What is a reasonable commission?

pvelJanuary 5, 2011

I am selling a home in Arkansas as my new home is nearing completion. I put a FSBO sign just to see what response I would get. Several Real Estate agents have asked me if they can bring a client to see the house. One said if the house sold his commission would be 5%. Is that reasonable or high? I had hoped the commission would be lower than that since there is not another agent to share the commission with. Am I wrong?

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It seems high to me. What I see around here (Atlanta Suburbs) is 3 to 3 1/2 percent to an agent that brings a buyer to a FSBO.

    Bookmark   January 5, 2011 at 8:04PM
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That 5% would only be good (very good actually :-) if you hired the agent, signed up officially with them, but FSBO's are normally about 2% at most if a realtor's involved (so be careful of what someone asks you to sign up for!).

    Bookmark   January 5, 2011 at 9:52PM
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It depends.

Is the agent to represent both you & the buyer, or only the buyer?

If the agent represents both, 5% is good.
If only the buyer, then 5% is too high:

I represent buyers for 3%, & I list homes for 6%, dividing it evenly between "selling" & "buying" agents' commissions.

If the buyer purchases a home that I have listed, I get the entire 6%, subject to my brokerage's split.

so if I were to solicit a seller representation agreement (listing) & then produced the buyer, I would get 6%.

which would make 5% a good deal for the seller.

    Bookmark   January 5, 2011 at 11:05PM
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Sylvia ...do you think it is possible for an agent to ethically represent both the seller and the buyer?

The last home we sold was an unsual situation. We were considering selling in a year or so (in a pretty hot market) and frequented open houses in neighborhoods we liked. At an open house, I met a realtor who had a buyer for my home. However, he refused to tell us how to price it, because he knew the buyer's price point, and felt that would be a disservice both parties, and unethical. He gave me comps in the area and let me figure out how to price it fairly on my own. He indicated he'd only take 2.8% if we bought the new home through him, and he discounted that side too.

I understand FSBOs are probably as a whole not the easiest for a realtor to deal with, however, you didn't have to spend time listing or showing the property, preparing sales materials, getting the seller to stage, fix up and do repairs to make the home salable for the sometimes long time homes are on the market. You wouldn't have to call the seller to request price reductions or deal with the unrealistic expectations many homeowners have. In short, other than the last negotiations it is a done deal.

While it isn't the ideal situation, many business deals aren't perfect, and in this economy if we walked away from every job with lower profit than we could make in 1990 we'd be out of business.

If I were working with a realtor who refused to show me a FSBO, I'd get a new realtor fast.

    Bookmark   February 27, 2011 at 11:07PM
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When we listed with a "flat fee to get on the MLS" service, we put in 2 1/2% for buyers agents. Depending on your region, the "standard rate" might be as high as 3 1/2%. I'm unaware of anyplace in the country where 5% is the going rate for a buyers agent.

    Bookmark   February 28, 2011 at 9:16AM
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