Raleigh, NC HELP w/ Realtor Standard Commission Structure for SFH

Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes

We understand every realtor can write up their commission structure (to a certain legal degree), but we want to know what the standard commission structure usually is in Raleigh, NC. What would be the "off the shelf answer" from realty school? AND is it realistic to expect negotiation, if so, how much?

We are asking so that we may consider options, while not disrespecting our realtor who has worked hard for us and we want to compensate him respectfully. We just don't know what the spread should be between the seller and buyer agent. Are we missing sales because we are less desirable to a buyer's agent and clients are being steered away instead of encouraged to see our home?

Thank you!

Candace

Keywords: realtor, realty, raleigh, durham, advice, help, NC, flip,

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Adam Ward

Investor · Raleigh, NC · Member since 2014 · 38 posts · 30 votes

10y

I'm not a realtor, but here are my thoughts for Wake County:

Off the shelf seems to be 2.4% to buyer's agent. I've seen as little as 2% and as much as 3%.

Not sure about an off the shelf answer for the selling agent. I have seen as little as $250 for a flat fee listing service (typically you get what you pay for) and as much as 3% to the listing agent. The sweet spot seems to be between 4%-5% for total commission (combined BA + SA). Yes, negotiation is realistic. Obviously a higher level of service will warrant a higher commission rate.

I doubt you would lose buyers solely based on a low BA commission (many buyers are using zillow, realtor, trulia, redfin, etc so they know exactly what's on the market).

A related question might be to see how the price point of the home influences the commission rate.

It will be interesting to hear from realtors on this topic!

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Adam Ward
Investor · Raleigh, NC · Member since 2014 · 38 posts · 30 votes
10y
I'm not a realtor, but here are my thoughts for Wake County:
Off the shelf seems to be 2.4% to buyer's agent. I've seen as little as 2% and as much as 3%.
Not sure about an off the shelf answer for the selling agent. I have seen as little as $250 for a flat fee listing service (typically you get what you pay for) and as much as 3% to the listing agent. The sweet spot seems to be between 4%-5% for total commission (combined BA + SA). Yes, negotiation is realistic. Obviously a higher level of service will warrant a higher commission rate.
I doubt you would lose buyers solely based on a low BA commission (many buyers are using zillow, realtor, trulia, redfin, etc so they know exactly what's on the market).
A related question might be to see how the price point of the home influences the commission rate.
It will be interesting to hear from realtors on this topic!
2 Reply
Brandon Battle
Real Estate Agent · Buena Park, CA · Member since 2016 · 743 posts · 424 votes
10y
minimum 5% commission should be offered ( 3% to buyer's agent).Anything less and your properties will go untouched by buyers agents as punishment for being cheap.
1 Reply
Candace Berry
OP
Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes
10y
@adamward @brandonbattle We like our current realtor, so not looking to change. Our house is unique, so we want to motivate buyer's agents to answer correctly to the benefits of the uniqueness not just say "yeah too bad it doesn't have this or that". We want them motivated.
Thank you for your answers!!
0 Reply
Jack Farrell
Raleigh, NC · Member since 2016 · 24 posts · 10 votes
10y
Buyers agents are used to seeing 2.4% and listing agents are used to 3.4%. Offering anything less will prob turn some agents off who don't want to show the house out of spite and you will lose a few potential buyers. In today's market there are so many buyers you may just sell it anyway depending on the house and condition.
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Candace Berry
OP
Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes
10y
Thanks @Jack Farrell - as a realtor would you be more motivated to sell if your buyer agent's commission was raised? Our realtor offered, and we upped the buyer agent's commission to almost 3%. We didn't notice it helping. But it may have nothing to do with it either way.
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Dawn BrenengenBusiness Member
Moderator
Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
10y
@Candace Berry I'm happy with 2.4%. I notice if there is a 3% commission, but I don't pick and choose what buyers see or ultimately decide on. They are looking online on their own in addition to what I send them, so increasing it to 3% might make me happy, but it doesn't really influence the sale.
Real estate school teaches us that there is no "standard" commission. :)
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Candace Berry
OP
Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes
10y
@Dawn Brenengen thank you so much your answer! Based on the advice we received today, we think we will put the commission closer to normal and drop the price. Thank you all again!
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Dawn BrenengenBusiness Member
Moderator
Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
10y
@Candace Berry Why don't you post the link to the listing here? I'm sure people would chime in with their thoughts. It can't hurt to have more eyes on it.
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Candace Berry
OP
Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes
10y
http://www.realtor.com/realestateandhomes-detail/3...
Great idea! LOL The address is 301 Brooks Ave. Raleigh, NC
@Dawn Brenengen
Home for sale! Make an offer!
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Dawn BrenengenBusiness Member
Moderator
Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
10y
@Candace Berry What has been the feedback so far? It looks beautiful, and that location is fantastic.
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John Newhall
Real Estate Agent · Bloomington, MN · Member since 2015 · 87 posts · 30 votes
10y
In MN 2.5%-2.75% for the buyers agent is common. I have a current listing where I'm offering 3% to try to attract a little more interest.
1 Reply
Michael Jobe
Real Estate Broker · Triangle Area, NC · Member since 2012 · 587 posts · 214 votes
10y
@Candace Berry
Regarding the commission question, the lowest I've seen personally was 2%. It didn't deter me one bit from showing the property to my buyer. On a property in that price point of your listing, it's going to take some outside-the-box thinking and marketing to attract more buyers. I think we spoke about this at the last meetup, but that $800k price point just has a limited buyer pool in this area.
It may be worthwhile to talk to your listing agent about marketing the place in some unconventional ways, and also market it in areas outside of the Triangle such as Boston, San Fran, etc. In other words, places where people are moving from to relocate here and also places where they won't get sticker shock at an $800k price tag. Just my .02!
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Candace Berry
OP
Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes
10y
These have all been excellent suggestions. I appreciate each of your contributions. The feedback has all been that the home is beautiful but they want open concept. That wasn't possible for this house and we've hosted a few events there and it flows beautifully for cocktail parties. It's an excellent idea to market it outside of this area! Our realtor has worked with several investors and this is the first home he's had trouble selling since so many buyers recently commented they didn't care about the open concept look but wanted the historical one. Our last one sold before it was finished. Thank you all again for your help! I am very grateful you've each taken the time.
Candace
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Mark Shafer
Raleigh, NC · Member since 2015 · 40 posts · 6 votes
10y
Try Solopro out. Their local to Raleigh and offer flat rate realtor fees.
1 Reply
Candace Berry
OP
Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes
10y
@Michael Jobe I was thinking this morning, if someone is looking to move from Boston or NYC to Raleigh, wouldn't they see the house on MLS? I wouldn't know how to begin to market a house out of town. I can ask our realtor - he's a big social media guy - but I'd love more than one opinion! It's been marketed in several local magazines, hosted a few broker cocktail parties and a photo shoot for ART2WEAR. It's also on www.presenc.org (preservation NC for people looking for historical homes). We feel like he's gotten the house out there more than we could have imagined. Any other creative suggestions? He's also hosted an open house almost every weekend. The buyer's agent is 3% exactly but won't be for long at this point. We think we'll put it back to normal.
Thanks!
Candace
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Adam Ward
Investor · Raleigh, NC · Member since 2014 · 38 posts · 30 votes
10y
@Candace Berry
Great job with the renovation!
It's a great location and a unique one. The allure of being inside the beltline is appealing to many. The neighborhood seems to have a bit of everything - large luxury homes, college rentals, and residential multifamily. VERY close to NC State campus. Corner of Brooks and Everett, which are both popular cross thru streets.
I noticed that the listing square footage > tax record square footage by about 150%. Which is accurate?
IMO, pricing will trump any other factor when selling a home. If the MLS sqft is correct, you are priced close to the top of the market for a .5 mile radius (not a bad thing these days!). If the tax sqft is correct, the home may be overpriced...
@Dawn Brenengen is correct about listening to the feedback you've received. With 160 days on market, you should have plenty to go on. Many realtors will leave 1-2 sentences after taking their clients to see the home. It may be worth a phone call to them to see if you can get a better feel for things.
Kudos to you for doing some research before dropping the price on a +$800K house.
Good luck!
1 Reply
Account Closed
Investor · New York, NY · Member since 2008 · 169 posts · 73 votes
10y
@Candace Berry
Beautiful home and great location!
When I looked through the pictures, my first thoughts were "beautiful!, tasteful!". When I got to the kitchen, I paused and scrolled back and forth a few times. I feel the kitchen is likely the 1st or 2nd room to sell a house and I thought this kitchen was a bit small for this house and the layout could flow better. The range is great, but maybe something bigger/wider for this house, more burners. Ceiling height cabinets will be great, as well.
Consider more staging, so the house feels like a home when the potential buyers walk in? At this price point, that might be worthwhile.
Also, even though some people say they no longer prefer the open concept, the majority still love open concept. If going for the historical layout, then the entire house should match that - but the house in general feels traditional, not historical, to me. Not a bad thing, as traditional style appeals to a broad audience, which is what most investors want.
Great job and best of luck!
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
10y
I do commercial real estate as a principal broker these days but I will put on the residential hat for a moment.
For an 800,000 house a .3 acre lot is tiny. That size of house would dictate a family would tend to live there with kids. The house from the pictures looks really washed out an sterile. There is nothing to draw you in. Looks like an old house that was painted white. Roof looks like the gutters need to be cleaned out. Color of the roof shingles has that look when the shingles get a lot of sun and need replacing.
The picture from the front shows steps and looks like the driveway needs power washing. You need some color to make it come alive and bring people in. The huge thing I see in the back is a whopper of a tree almost right against the house. No yard of any kind for family to use it appears. I would worry a as buyer that tree would have roots under the house and the foundation might be an issue down the road. With a sloped back yard I would be concerned with possible water retention against the house and animals jumping on the roof to get into the house.
With the house being older and a renovation did you take pictures of the electrical being replaced and plumbing etc.? It would be great to have a documented album potential buyers can see that showed you just didn't make it pretty to look at but actually spent time and money behind the walls. It takes away them wondering if everything was redone instead of taking your word for it.
For the open concept nothing you can do about it now. You need to research the area and see the last house that sold close to your range that was not open concept. Check who the buyers agent was and call them. Maybe they have another buyer wanting that type of design. If nothing has sold with a separated concept that could be big trouble.
This one might be a dud instead of a stud and you need to move on. You might want to get XX profit but if interest rates rise then people can start affording less for the house. At that price level you have a lot of capital into the house to recycle. Make sure when you reduce you are just not keeping up with market corrections. You do that you have an old product on the market and a top price.
When you reduce you have to "shock" the buyers and be at a price slightly under market so you are the best deal in town to sell fast.
On overview description in your listing "A finished lower level is complete with den, full bath and bedroom (great nanny/in-law suite), flooded with natural light."
I would NOT use a lower level and the word FLOODED in the same sentence. I wouldn't use flooded anywhere in the description. That's a bad choice of words.
"Warm rays of bright and pleasing light fill the lower level. Open and airy space has updated amenities and provides a great level of comfort and relaxation."
I am not an expert on this but you want to use words of EMOTION for house buyers and not descriptive only comments (has updated kitchen, garbage disposal, etc.) You have to tie the emotion to the property so that people can see themselves there. The pictures give it a museum feel where you walk in and walk out.
I haven't looked at residential in about over 10 years so just my random thoughts.
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Candace Berry
OP
Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes
10y
@Adam Ward We added a complete master suite to the back of the home on a crawl space (didn't even skimp to put it on a slab). So our sqft is correct. All of the feedback has been positive. They can tell the home was meticulously refinished with quality products, but they wanted a bigger kitchen, or a garage.
@Account Closed Thank you for your insights! I'm from Georgia originally and couldn't imagine purchasing a .3 acre house, but in downtown Raleigh, .3 acre on a corner lot is pretty big. Most lots in the city are measured in sqft! I'll have to go back through the pictures to make sure the lighting isn't reflecting the wrong image since the driveway is new and pressure washed. In fact the only thing in that house that isn't new are some of the walls, the original hardwoods and the trim we painstakingly kept (costing us more) to keep the original 1930s look as much as possible. Our original MLS listing was very "luxury" based and not "emotion" based. This recent one was the first attempt at more emotion - looks like we need to head back to the editing board! "Flooded" - thank you for that catch - seems silly now that we missed it. When you walk through the house and see the systems which are easily visible in the lower level storage area - its clear that all systems are new and that's stated in marketing info and realtor info. We even have cute little cards all over the house with surprise cool things we did to the house etc. LOL
I agree with everyone that there are things that are a concern, but few of which we can currently fix. I also believe that our comps have to reflect the open concepts as compared to the traditional older reno homes. We are sitting down with our realtor tomorrow to analyse the deal differently with all of this in mind.
Thank you again for how much time and effort each of you have placed in looking at the home and answering with so many details. I am humbled by your generosity.
Candace
1 Reply
Jacob Pereira
Real Estate Agent · Austin, TX · Member since 2014 · 636 posts · 486 votes
10y
I'm surprised to see such low numbers. In Austin it's pretty much standard to offer 3% to the buyer's agent. I get a discount on the seller's side on account that I'm an investor and do multiple deals a year, but most MLS deals in my area cost 6% (3% to buyer's agent, 3% to seller's agent). New builds are a different story, of course. If other Austin investors are seeing different numbers, please let me know.
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Candace Berry
OP
Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes
10y
@Jacob Pereira I always thought standard was 6% total as well when I was shopping for a home as a consumer. Apparently 5% is standard in Raleigh divided as stated above. I'm sure it's different all over the country tho. Worth looking into for sure!
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Daniel R.
Raleigh, NC · Member since 2014 · 3 posts · 13 votes
10y
Hello Candace, This is an outstanding renovation. Very tasteful in a great area. In looking at the listing vs WakeGov it appears there is a 1300 sqft variance. I know @Adam Ward referenced this above. When looking in the notes on the county site there do not appear to be any permits listed. Generally there will be notes for reno's, tear downs, etc. Both of these elements will certainly impact the types of buyers and offers that you'll receive. Given the price point you'll want to have all of these ducks in a row. I personally have seen ITB houses sitting on the market where agents have said they have a contact in hand and are waiting on permits for the house to close. Tax value vs listing can impact resale, appraisals, etc. Those are just some thoughts from my experience.
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Candace Berry
OP
Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes
10y
@Daniel R. thank you for this heads up! We have to look into this for sure because we were adamant about all permits being pulled and even went thru the process of getting our contractors parking permits to avoid issues parking on the street. LOL We always spend more to do it all the right way knowing this pays off in the end thru quality and reputation. Can you think of any reason why our permits would not show with the tax county site?
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Daniel R.
Raleigh, NC · Member since 2014 · 3 posts · 13 votes
10y
You can probably find out by calling Wake County and specify that you are in Raleigh (links below). Another place to call could be Development Services. We've typically had good success when calling the city and county for info.
http://www.wakegov.com/inspect/Pages/default.aspx
http://www.raleighnc.gov/home/content/Departments/Articles/DevelopmentServices.html
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Candace Berry
OP
Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes
10y
@Daniel R. and @Adam Ward thank you so much for catching this about the county and permits. What a pain to painstakingly do everything correctly and not have it show! We'll take care of this tomorrow. Thank you all again!!!
Candace
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