Is this agent commission ok/normal?

16 Replies

Here's the deal: I just got married and my wife owns a house in Southern Indiana, right across the river from Louisville.

We are going to sell the house but she will be moving in with me soon and will no be present for us to do a FSBO.

Friends of ours recommended an agent to us who is supposed to be very good. The problem is the agent charges 8%. He said that he will take care of general care (lawn/cleanliness) around the house without viva thing extra.

He told me that the average commission is 7% split between the listing/buying agent. If this agent has a good reputation and can sell this property fast, is the 8% worth it?

Thanks!

While i'm not familiar with the commissions in your area, this 8% sounds way too high. If I were you I'd call 10 random agents in that area (using google) and call them and ask what they charge

Also keep in mind that you can negotiate that number

Our market here is typically 6%. 3% buyer broker & 3% selling broker. Now it's always a point of negotiation I've seen where they throw in extras for buyer's agent just to get the thing sold, but I'd concur that I think 8% is really high(and that's coming from a realtor!!)

What's the price?

Right around $170K

8% is not normal...as others mentioned 6% is what you should expect in this area. I'd ask that agent if he will do it for 6% total with 3% allowed for a buyer's agent. If he won't do that, then tell him thanks but no thanks. As for the extra maintenance and such, you can get regular lawn maintenance for $100-150/mo. Not sure what else the agent is providing for the ~$3400 he's charging, but I'm sure you can find somebody to do it for much cheaper.

Shop around. I'd ask him for specific reasons that he charges an extra 2%. I don't think it's worth the $3400 to have him keep the grass cut and the place tidy for the time frame that it takes to sell the house.

How much land does this property have??

Commission is negotiable when listing a property.

There is no set number. When evaluating the property to list a broker/agent is supposed to look at what makes up the most value for an asset.

So for instance a dumpy house that sits on 10 acres. Are you selling the land or the house and what makes up most of the value. In that case the land is what is being sold and that can go for 10% commission. The house is usually secondary in that instance.

If an area which I have seen it is 7% commission because house prices are lower ( in the 100's ) then 8% is not that out of the norm.

If this person is very good what you might want to do is set a tiered structure based on closed sale price.

If you want to list at 170k have it 8% for 167k to 170k, 7% for 162k to 166k, 6% for 157k to 161k etc. Keep buyers agent commission to drop no lower than 3%. This drop method will make listing broker / agent tell you the true price they think it will sell at. Given the fact you will be far away you need a broker/agent who will handle services with the property. If this person is that good they are worth the money.

No legal advice.

Yes, that's on the high side. We see 6%-7% as an average and it's always negotiable. With that said, however, if it's too low - the selling agents won't show it.

I personally like to setup a lower rate 6% or under and then have the listing agent state a $1000-$1500 selling agent bonus if closed by xxxx date. This seems to motivate the selling agents to show your property ASAP.

Have you thought about keeping it for cash flow? I'd recommend a lease option.

I am a licensed real estate broker as well as an investor based just outside Louisville in KY. Commissions are 100% negotiable between seller and broker. Laws prohibit the establishment of a "standard industry rate" in the truest sense of the word - it is considered price fixing. That said, interview multiple brokers and go with the one who clicks with you that you feel provides the best value. I am unaware of any restrictions on how high or low a commission rate can be. It may be different in Indiana, but I would suggest you get multiple "bids" from brokers interested in helping you sell.

If you feel that this broker is a good match for your needs and that having someone maintain the property while it is listed is worth paying 8% of the sale price, then go for it. If you feel that 8% is too high, shop around.

I normally don't consider recommendations from friends. Best agents can be sometimes found based on certain ratings, such as the agent with largest listing and sales in your area in the past.

Originally posted by @Shawn Holsapple :
Yes, that's on the high side. We see 6%-7% as an average and it's always negotiable. With that said, however, if it's too low - the selling agents won't show it.

I personally like to setup a lower rate 6% or under and then have the listing agent state a $1000-$1500 selling agent bonus if closed by xxxx date. This seems to motivate the selling agents to show your property ASAP.

Have you thought about keeping it for cash flow? I'd recommend a lease option.

We talked about this but decided it might not be best being that we will be living all over the place (I'm in the Air Force). I do eventually want to get into rentals of some type, but for this property we want to go ahead and collect the equity we have in it.

Thanks to everyone else for the replies! It's much appreciated!

Here is 6-7% on average. Like everyone else has said it is negotiable. It can be up to 10% sometimes for houses priced under like $30,000 or a flat fee.

Need a few more details.

1. List price.

2. Yard size.

3. How many grass cuts/month

It is becoming standard here (Ohio) to do 7%. Average home prices are pretty affordable however, I never thought about that being a factor.

In the area of Ohio I'm buying in allot of homes are 20k and under and I've noticed that agents don't do a percentage at all but rather a fixed fee. At 3% the agent on the house I'm buying now would only make $150 but she is getting $1000 and I believe the other agent is getting the same. Here in CA the norm is 6% but that is always negotiable. During the boom a few years back there were a lot of discount brokers offering reduced fees and sometimes sliding scale... Pay this get a,b & c... Pay more get a,b,c,d.e etc and I knew one agent who always told their sellers 7% so they could offer 3.5 to the buyers agent while 'earning' an extra .5 themselves for selling it so fast.

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