Realtor's commission...?

[JHZR2]

Originally Posted By: Studebaker
JHZ, you are talking out your [censored], but with 15,000 posts you seem to have an opinion on everything. Unfortunately, your opinions are not based on fact.
The realtor wants $1300 (3%). Selleris willing to pay 2%. So the seller is kicking away a quick sale for 1% ($433). So wait.
The Realtor has the buyer, he can find him something else.


"And generally it is understood that private party sales will net better money to the seller."

Wrong. Last statistics I saw showed a Realtor sells a property quicker, and for 9% more than a FSBO.


Notice the discussions. They have gone back and forth, but the points are still the same:
1) What value is this realtor bringing to the OP for that money? Again, note that the OP does not appear to be in a rush, and would barely break even with this deal.

2) For a typical home purchase, which is what MANY in this thread express grief over, for the typical home purchase what is the realtor doing 5x better on the $500k home in the suburbs than the $100k home in the country? Remember, it is a straight percentage comission.

3) What true value does the buyer's agent bring to the seller? Anyone can go and scan MLS and see what is available... If that person scanning the MLS contacted the seller's agent directly, what did the seller's agent really do that is worthy of an additional 3% comission?

...And, we were talking about cars, not homes when you were writing your analogous situation (which was what I responded to). Go to any KBB type pricing guide and look at the private party value versus dealer values. How is selling it yourself getting 9% less than at the dealer?

It is great to represent and defend your profession, but some logic and straight answers should be provided. Lots of people in this thread are taking shots, and Im not seeing any good answers...

 

[Studebaker]

mrsilv04, let me talk directly with you and clear up a few things.

You are willing to give the Realtor 2%. He wants 3%. If you don't think having a qualified quick sale is worth 1% ($433), then wait a while.

Keep in mind that many banks have stopped lending on land altogether, and to even find a buyer who has the cash or can qualify is getting rare. Those in our area that will lend (only 1 that I know of)wants 40% down. A 50K lot means the buyer has to have $20K cash. Yet the same buyer can get ab FHA home loan on a $300,000 house with 3% down ($9,000).

You are assuming the Realtor refusing to drop to 2% is because he is greedy. Most traditional real estate companies (C21, Coldwell Banker, Joe's Realty) dictate to the agent what the fees are. He can not vary from them. Fee companies (like Realty Executives, Re/max) charge the agent a monthly fee and he is free to adjust commissions as he sees fit.

Everyone assumes this Realtor is making a fortune. His $1300 comission is usually split 50/50 with the company. Some companies also hit him with a 4% franchise fee. Then he may have a transaction fee, E&O insurance per transaction etc. All of a sudden the $1300 is below $500. And from this he has his normal expenses- vehicle, MLS, Board Fees, advertising, etc. I just want to clear up that he isn't making a fortune.

Also, you assume the building of the school will increase the value of the property. Not necessarily, it may hurt it.

Some have suggested that you could have the property rezoned, increasing the value. Even if you could rezone it (be prepared for an expensive legal fight from residential neighbors) and even if the school increased the demand for commercial property in this area (which I doubt), based on the price you are now asking, I bet it is not a large lot. Any company like a national fast food chain etc needs a couple of acres. The regulations now are such that based upon customer count, you need x parking spaces per x customers. How big is your lot? Half an acre? 3/4 acre? This limits you to things along the line of barber shops, hair dressers, etc. and it's much quicker to buy and convert an existing home than build from scratch.

If you don't want to deal with a Realtor, that's fine. At least hire an experienced, local, professional appraiser. He can tell you what the property is worth, which way the market is trending, and if he feels there are commercial possibilities in that neighborhood. Couple of hundred bucks well spent.

 

[mrsilv04]

Studebaker-

Things just aren't that tight here. Our banks still loan 80% on a good credit score. Our regional housing market has fared considerably better than most, and is still intact. In this area, if you truly have the means to buy a home, the money is out there.

I've spoken with another realtor (who I trust and have dealt with in the past) who is with this same firm, and was told that the commission can be any percentage or flat fee that is mutually agreed upon.

I've sold property in the past, and have made special arrangements with the listing agent. One was with a decreased commission, and on the other one, we shortened the standard length of time for the listing, so that the contact for the listing would coincide with the end of the calendar year. (It didn't matter, he got it sold before the end of the year anyway...)

I really don't care if the realtor is making a fortune or not. This one has actually done very little in this process, except to annoy me. Part of the reason why I ever mentioned the possibility of a reduced commission was to see how he'd respond to the question. And his response to the question revealed quite a bit to me.

Remember that I actually spoke to the buyer directly first, but then he went and got this agent involved. The agent didn't even find the property for the buyer, the buyer already knew about it, and had already spoken to me. For some reason, the buyer then went to the realtor and asked for his assistance to buy the property (at my expense.)

Apparently, the buyer didn't realize that a competent real estate lawyer would have been the correct person to contact. There was simply no need for any realtor in this process. And that's why I refuse to pay for one. A realtor is unnecessary in this transaction.

Then I had the pleasure of receiving a hastily written offer that was filled in on a barely readable photocopy, with mis-spelled words, scratched out terms, and with information scribbled on the margins... I honestly wondered WHAT I was paying $1300 for...?

This is a lot for a single family home, that is in a entirely residential neighborhood with other single family homes. Period. There is no possibly for rezoning. None.

The school will be a smaller, neighborhood oriented K-6 school, that will only serve this immediate area, as there are several K-6 schools scattered throughout the school district. The school is properly located on a collector street within the subdivision. Very little of the school traffic will ever be on the street where my lot is located.

 

[PandaBear]

In your case this real estate agent doesn't seems to be doing much then. If you and the buyer has prior contact and the agent isn't helping in negotiating, closing, etc, then he isn't doing much.

Sometimes a buyer's agent paid for by the seller is providing services to the buyer. When I bought my house and when my parents bought theirs, we uses our own agents to help us, shown us 50+ homes, negotiation, etc. We insist on using the agent because he/she helped us a lot and we felt obligated to let him/her make a living. My parents were real estate agents before their retirement and we knew how tough it could be in bad time, but that's between us and the agents, not between sellers and the agents.

In your case, you can ask the buyer to pay for it or increase the offer to cover the commission if he insists. Maybe the agent is a buddy, maybe the agent helped a lot. This happens a lot and having the agent blindly insist on you paying for it before the negotiation even started doesn't make sense.

Remember, if the buyer counter offer and you refuse to sell, you need to reserve the right to NOT USE THIS AGENT. This is the most important point.

 

[JHZR2]

Still no indication of what value this buyer's agent brings to the table...

 

[ArrestMeRedZ]

I had something similar happen to me once upon a time (pre-internet, an age ago). I had listed my house for sale on bulletin boards and in the paper. The first people to look at the home liked it a lot. They had been touring with a realtor, and didn't find anything else they were interested in, but found my flyer on a club bulletin board.

Later, I got a call from a realtor who told me she had a buyer that wanted my house, and asked if she could come by to discuss it. I suspected it was the couple who had previously seen it, and agreed, fearing she would foul the offer I expected.

She came out, and gave me a spreadsheet with my "profit" (the difference between amount owed, and the sales price) with various commissions from 6% down to 3% with the buyer "she found for me". I asked her directly if her buyer was the couple who previously looked at the house. She said yes. I told her I found the buyer, and didn't see any value added to her participation in the deal. She looked relieved (an honest person!), and told me that was the right answer, and her broker forced her to make the unreasonable demand.

With offers, and counters, I got very close to the asking price. She helped every step of the way. At the closing table, I gave her a "tip" of a few hundred dollars (this was in the 70s)
and thanked her profusely.

Since then, I've completed a number of real estate transactions, both with and without realtors. Trust me, the escrow or title company (depends on the state) is glad to handle everything a real estate agent would do within their fee structure that you would be paying anyway.


This buyer's agent is a crook, attempting to be paid for services not provided. Deal directly with the buyer. If he refuses to deal directly, tell him he can pay his agent if he wants him involved.

 

[expat]

"Everyone assumes this Realtor is making a fortune. His $1300 comission is usually split 50/50 with the company. Some companies also hit him with a 4% franchise fee. Then he may have a transaction fee, E&O insurance per transaction etc. All of a sudden the $1300 is below $500. And from this he has his normal expenses- vehicle, MLS, Board Fees, advertising, etc. I just want to clear up that he isn't making a fortune."


Cry me a river!
A business should make or break on the service they provide, Overhead is NOT the punters problem!

 

[mrsilv04]

The realtor called tonight to follow up. I laid out my concerns to him in a very honest manner. There shouldn't be any confusion as to where I stand.

The buyer is still interested, and he's going to work up a new offer and get it to me. I let him know yet again that I have a issue with his 3% commission, and how he thinks *I'm* responsible for it. We'll see what he proposes this time. Maybe he'll come up with something creative.

If he'd propose a 2% commission, split equally between the buyer and seller, that might just do it.