Just want to get opinion in regards to realtor commission when selling a property. As you all know, Austin RE market is red hot now. I have been doing most of the groundwork on working out what the fair market value of my property would be in this current market. I have a seller realtor who accepts 1/ 1.5% as commission for listing the property.
so when listing the property can I mention that I will pay buyer realtor commission of max 1.5% ? Is that going to hamper my chances of selling the property. In the current market I see that there is enough demand for my property to get the buyers at the appropriate price point. So should this matter?
i plan to cut down the total realtor (buyer + seller) commission to be around 3%.
please let me know your thoughts.
Yes, it will greatly reduce your buyers....agents aren’t going to show your house when they can make their 2.5-3% elsewhere.
Thanks for your reply. But in this case, inventory is ultra low and properties are getting 20 offers with 2 to 3 days. So do you still think this is going to matter?
In a balanced market, yes definitely realtor is not going to be keen to show my property.
Without sounding sales-y one of the main benefits of this unbalanced market here in Austin is multiple offers. You will still get multiple offers on your house from agents willing to take 1.5% but you will be missing out on many more offers from agents with well qualified cash clients from all over the US who won’t be as inclined to sell your home for you if you don’t compensate them fairly. Plus, it’s just bad business. Also there are so many other strategies that actually work to make your home sell for more and by not compensating your agent, or buyers agent for implementing those strategies you’ll lose out on thousands. It takes a very myopic view of the process. I used to think realtors were unnecessary with the internet and how well informed I am. I sold my house without a realtor in another state (I had worked at a real estate office as a transaction coordinator/office manager so I knew a lot.) But, if I hadn’t known as much as I did I would’ve been taken for a ride. It opened my eyes and I became a realtor. I don’t charge 3% for listings because I don’t ascribe to the old broker model (for so many obvious reasons) however, I do see the value of selling for top of market results and have seen it work over and over again. None of this is going to convince you but I firmly believe it and take pride in the savings I provide all my clients. Ignorant sellers benefit greatly from the knowledge of a good realtor, wealthy and well informed sellers also see their value and almost always use realtors. It’s the in-between amateur “expert” seller that doesn’t take good advice that receives mediocre returns for their efforts.
Thanks for taking time to draft your reply Lisa. I respect your view but I still don't see the "need" to pay 3% for "buyer" realtor. Say a client wants to buy my property, will the buyer realtor say no to the client just because I am going to pay 1.5% instead of 3%? I am genuinely trying to assess the role of a buyer realtor from a seller perspective :)
As for the seller realtor, I am pretty confident that my market analysis is as good as the best realtors in my part of the town :) Also my seller realtor has been doing a pretty good job in getting properties sold for top dollar in this market.
Have you asked your listing agent what they think? If they are really getting their sellers top dollar in this market I doubt they agree with your conclusions. If you're still asking what compensation you are thinking of providing to the agents then you haven't yet signed a contract with a listing agent. I am glad you are confident, maybe you are correct, or maybe you don't know what you don't know. As I said before, I know I'm not going to change your opinion. Sales by nature is more subjective than other industries - especially in residential real estate where emotions run high whether or not people realize they are acting out of emotion rather than reason. Again, you can solve for X amount you receive over asking price by the number and quality of the offers you receive. Yes, agents will discourage buyers from offering on your listing. I am not going to undercut my own value any further by explaining the reasons why.. that's your listing agent's job.
I've heard limiting commissions is pretty common when the value of the property is higher. Ie. a 1.5M home is not much diff in work than selling a 1.1M home. As your home lessens in value, it becomes a bit more grindy so to speak if you're trying to bargain out of saving a thousand bucks on your sale. If you can find a good realtor though who you know will fight to get you extra money, they're worth every dollar to pay full commission as I know their negotiation skills will far outweigh the commission.
You’d be better off with a flat fee listing service for a few hundred bucks and 2.5% to the buyer agent.
Agree with Max - if you wan't to skimp use a service like listing spark and make sure you get a great photographer and offer a buyer's agent a higher commission. For what it's worth - managing multiples is an art. I have seen some great listing agents coach offers from buyer's agents to much higher rates. I had a property we did in S Austin where the ARV on the houses was 500K. We pre-marketed and ended up normalizing a 550K list price and ended up receiving 568,000 and the buyer paid my closing costs. As an agent and investor that flips houses - I offer a buyer's agent 3% every time and I believe it nets me more in the end.
Remember too - the buyer has about 20+ exits from a contract if their agent knows what they are doing (option, EM, termination due to seller non compliance with delivery of items like survey/T-47, third party approval, appraisal etc). If you are skimping on a buyer's agent - you are incentivizing a buyer's agent to always be looking for a backup option while under contract with you. I think it increases the likelihood of potential termination and when I am on the seller side- I want certainty after option that it is going to close.
If you think working with a professional is expensive, wait until you have worked with an amateur!
Of course it will sell, the question is how well.
Thanks a lot y'all for taking time to reply.
You definitely educated me on the role of buyer's agent :)
Sure, don't know how it's done in TX, but in Portland you'd put BAC = 1.5% on the public listing.
Only issue may be that if you're the only guy that low that not many buyer brokers will flog your property.
If I were to sell a property with that low of a commission, I would need my buyer to pay the rest. That is a clause in the buyer broker agreement. Hopefully it will be a good enough deal for the buyer to pay the extra cost.
I would think that the kind of buyers who bring cash offers and get in bidding wars are often the type to have their realtor bring them options not the type to browse the listing site themselves. I doubt that the realtor would say no to their client who wanted to see your property but the client may just not become aware your property is on the market. My 2 cents is that you are looking to save $6k-$12k on the buyer agent side and in this market having one additional interested buyer could easily earn you twice that. I would not lower buyer commission.
For full disclosure I barely call myself a RE inventor and am not a realtor/in the industry. I have bought and sold property without an agent to private seller and self representing myself as seller/working with a buyer agent. All of these situations were off market deals though. Right now the market is performing at its best, I wouldn't risk having it break down on me by not using the same amount of grease as everyone else does.