Raleigh, NC HELP w/ Realtor Standard Commission Structure for SFH
Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes
Raleigh, NC HELP w/ Realtor Standard Commission Structure for SFH
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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!
37 Replies
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes10y
Candace create a checklist for the future before you market the next property. Add these little things in to the list so next time it's not remembering but working the list. Just like building the property have a pre-marketing for sale checklist you go through each time.
- Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes10y
@Daniel R. Thank you for all you help!!! I am again humbled by everyone pitching in so much time!
Candace
- 10yAdam SchneiderPro MemberLender · Raleigh, NC · Member since 2012 · 957 posts · 639 votes
Hey Candace. I'm surprised how much play your question got. While you asked about R/E commissions, you received lots of great feedback...people must really care about you and Michael!!
There's no standard commission structure. The most common you'll see in Wake is 6%, divided 3.6% listing agent, 2.4% buyer's agent. The most common you'll see in Durham and other markets surround Wake is 6% with the split being 3%/3%. There's a fascinating story about how this came to be, but it's too long to share, here. Good brokers work their tails off, and deserve to be compensated. Because of the price point of your house, the broker will be well-compensated at almost any reasonable %. Think of it this way--if a broker were to get 3% on a $100K house, that's $3K. The broker won't be doing much more work on a $500K house than a $100K house, but would earn $15K on the more expensive one....at your price point, the only way the commission would make a difference is if there were several homes that were essentially the same with which yours was competing. That's not the case.
You could test the commission component by having the agent only remarks offer a bonus to the selling agent if the property sells within a certain time frame.
You could also have a discussion with your listing broker about his/her willingness to adjust his/her fee if the property doesn't sell by a certain time and you have to reduce the price. That's a bit trickier of a conversation and I'd be glad to talk on the phone with you about this.
Adam
- Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes10y
@Adam Schneider we do feel very blessed that everyone has helped us so much! We originally asked the question because we had upped the buyer's commission and later added a bonus and haven't notice a difference and wanted to ask the group before going back to standard.
We definitely don't want to reduce anyone's commission below normal because we don't believe in doing business by taking. I think we have the 5% because that was our broker's personal choice when working with repeat investors. He truly has worked his butt off for us.
We felt like we have tried everything other than drop the price and have spent some time really evaluating it since it's almost impossible to get true comps. Lesson to newbies - never be the prettiest house on the block! :-)
Mistakes are where you learn, and we've learned a TON and grown together in the process, so there is a positive side. Hopefully we'll be able to help everyone that responded here and others.
Thank you again!
Candace
- Contractor · Raleigh, NC · Member since 2014 · 651 posts · 510 votes10y
@Candace Berry Is it possible to create a [large?] pass-through opening between the kitchen and the dining area? That would open things up a bit. The house is gorgeous!
- Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes10y
@Account Closed We've discussed all sorts of options but felt like the whole reason for "open concept" was to feed into the living room. At this point we aren't sure the large investment to creat an island there instead of a wall would change much, and would it be throwing good money after "bad"?
The idea that the kitchen is "small" is interesting to me because there is a ton of counter space and flows really well for parties with the extra serving/counter area away from the cooking area. Everyone has just gotten used to seeing the kitchen open into other rooms. For me, I think it's a much more peaceful way to cook!! Plenty of space when hosting relatives that like to hang out in the kitchen, but away from the loud TV room. Think, super bowl party where you can escape the noise when you want? LOL
While I agree with @Joel Owens about much in his post There are several for sale on that street.
214 a sq ft but it looks modern with lots of contrasting color
You at 205 a sq ft, it is well done on the inside but there is no life to it, and the outside is painted brick, again nothing vibrant there.
184 a sq ft is pending, it is more modern and obviously something was attractive
160 a sq ft, it is not as nice and refined as yours but also much cheaper
Don't worry about the commission split, at 2.4 % the buyers agent is looking in the ball park of 18k you are not losing deals because of the commission. Truthfully if a buyers agent is marketing properties base on split % and not the buyers needs they are not fulfilling their responsibility to their clients, I am not saying it does not happen, just that it shouldn't.
"Unique" or "character" may sound great but I think it all comes down to $
Again I do not want to diminish the hard work and effort you have put into the property, but it is overpriced.
- Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes10y
@Chad W. I completely agree and we're meeting with our realtor today. I am armed now with some serious reality checks. I do not want to deminish the work he has done for us but at this time I think we're in a wishful thinking space, an emotional not wanting to be THIS wrong space and for me - it's time to be real and get out - even if it means losing $. We can make it back, but we can't with our hands tied.
The frustrating thing - our realtor walked several other brokers outside his company thru the house and said - be totally honest about price rtc. And ALL said price was fine. It encouraged us to "just be patient, this price point takes a while" etc. Not being a realtor or knowing the market as well as they all should - it was hard to argue. Now, I'm arguing! LOL Thank you again for your help!
- Charlotte, NC · Member since 2013 · 12 posts · 2 votes10y
Update w list w spring pictures. I had a project that was finished & photographed in winter weather. Less than a month later, it was spring!!! Made a difference.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes10y
Buyers will always be polite with viewing a property. Rarely will they share to a listing broker or the seller how they really feel.
One question to ask is what "one thing" is keeping them from writing an offer today?
If a pass through is what they desire to do the deal then you can figure out the cost and have them place up a non-refundable amount for that as a deposit. This way if you go under agreement and they bail your additional rehab was covered and you now probably have a more marketable property.
You never want to over improve a property in an area. You never want to be the most expensive and biggest. Buyers want to be around those properties as it tends to bring their values up over time. The most expensive tends to appreciate the slowest. In my subdivision for instance there are about 4,000 houses in a master community that range from 150k up to about 2 million. The bottom half of the price ranges have went up the most the last few years as buyers desire to be in the great community but can't afford the more expensive homes.
If there is no backyard you should have information on the listing with pics of a nearby park or showing your culd de sac if you have one or amenities for the area. You have to show the features your property might be lacking are close by, easy to get to, and convenient when a buyer wants to do those things.
Right know you need objectivity. Don't look at asking prices that much ( what sellers want) but what has recently gone pending close to you and what has closed ( what buyers want to pay). Look at number of days on the market and also the saturation level for your price point of how many other properties are in the area.
If there are for example 40 properties in your range in a 1 mile urban core radius but only 1 to 2 closes a month then you have heavy competition for the limited buyer pool in that space. People can fall into the trap of renovating one and things go great and the money is made fast. The next one they go all out and stub their toe. Success at the previous deal is not then a given for the next deal. Doing it over and over and over again with a successful system is based on processes you follow without fail and checklists every time.
You could get a BPO ( broker price opinion ) an outside estimate of value from a broker,agent, or appraiser that does those for about 150. They are not involved in the deal so can be objective. You would want an interior BPO where they take pics of the outside and inside and do a full report versus just an exterior drive by. You can also get an appraisal for about 400 to see what that comes in at.
You have to find out what the objections are and then overcome them. If it's the tree in the back nothing you can do about that. Anything generally sells at a certain price. You have to figure out what that number is. Make sure you account for future flips by timing the weather. Some people time flips by mistake to then sell at winter time and nobody wants to move in certain areas where the weather is harsh. That is generally the time to get a great deal as a flipper on a purchase so when the rehab is complete you are coming out of the cold months and into the warmer months to sell.
Jason Scott on here is great. He might have some nuggets of wisdom to help as he does a bunch of the flips.
- Contractor · Raleigh, NC · Member since 2014 · 651 posts · 510 votes10y
Originally posted by @Candace Berry:
@Account Closed We've discussed all sorts of options but felt like the whole reason for "open concept" was to feed into the living room. At this point we aren't sure the large investment to creat an island there instead of a wall would change much, and would it be throwing good money after "bad"?
The idea that the kitchen is "small" is interesting to me because there is a ton of counter space and flows really well for parties with the extra serving/counter area away from the cooking area. Everyone has just gotten used to seeing the kitchen open into other rooms. For me, I think it's a much more peaceful way to cook!! Plenty of space when hosting relatives that like to hang out in the kitchen, but away from the loud TV room. Think, super bowl party where you can escape the noise when you want? LOL
Candace, I made my earlier suggestion based on memory from having been to the house one time; I should have looked at the pics first before commenting as now I see my idea doesn't work. Sorry about that (embarrassing). :)
It's a beautiful home and no matter what the financial outcome, you've created a special place that its eventual buyer will be very proud to own.
- Investor · Cary, NC · Member since 2016 · 62 posts · 18 votes10y
@Account Closed I don't know why we haven't updated the pics, you're absolutely right. Our landscaper is coming out to fix a couple things that died and then new pics are being taken.
Thank you ALL again for being sooooo helpful!!
Candace
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