Realtor asking for a higher commission

66 Replies

Hey everyone.  I’m curious to hear your thoughts.  I’m in talks with a guy selling his investment property.  I would be listing it.  The property will go for about 55k tops.  Obviously Small price equals small commissions.  I’m thinking about asking for a higher commission, around 7-8%.  How would you feel if a realtor wanted you to pay a higher commission on a smaller priced property?   

I would look for another realtor.

If you wouldn't be happy with the 2.5% - 3% commission, then why list it?

Pass it on to some young, hungry, upstart who needs a listing to jumpstart their career.

Most experienced agents have a minimum commission for their side that they will work for, $2500-$5000, I know I did.  This is for a one off deal....if the client used me for other higher dollar prooerties, I’d probably do one low end one at normal rates.

@Brooks Rembert  @Wayne Brooks

In this case, I am the newbie jumpstarting their career.  I do this full time.  Normally, I would just eat the low commission, but I gotta try and get this sold pretty quickly.  He goes to auction in a little over 30 days.  It's going to require more effort on my part.  The whole situation just got me thinking if I should start charging a minimum for these lower end properties.

That's what I was thinking, but I'm not the most experienced agent on the block. Perhaps I don't have the credibility yet to charge a higher rate. So far I'm leaning towards "standard rates".

@Steven Wilson I strongly believe that you get what you pay for with a realtor who can’t protect their own money.  If they can’t protect their own assets, what will they do when it comes to yours?

@Bill Plymouth If a realtor is bringing me off market deals, running analysis for me, or earning his commission through other beneficial means, then I totally agree.

But if you have a deal and you want to purchase it, there are a million and one realtors that can do exactly that.

@Steven Wilson oh yeah dude.  If you spot somebody property on Zillow that happens to be a good deal and use some random realtor then yeah.  3% is justified.  I would say they deserve less than that.  I would agree that any agent that throws a sign on a lawn and calls it a day also deserves less than 2.5-3%.  That’s not the point I’m arguing.  

The point I’m arguing is that the realtor who goes above and beyond for a 50k property to get it to sell before the city auctions it due to unpaid taxes, which is the situation I’m in, deserves a bit of a pay bump.  3% of 50k won’t cut it for the extra work/marketing that will come out of pocket.  I go above and beyond for all of my clients. I earn that 3% that gets typically charged.  

When it comes to $50-70k listings, I believe I should be able to charge based on the work that I do.  This is a business.  I (and other HARD WORKING realtors) should be duly compensated. 


Updated about 1 year ago

By hard working, I’m referring to those who above and beyond. Not the typical transaction realtor.

@Bill Plymouth you’ve been pretty active here on BP the last few weeks so for that I’ll give you props.

To your actual question, it really depends on the market. If that’s what the market supports you can charge that. In your case, I would just stick to the normal rate.

@Caleb Heimsoth thanks, brother!  I’m really trying to learn and soak up all the info I can before I get started.

And yeah.  I’m starting to think I won’t even take the listing.  With all the extra marketing and time I’m going to have to spend on it, the 3% won’t cut it and I don’t see him agreeing to a higher percentage. 

@Bill Plymouth

Good points but there is a lot of competition for skilled Realtors—so walk softly and build trust first. Maybe a set price [5-6%] total commission for set objectives would work with an escalation clause for a headache deal?

I will negotiate a contract and take you through closing for 6 percent unless there are comprehensive and unplanned negotiations regarding; major repairs which are unknown at this time, hidden title/easement complications, water and sewer repairs or negotiations etc. in the case of extensive negotiations and or repairs, the commission will escalate to 8 percent.

As a licensed salesperson and buyer/seller who has used representation—this is fair and reasonable as long as you deliver.

@Bill Plymouth your the listing agent? Too bad your not closer.

We’re at 6 mostly around here but I do that.

I would do that all the time.

Few years ago House was listed at 60k multiple offers. He knew some stuff. Told me to make my offer at 47 cash. I think I gave him 10%.

A month later I was drinking coffee and a broker asked me how the hell I got that house for 47 when she had a buyer at 59k similar terms...she was yelling in the coffee shop like a lunatic.

Last year an agent called me with a deal. 75k 2 family. ARV 250

No one was finding deals.

I had told him a few weeks before that I was looking and I would pay 500 cash on top of commissions for cheap houses like this. At the closing.

Everyone always asks me how I got that one.

In those markets investors should figure out what makes agents happy and do that.

For what it worth 500 wouldn’t do it around here now. But shells are 200k now. Lol. Hot markets.

I dont service properties under $100k at all, as I lose money on them. $100-200k needs to be within a 15 min drive of me and I charge $750 flat fee ontop of the commission for under $200k to pay for my fixed costs.  

Originally posted by @Bill Plymouth :

@Brooks Rembert  @Wayne Brooks

In this case, I am the newbie jumpstarting their career.  I do this full time.  Normally, I would just eat the low commission, but I gotta try and get this sold pretty quickly.  He goes to auction in a little over 30 days.  It's going to require more effort on my part.  The whole situation just got me thinking if I should start charging a minimum for these lower end properties.

That's what I was thinking, but I'm not the most experienced agent on the block.  Perhaps I don't have the credibility yet to charge a higher rate.  So far I'm leaning towards "standard rates".    

 Risk vs reward.  Are you confident you can sell it before it goes to auction?  If not, find another home to sell and let it go to auction.

@Bill Plymouth

Unless you have a list of potential buyers and could almost guarantee a sale prior to the auction, I wouldn’t give you more than the standard 5-6%.

As a new agent, there can be valuable learning experience from a cheap listing, and that might be worth the time, even if the commission fee is barely worth it. But it depends on how much other business you have at the moment, and if you think the house would sell quickly. That said, as a realtor, the cheapest houses usually lead to the most work, so keep that in mind. If you have any investor clients with cash, see if you can bring a committed buyer before it hits the market and close quickly. 

However, aAnother question would be, is it a good enough deal that you would buy it?

I charge a higher %  or flat fee for vacant lots, and will generally refer out low dollar residential clients when I am busy, as servicing those will actually cost me $. Exception being on listings. In my market a correctly priced listing is pretty good marketing for the agent.

Conversely, we have agents in my market that work $800/mo leases. I dont understand it, but there is more than 1 way to skin a cat, as they say. 

@Bill Plymouth sell your value and what you bring to the table. If it was that easy the owner would already fsbo it and maybe only pay 3% to buyers agent. Regardless, under 100k, owners and especially investors are dreaming to list for 5 or 6. I once told a “wholesaler” 10% on a 50k property and they about lost it saying they would lose money which is another sign that you maybe don’t want to work for people like that if they can’t understand the dollar value nor can budget half decently.

End of the day, better to walk away from certain deals and more so certain people that are too difficult to work harder for the type of deals and people you want to work with and want to work with you. This may sound tough without much of a pipeline but you never know when they may come back or more so who knows what better deal will come up because you had the extra time, not bogged down with a difficult listing that you can’t even profit from.

Originally posted by @Bill Plymouth :

@Caleb Heimsoth thanks, brother!  I’m really trying to learn and soak up all the info I can before I get started.

And yeah.  I’m starting to think I won’t even take the listing.  With all the extra marketing and time I’m going to have to spend on it, the 3% won’t cut it and I don’t see him agreeing to a higher percentage. 

This is all some short sighted thinking. You don't have much of any notoriety or deals under your belt at this point. Every listing is a chance for YOU to get some exposure. Who knows who your buyer on this deal might turn out to be. They may be a cash heavy investor that buys 25 more properties from you over years to come. If you can get paid (even minimally) to get some experience and exposure, I'd call that a win. 

 

If your services and time demand a higher commission and you believe you are worth more go ahead and charge what you believe. Everyone has a self worth and only you know what it is. 

Commissions are negotiable from both sides. Why can't a realtor charge more?  It goes both ways. Yes, the seller can pick another realtor but don't look at it as lost commission, its you knowing your value and sticking with it. At the same time you are new. In the beginning every dollar counts.

@Bill Plymouth I'm guessing by above and beyond exceptional service and drastic measures to sell it fast you plan to list it on the MLS and pick up the phone. This listing sounds like an non-financeable investment property in which case it should be selling to a sophisticated crowd which requires minimal handholding.

Also as a new agent I'm curious on what sophisticated mechanisms you have to sell houses with alacrity for exigencies? Also what awesome but expensive services are you bringing to the table that justify 7-8% commissions on a likly small turd of a SFR in a marginal location?

Originally posted by @Wayne Brooks :

Most experienced agents have a minimum commission for their side that they will work for, $2500-$5000, I know I did.  This is for a one off deal....if the client used me for other higher dollar prooerties, I’d probably do one low end one at normal rates.

Same with me Wayne in this instance I would not be talking % I would be talking dollar amount .. I see it all the time on HUDS in low value areas with brokers taking a standard dollar fee not a %.. in my early years of selling rural dirt I either had a minimum fee or would do these deals at 15 to 30% commissions.