The base fee was well worth the personal guidance and MLS listing. If I were ever to own/sell again, this would be my approach.

 

[njhowie]

Anyone ever FSBO?

Maybe 15 years ago SIL did FSBO and used one of the online sites which provides guidance/assistance, though I forget which. She had a very good experience with it.

In the current market, where there is lots of demand, I think you would not have much difficulty at all. Saving the realtor fees additionally gives you additional flexibility with the price if need be. However, seeing how buyers offering above listing price is now very common, if you price it appropriately, there's no reason it shouldn't sell quickly.

 

[Badger]

A realtor in my area puts out one of their yard signs saying "Coming Soon" instead of "For Sale". Without listing it the houses are getting sold quickly so the realtor expenses are minimal and they get the entire fee and dont have to share it. I don't know what the sellers expenses are but I bet it is still pretty stiff.
I don't need to sell but if I did in this hot market I would get a real estate lawyer for the legalese and put a sign in my front yard. It would save me about $60+k.


Cheers!

 

[mrfeh]

We recently used a seller's agent that charged 2% after we asked for a discount. Buyer's agent still got 3%.

Yeah, in this market, realtors are being overpaid. But, we didn't want to deal w/ FSBO, which we had done in the past.

 

[ncbill]

We had luck with a FSBO company. They offered tiers of support for a flat fee. Its ncluded an MLS listing and other sale support. The base fee was well worth the personal guidance and MLS listing. If I were ever to own/sell again, this would be my approach.

In today's seller's market I'd go with above first...can always switch to a more conventional Realtor-based approach later.

 

[marko]

I'm not a realtor, and have sold one condo by owner. I'd have to disagree, in certain situations. Realtors offer guidance, help the seller ask the right price, and if they're excellent at their job, can help you maximize you return.

Agree. Our realtor priced our house waaay more than we thought it was worth and got waaay more over asking as well. More than made up for his fee. We paid him 5.5% and ended up with about 20% more than we planned on netting. Sold the house in one day to boot!

Plus, you can deduct parts of the fee from any cap gains against the house. At least here in Mass, there's a maze of legal, historic and disclosure items that also need to be considered. One of our nephews did a FSBO and has been in court for the past year and a half simply because of things he didn't know.

 

[sengsational]

I sold a house in Ft Lauderdale by paying a flat fee to get it into the MLS. Only cost me $300. It was decades ago, so probably double that now. I had to fill-out all the MLS details, which included the rate I'd pay the buyer's agent. They expected 3%, but I put 2%. They'd call and ask for 3% and I said "no, it's 2%". Most of them still showed the house.

Now that the home buyers can see everything in the MLS online, anything that fits their screen will come up, and they'll say "what about this one?". So that would be awkward for the buyer's agent to say "perfect house for you, but I only get $14,000, so I'm not showing it to you.

You have to answer the phone, and let them in. I had a lock box. I sold it while living in Atlanta, but had my sister go over and change the code on the lockbox occasionally, so I'd know what the agents were up to. The agents didn't like me, hehe, but I wasn't in it to please them.

 

[pjigar]

There are agents who will give you hefty rebates. I have always used buyer's agent to buy the house where I got 1.5% to 2% rebate at closing. Same way, I have used seller's agent where I paid 4% to 4.5% total fee. The 3% buyer's agent is almost non-negotiable if you go through traditional agent unless you end up with a double agent situation. I have paid 2% total commission in case of a double agent situation when we sold our last house. You have to be fair though with the agent. You get what you pay for. You have to do heavy lifting of searching, talking to potential buyer/seller, open house, negotiation, etc. in most cases. You should communicate and agree on the expectations with the potential agent up front.

Having said that, these are the rates for the normal times. In today's sellers' market, I would find a "listing only" service and list with "unspecified negotiable" buyer agent commission. We sold out first house during the last housing frenzy using "listing only" services available then. I think it was ZipRealty. We ended up paying 0% to buyer's agent because agent was a friend of the buyer.

DON'T let anyone think that you have to pay 6%. EVERYTHING big ticket in America is negotiable.

PS: MLS is an 800lb gorilla and you can't get around it by doing FSBO. You just have to command the gorilla.