Is 6% to much?

34 Replies

Is 6% for the sale of home to much to be giving agents??? This number has been aroudn fro decades why hasn't it changed with the market?

6% is not the universal sales commission, but it is a universal starting point for negotiations with a full-service listing agent. However, what's usually negotiated is the listing agents' split which depends on market conditions, location, requested services, and the date by which owner needs to sell.

The selling agent's (or buyer's agent) portion typically remains 3% because of pressures by agents not to show anything below 3%.

It depends on what the agent is offering to take the listing at 6%. If they are just putting it on the MLS and nothing else, then 4% should be sufficient (3 for the buyer's agent and 1 for the listing agent).

If the agent is planning to market your property by doing open houses, getting it listed in the paper, real estate websites, calling buyer's agents, etc. A good listing agent will have a good marketing plan that will be worth the full commission amount. HOWEVER, a lot of agents won't do much more than putit on the MLS.

The bottom line is to be savvy when you talk to agents.

Originally posted by "utahman":
It depends on what the agent is offering to take the listing at 6%. If they are just putting it on the MLS and nothing else, then 4% should be sufficient (3 for the buyer's agent and 1 for the listing agent).

If the agent is planning to market your property by doing open houses, getting it listed in the paper, real estate websites, calling buyer's agents, etc. A good listing agent will have a good marketing plan that will be worth the full commission amount. HOWEVER, a lot of agents won't do much more than putit on the MLS.

The bottom line is to be savvy when you talk to agents.

This is true, make sure you know what the agent plans to do to list your home. Ask them what their marketing strategy is and what they will do to impliment it. Make sure the report back to you. My clients get daily reports and one weekly summary so that they are informed as to how their home is being marketed. If you think you have a hot property in a sellers market, then yes, negotiate the split down and have them list it on the MLS and place a keybox on it and do the negotiations. If you need it marketed then plan on paying the 6%. If you don't know, then you probably need it marketed because if it stays on the MLS too long it can get "stale" and won't show is much because buyers agents think something is wrong with it.

I will charge anywhere from 4-6%. Anything under 6% I pay the buyers agent more than half. If I list for 5%, I will receive 2% and pay b.b 3%. Make sure that your agent writes out what they are paying out to the b.b. Two many agents say they will list at a reduced % and then split it with the b.b. A lot of agents will skip a listing if it only pays 1.5-2.5% when the house down the street will pay 3%

Some people do charge more than 6% for residential deals. Keep in mind the price of the sale is very relevant - a 7% fee on a $100k home is a smaller commission, for the same amount of work generally, as a 5% fee on a $200k home. The key is not the amount/percentage, it's the value you get for it, so the answer is 2% is too much (for some lazy REALTORS) and 6% is not enough (for the super hard working group that always sells listings higher and faster than the market).

I sold my home last year for a 4.5% total commission. 2.5% to buyers agent and 2% to my agent. It's common to offer the buyer's agent 2.5% out here as that still brings them $25k on many of the "average" homes. And, my agent gave incredible service for the 2% she got - much, much more than just listing on the MLS.

Of course, an added benefit that my agent received is that she also represented me on our new purchase so that was another 2.5% for her.

Finally, the commission doesn't really matter *if* you have educated buyers. We have easy online access to the MLS in the Bay Area so when I bought, I told my agent which houses I wanted to see regardless of what the commission might be. She really had no choice but to show me everythying that I was interested in.

Originally posted by "bigdave":
Is 6% for the sale of home to much to be giving agents??? This number has been around fro decades why hasn't it changed with the market?

The commission has changed over the years. Some markets were at 7% 20 years ago while others were at 5% back then. Raw land can be listed at 10% if the value of the land is low. Very large deals might have smaller margins as the work does not go up in a linear fashion with the price.

The Internet has reduced the commissions a bit in that there are more discount brokers.

Get too tight and the buyer agents will not show your place. How many extra days on the market does it take to wipe out any possible savings from a discounted listing?

There is no cartel yet there is not a perfectly free market. Do what you need to so you get your deals done.

John Corey

3% for the listing side

then you offer 1.5% to the cooperating (buyer) side.

total 4.5%

how many buyer side agents are going to cooperate for 1.5%...some but a lot less than if it were 3%...

hence the 6% listing.

for all the time and effort that goes into getting a listing, doing the paperwork, marketing the listing - open houses, email contacts, follow ups, showings, ads in paper, net, etc. - THEN handling the closing process - dealing w/ underwriters, banks, insurances, inspections, etc...

3% - WITH A FULL SERVICE realtor is CHEAP!!!!

here is so cal, when the market was hot a couple years ago, it was not uncommon for listing side agents to charge 1% and try and get volume. and this is where help u sell and some of the other discount brokers really gained steam. the listing side was really easy back then, you put up a listing and in 7 days you get 5 offers above asking. nowadays, people including myself are offering 3-4% for the buying side. trying to get the buying side agents to bring their clients in the door and maybe even convince them to take your place over the others. but for me, its really just to get them in the door, and hopefully the great rehab job sells itself.

As an agent, none of us should be saying what is a "typcial commission" or list any specific numbers. To say what most agents are charging in various markets is in violation of antitrust regulations. Many buyers and sellers are having problesm with believing that the commission percentages are too high. I do not believe that the commission is set too high, I believe that the customer service level is too low. If agents will provide the "Nordstrom level of service" then their customers will not balk on the commission rates.

6% is average, not always common.

The area i'm in still has alot of 7% listings. I've run in to a few that have been 8%. It's all about what you're providing. Anymore, i'll let the seller pick, 6% or 7% w/ a higher co-op over the 6%.

I could justify a 10% commission....most people don't understand, but a GOOD agent will be worth far more than 6,7, or 10%. A good agent will improve his commission, and add an additional 5% to 10% to the sales price compared to a poor agent or FSBO.

Me personally, I do believe that 6 percent is too much but you must keep in mind that YOU GET WHAT YOU PAY FOR. Realtors can prove to be invaluable when selling your home.

In my area I see 6% commissions more often than any other number. In my area an average house price is $135,000, so that means you get $8,100 for selling a house, right?

Wrong.

Unless you are fortunate enough to both list the house and find the buyer, you'll be getting 3%. So you're still getting $4,050, right?

Wrong.

Your employing broker typically gets half of that, so now you're down to 1.5% ($2,025).

Don't forget you have to pay income taxes on that $2,025. Don't forget that most brokers charge a desk fee ($350/month, or so). Don't forget your advertising costs, your travel costs (with gas at $3+ per gallon). Etc.

After all is said and done, a typical broker is very lucky to net more than 1% on a house.

After all is said and done, a typical broker is very lucky to net more than 1% on a house.

Amen to that.

Gas used to sell for .35 a gallon -- Now that we have better technology to obtain it and better refinng methods to extract more fuel from the crude oil the price should be lower!

Just kidding, the price of eveything else has went up and we always come up with more creative ways to spend money on advertising.

Commission is always negotiable, but you also want to know you have an agent that can negotiate. I have found that agents that cave very quickly on their commission are even quicker to cave on the negotiation of the sales price and terms.

You also have to consider the current market conditions in your area. If the market is slow and there is a lot of competition you may want to consider paying higher than a 6% commission to make your home stand out. I work in Orange County, CA and we are now seeing builders offering up to 10% just for the buyers agent to bring a buyer!

In our area the commission for the listing and selling side is 6%. If you FSBO you can offer broker protection and pay 3% to any agent who wishes to get involved. You are wasting time to think that you can pay less than that in our area. I do think 6% is too much. The classified ads that the brokers pay for (new listings etc.) don't work anymore so there's a waste of money right there. If you are a top producer and sell and list two homes on one deal your broker might let you offer a 5% but it is rare and must be approved in advance by the broker. Well, that's the sunny south.

Here's a little secret about commissions....

If the real estate agents/brokers were able to , they'd do less!

There are sooo many costs with doing business, and if you ask a broker how much money they spend on worthless advertising, they'd tell you alot.

In my area for instance , EVERY broker advertises in the local newspapers. The newspaper ads for a full page runs $750 per WEEK. Only about 5% of homes sell because of newspaper ads, so they're almost worthless. Having said that ,EVERY SINGLE PERSON I HAVE EVER DELT WITH LISTING PROPERTIES ASSUMES THAT NEWSPAPERS SELL HOMES regardless of what information I provide them.

I'm telling you, if we could just do away with the majority of print material, the commissions would be a bit less.

Generally on the order of 5 or 6 per cent of the selling price. It can vary or be negotiated under some circumstances.

Originally posted by "schockergd":
In my area for instance , EVERY broker advertises in the local newspapers. The newspaper ads for a full page runs $750 per WEEK. Only about 5% of homes sell because of newspaper ads, so they're almost worthless. Having said that ,EVERY SINGLE PERSON I HAVE EVER DELT WITH LISTING PROPERTIES ASSUMES THAT NEWSPAPERS SELL HOMES regardless of what information I provide them.

I'm telling you, if we could just do away with the majority of print material, the commissions would be a bit less.

Tell us more, please. :D I've long suspected that print advertisements are a big waste of time and money.

About ten years ago, I would run newspaper ads every weekend for open houses. If I remember correctly, a single ad cost about $200. for the weekend editions. I use to make a killing picking up buyers from open houses. Then, Al Gore invented the internet! :D

Hi - I work with many other real estate agents and brokers, and I think in the market of the past 12-18 months- and moving forward, unfortunately most realtors are going to have to take less as far as a commission %. There are many realtors out there who will take a listing for 4.0%, with a 2%/2% split if there's a cobroke figured.
There are those same brokers who will do it all (allegedly) for 3.5% complete- if it is sold inhouse.
If property sale prices increased 50% in 5 years a while back, that meant that a realtor would be earning 50% more also in 5 years. Not too shabby. Most people working out there aren't getting a 10% raise a year, let alone for 5 years in a row...
The RE market has changed a lot in the last couple years. I think the 6% commission days are numbered.
-Ken

No!

Commission is BY LAW negotiated. I am full service and charge % commission based on the propery. On $1,000,000 sale I would not turn my nose up at less than 3% to represent buyer. To list same property, if it is priced right, I would list at 4.0%. But I do not pay the high fees/splits that some agents must. The RE industry is changing but the 6 or 7% agents will always exist because there is always going to be people needing them/willing to pay for them.
Even the flat rate on listing side companies still normally offer 3% to Buyers agent. But normally you pay the flat rate listing fee upfront, whether your house sells or not, you still paid the fee. Something to be said for letting the listing agent gamble and spend money to sell your property. If it does not sell, you have not lost any money but listing agent has.
If a client insists on newspaper ads, I cannot afford to charge less, in my market newspaper ads are ineffective for selling, OK for open houses. Great listing tool for the companies willing to spend the money on self promotion.

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