Real Estate Agent(s) and Commission

3 Replies

I was in the process of talking to a realtor about listing my out of state rental property for sale (no agreement signed yet). Then, I found out a neighbor, represented by an agent already, is interested in buying the property. I found out because the neighbor's agent sent direct mail advertisement. If I go with the neighbor's agent, commission is 4%- all of which goes to that 1 agent (although I may be able to negotiate this down to 3% as only 1 agent would be involved). If I sign with "my" realtor, these are the terms:

1) If the property is NOT listed for sale / advertised, and there are two agents involved in the transaction, the commission can be adjusted to 4.5% split equally between both agents

2) If the property is listed for sale / advertised, the commission is 6%

If I sign with "my" realtor, in a sense, the neighbor's agent gets shafted. Any recommendations for this situation?

@Nancy Shen The risks in going with the other agent are:

1. That agent represents the buyer, unless it's a disclosed dual-agency.  In which case, the agent is supposed to be neutral, representing both parties and maintaining confidentiality between the parties.

If the agent is representing the buyer only, then you're probably going to be negotiating against a trained professional.  That might not be the best idea.

2. Without going on the market, you won't have any real assurance that you're getting the best price and terms that the market can generate.

@Charlie MacPherson - couldn't have said it any better myself. 

@Nancy Shen , Charlie is absolutely correct. I was recently involved in a transaction like this where the seller insisted she didn't want to "list the property and deal with all that commission nonsense". She was ready to sell the property for $200,000 to a buyer she already had lined up. Long story short, I convinced her it would be in her best interest to list the property, and we're closing this week at $245,000.  So even after all that "commission nonsense" she's walking away with an extra $30k.

as a buyer... I never understand why people do this...  You pay nothing get your own guy.

As a seller. I don't think any realtor has gotten 6% in a LONG time.  In Ca, it is flooded with agents, it is 5% almost always.

always list with an agent... that $ you "spend" out of your profits is worth it.   IMHO...  especially in high regulation states like Ca... I could get seriously F'd missing some disclosure or legal thing, and get sued BAD... not worth it.