What is a fair real estate fee in this situation?

[urn2bfree]

I feel a little lonely suggesting the RE agent be paid what she has requested. If the broker and the RE company appear on any of the contracts I'm sure the broker would receive the 1% and pay the agent. Now, if the broker is on the contract every signature, every part of the deal, all the paperwork that goes to the State, city, changing ownership records, mtge contracts etc....the RE agent and broker have to check them for accuracy since they are liable if anything is wrong. If I were the agent I would ask that everything be torn up and send a certified letter to buyer and seller removing any responsibility for anything in the sale. The real problem here is that fees should have been discussed and disclosed and understood up front. But.....since 1% is so much less than 6%.....I think the RE agent didn't feel that a friend of a friend would dispute what I believe is a very reasonable fee. Now, again, I never had a RE liscense, no RE agents in the family.....I just have bought and sold a lot of property and NEVER knew any agent to work for less than 1% if his/her or the brokers company name appeared on the contract. Am I wrong? I'd love to hear from RE agents if I'm incorrect.

Other than tradition-(the last refuge of the indefensible) Why should the reimbursement be based on a percentage of the value of the property? The people who perpetuate this system of basing their fees on percentages of things that end up equalling ridiculous wages on a per hour basis will keep picking our pockets as long as we let them.

Why can't we pay people a reasonable hourly wage for their services, calculated by how much work they actually do -based on the value of their labor -not based on the value of MY property?!?


Sent from my iPad using Early Retirement Forum

 

[Willers]

Other than tradition-(the last refuge of the indefensible) Why should the reimbursement be based on a percentage of the value of the property? The people who perpetuate this system of basing their fees on percentages of things that end up equalling ridiculous wages on a per hour basis will keep picking our pockets as long as we let them.

Why can't we pay people a reasonable hourly wage for their services, calculated by how much work they actually do -based on the value of their labor -not based on the value of MY property?!?


Sent from my iPad using Early Retirement Forum

I can only share my experience but I've seen a lot since DW is a realtor (not open market, works for one developer only). She doesn't list other people's houses so I have nothing to sell here. From what I've seen the amount of work is somewhat related to the value of the property.

We recently listed our house. It's definitely no mansion but is in the top 1/4 of values in the area. We listed it with a realtor even though my wife could have. Our realtor has developed brochures, a web site, video, multiple other marketing channel pieces and has worked outside of our area on relos. She is working multiple high-end buyers and has the experience to do so. She can do this because the payback will be there. It is simply a different investment of time and money for a higher end home.

Could we do this as time and materials? Sure. We think we'd end up in the same place. Also, you are basically transferring the risk. If you want to pay for everything them you also have to make each decision. That seems to defeat the purpose and if it doesn't sell you get all of the expenses again. It seems like a better option is just to negotiate the commission down a bit up front. It makes your house a little less marketable, but it saves on overall costs if it sells. Or...of course...FSBO.

As always YMMV.


Sent from my iPhone using Early Retirement Forum

 

[pb4uski]

.....Our realtor has developed brochures, a web site, video, multiple other marketing channel pieces and has worked outside of our area on relos. She is working multiple high-end buyers and has the experience to do so. She can do this because the payback will be there. It is simply a different investment of time and money for a higher end home. ...

So you believe that it takes more time to develop brochures, a web site, video, multiple other marketing channel pieces, etc and interface with potential buyers for a $2 million house than a $1 million house and a $0.5 million house? I'm struggling to see the difference and that it would be twice as much time and effort for a $2 million house compared to a $1 million house.

 

[Willers]

So you believe that it takes more time to develop brochures, a web site, video, multiple other marketing channel pieces, etc and interface with potential buyers for a $2 million house than a $1 million house and a $0.5 million house? I'm struggling to see the difference and that it would be twice as much time and effort for a $2 million house compared to a $1 million house.

In our specific case the answer is yes if you compare it to a house of 1/2 the selling price. I didn't list everything here and some of the marketing materials/efforts are things I haven't seen at the lower selling amounts. I do think that there is a limit to this and I've heard that commission % negotiations aren't unusual on high-dollar homes.

As a side-note, if our house had 1/3 the value it does I wouldn't have listed it with an outside party. It's not that hard (at least in our area) to sell an entry-level home.

 

[HawkeyeNFO]

Pay the realtor nothing. If you hear from her again, find out how to file a complaint with the local and state boards that govern realtors.

I seriously doubt there will be a lawsuit, and even if there is, it's small claims court for $1600 (at least it would in my neighborhood). So she would have to hire and pay for a lawyer, or put her own time and effort into her case, and then explain to a judge why she deserves to be paid for her incompetence and unprofessional behavior. The concern I might have is that she could put a lien on the property.

 

[48Fire]

As the OP, I am closing out this old thread with what we ended up doing. We paid the $750 fee, although very slowly, since my wife was very reluctant to agree to paying anything given the way she was treated. The concern of a lien or any legal issues outweighed the concession and the money. Thanks again for the comments.