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what is realtors average percentage

Posted by seamer1 (My Page) on
Mon, Mar 19, 07 at 12:37

We have a FSBO sign on our home. A realtor has approached us to sign the house. What is the average percentage for realtors? I was in a really nasty mood when she called, and told her if she wanted to negotiate her commission, to call me back and we would talk. Do they ever budge on their commission take?
tia


Follow-Up Postings:

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RE: what is realtors average percentage

6% where I live. Some realtors are trying to get 7%, but those can be negotiated down quite easily to 6%.


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RE: what is realtors average percentage

Here is my perspective as a real estate agent: After I give 50% of the commission to a buyer's agent, give 50% of what's left to my broker (and in many office situations they take more than that), and pay my marketing fees and business expenses, if I take less than a 6% comission on an average-priced home ($250,000 around here) I am working for free or sometimes even at a loss. If your realtor doesn't "budge", that is probably why.

One of my pet peeves is sellers who want to pay less than 4% and assume I am horribly greedy if I decline that. Doing a truely good job of marketing your home will cost a realtor serious money up front. Ask her specifically what she plans to do to market your home and see the value in what you would be getting... Professional results call for professional fees.

Also keep in mind that on national average, houses sold through realtors sell for more than those sold by private owners. In most cases the difference in price more than makes up for a 7% commission. Someone who is harder to budge than you are can negotiate better on your behalf!

Whatever you decide to do, best of luck with the sale of your house!

Jane


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RE: what is realtors average percentage

I was at an open house a couple of weeks ago and asked the realtor that question~he told me he was taking 5% of that sale, but it was negotiable. He said since houses are not selling as quickly as the previous year, he had to be more flexible to attract more sellers. I'm in CA, and he was with Century 21. I appreciated his honesty. Whether or not i'll use him is undecided. I liked the guy, but he didn't seem aggressive enough or 'talk up' the house, which I would have expected him to do. ;o)

patty_cakes


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RE: what is realtors average percentage

My mom listed her house with an agent that only took a 5% comission on sale. Her market was actually a seller's market, but she listed with a "no-name" firm that was willing to negotiate the commission at 5%, and they sold the home in less than a week on the market.

However, we've never listed with an agent that took less than 6%.


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RE: what is realtors average percentage

I have a friend who is a broker and she charges 5% because she is not affiliated with a national company. The national companies in her town charge 6%. Land can be as high as 10% where we are, but I've never heard of a house being more than 6%.


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RE: what is realtors average percentage

6% which the agent typically gets 1.5% in the end.

Asking for an agent to work real hard for another $10,000 that will give that agent ANOTHER $150 in his/her pocket will get cold stare when you are not looking.

With THAT said - it depends how hard the agent is working in the first place.

10 days on the market with an offer and I would ask. 6 months and an offer - I might take the deal.

Here is a link that might be useful: Rod and DJ's House Building Adventure


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RE: what is realtors average percentage

Commissions are negotiable. There are no set commission rates,(illegal in real estate) however there are customary rates. If your commission is not competitive with other homes in your price range, chances are you will be last to get shown. In a sellers market where there are less houses on the market and listings are hard to come by, realtors may take less of a commission because the houses sell more quickly and there is less marketing expense. In a buyers market, typically commission rates go up because there are more houses on the market, longer marketing times, more expense in advertising fees and more incentive to buyers agents to show your home. When there are many to choose from, its easy to find something to show that offers the agent more money in their pocket. A buyers market is not the time to try to get a low commission.


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RE: what is realtors average percentage

There's a lot of truth to the old adage, "You get what you pay for."

Remember, the agent must front the advertising & associated costs. He/she pays for those expenses weeks if not months before receiving payment in the form of their commission. So, not only do you have to consider incentive for an agent to work for less...you also have to take into consideration the cost of funds from the agent's perspective...i.e. the agent has funds tied up in your property that can't be used elsewhere. That has a cost to it.

Tricia


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RE: what is realtors average percentage

The average commission percentage can vary also depending upon the price range of home. The higher the list price, the more negotiable the commission, which is one reason why some land commission can be as high as 10% (especially when values are under $50k).

Most commissions around here (No. California) are more like 4% to 5% (it's changed from 7-8 years ago when most were at 6%, but then again, so have property values!) These commissions are best split with 3% to the buyer's agent, and 1% to 2% to the seller's agent. In a buyer's market, the commission offered to the buyer's agent should be competitive and 3% is pretty customary. Some sellers even offer bonuses to the buyer's agent and/or incentives for the buyer to make their properties more attractive.

As a real estate broker, I can say that it takes the same amount of paperwork to close a transaction on a $200k home as a $2.5M home. It also takes the same amount of time to list a $200k home on the MLS as a $2.5M home. The difference lies in the advertising costs and the length of market time, but advertising in magazines are typically to promote the agent and not really to sell the property (why do you think so many agents continue to advertise their sold properties?) Additionally, statistics prove that the majority of homes are sold via the MLS - not through magazines, not through an open house, not through postcards and/or flyers. This is the reason that many people find "flat fee real estate" so attractive because they pay only for services they feel benefit them, at a fraction of the price.

If you're looking for an agent who will advertise your home (and their face!) in different magazine publications, who will hold open houses (to meet their future buyer clients!) etc. then perhaps your listing commission would not be so negotiable to an agent who realizes that they must hold your hand throughout the entire transaction, keep your property advertised everywhere and hold open houses in order to make you happy that you are seeing them "work" for your money.

If you're a savvy seller who doesn't need the hand-holding and you want to spend your commission dollars on the things that directly contribute to the sale of your home, like the MLS and use of a keysafe/lockbox (instead of contributing to the agent's personal marketing campaign), then perhaps you are in a good position to negotiate a lower listing commission (to the listing agent, hopefully not the buyer's agent!) because you've just subtracted a good portion of the agent's time and costs associated with your listing.

A note about broker/agent percentage splits: I don't know ANY agent who is on a 50/50 split with a broker. Personally, the first broker I worked for gave me a 65/35 split (65% to me) for my first transaction. From there, I was on a 70/30 split until I reached a certain sales volume, then it went up to 75/25. When I got my broker's license and went out on my own, I was at 80/20. Many brokers nowadays are offering 100% to agents and collecting only franchise fees, monthly desk fees and/or "per transaction" fees. Most agents I know get at least 70%, but maybe the new agents or those with not so many transactions under their belt get less.

Best of luck in your negotiations!

Leilani


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RE: what is realtors average percentage

Leilani, I couldnt agree with you less as far as who gets what split. I have the feeling it might be a regional thing, but in my area its pretty customary for the listing agent to keep an extra .5 to 1% for advertising costs depending on if its a sellers or buyers market. The listing agent is the one who has the expense of marketing the listing. I read everything you said about advertising the listing agents face, so I am assuming you don't do any advertising of your listings at all. I spend a fortune in internet advertising, (thousands per month) because statistically 80% of home buyers search the internet before they even contact a realtor. If my site is found, so are my sellers homes. Since I have sold 30+ homes each year for the last 3 years, I think its working. I do agree that most print advertising doesnt get the house sold, but there is a small percentage of people that still call from the magazines so you have to expose your properties in some of those too. After years in the business, I have tried every form of advertising and have adjusted to what works. (this ocassionally changes depending on market conditions. If I had an agent come to my house and tell me they wanted to collect 4 or 5% commission to stick me in the MLS system, I would keep searching for another agent.


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Re; Average Commission

Leilani, I couldnt agree with you less as far as who gets what split. I have the feeling it might be a regional thing, but in my area its pretty customary for the listing agent to keep an extra .5 to 1% for advertising costs depending on if its a sellers or buyers market. The listing agent is the one who has the expense of marketing the listing. I read everything you said about advertising the listing agents face, so I am assuming you don't do any advertising of your listings at all. I spend a fortune in internet advertising, (thousands per month) because statistically 80% of home buyers search the internet before they even contact a realtor. If my site is found, so are my sellers homes. Since I have sold 30+ homes each year for the last 3 years, I think its working. I do agree that most print advertising doesnt get the house sold, but there is a small percentage of people that still call from the magazines so you have to expose your properties in some of those too. After years in the business, I have tried every form of advertising and have adjusted to what works. (this ocassionally changes depending on market conditions. If I had an agent come to my house and tell me they wanted to collect 4 or 5% commission to stick me in the MLS system, I would keep searching for another agent.


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RE: what is realtors average percentage

Northeast NJ - Homes in my area are $600K - $1M, These are average prices with the more expensive $1M - $5M and up.

4.5% - 5% are given without much negotiation.


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RE: what is realtors average percentage

bobleilana, so much honesty in one post from an agent, how refreshing.
I've long said the sob story on this forum about commission is not reality. Maybe it is regional, but your facts are just what I've been told by agents. My impression is, only a newbie or unsuccessful agent has the poor 50/50 split mentioned. I also don't want or need a agent to spend thousands advertising my listing in print. The talk about all the money spent just to list your house is just that, marketing talk.

"If I had an agent come to my house and tell me they wanted to collect 4 or 5% commission to stick me in the MLS system, I would keep searching for another agent." Linda, I know my listing agent does more during the entire sales process than stick it in the MLS, that is why I pay the 4 or 5%, not for print ads or open houses. There is more to the sale than the MLS, wouldn't you agree?

jane_d, I don't think you are greedy to want more than 4%, it is your choice as a businesswoman to charge whatever you want, it is also the sellers choice to pay less if they find a willing agent. No harm there.


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RE: national average percentage

To answer the original question, I believe the national average is 5.2%, but it is really regional, just interview several, negotiate the fee, do go with the agent you feel is best qualified, offer for the same commission fee as others have agreed to, it should be fine with a successful agent.


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RE: what is realtors average percentage

A typcial listing is 6% in my area, but 5% is not unusual and many agencies are offering all levels of service for different %. We have agents here who watch for a home to be FSBO and after a few weeks they start hounding people by advertising themselves as an agent for FSBO owners.

I would estimate that 25% of the calls we received were from agnets, so you probably need to decide how you want to handle the question. I was told by agents that the house was priced too low, I'd never be able to sell it on my own because of lack of exposure...it was constant. I just told the agents who called that I had already made my decision as to who I would use if I decided not to continue with FSBO. To let me know if they had a buyer because I would not consider listing with anyone who cold called me. I had decided long before we ever stuck a sign in the yard which agent I would use if I decided to stop FSBO.

Gloria


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RE: what is realtors average percentage

Hello, linda117, with all due respect, we're going to have to agree to disagree on this one. In our region, which is currently a strong buyer's market, the higher commission (unless equally split) typically goes to the buyer's agent. Most sellers are aware of and agree with the fact that offering a "lesser" amount to the buyer's agent will hurt their odds of selling the home. Even the builders in new home communities have been offering VERY large incentives to buyers and buyer's agents. One property in my own neighborhood that was recently listed and sold in a fairly short amount of time (2-3 months, I believe) was priced at $1,099,000 with a 9% (yes, NINE percent!) commission. This is a rarity, though; generally speaking, most buyer's commissions are at 3% and do not exceed 4%.

Linda, I've been a full-time real estate agent (now a broker) since 1999. I've worked for a broker in a traditional real estate company and I've been the broker-owner of both traditional and flat-fee type companies. I have sold over $50,000,000 in residential real estate. I am a CRS (Certified Residential Specialist), e-PRO and TRC (Transnational Referral Certified). I have spent a tremendous amount of money in advertising, mostly in the first few years of my career, and over 90% of my transactions were closed as a result of the MLS. What my advertising dollars got me was name and face recognition in the town I worked in at the time and this gave me a "familiarity" advantage with new clients.

Now, I've changed the "way" I do business. I no longer work 80 hours a week and I got out of the "Realtor Rat Race" a few years ago. Instead, I've found a way to work less and working more for myself than for others. I've actually made more money this way than I ever made in real estate commissions.

You said you have tried every form of advertising and have adjusted to what works, and if thousands per month in internet advertising is working for you, I'm happy for you and wish you many more years of prosperity.

Thank you, cmarlin20, my honesty comes from the heart, as I have no hidden agenda here and I'm happy to share my thoughts and experiences as a real estate broker with others who are asking for an opinion. I gain so much from this forum on other matters (building a home, kitchens, appliances, baths, etc.) that I'm glad I have the opportunity to share my expertise in this area.

One last thing I'd like to share, that doesn't ever seem to be discussed here: a real estate agent's true worth, when you get right down to the bottom of it, is their knowledge of the real estate contract and the ability to best represent and protect their client. I've seen too many times with new agents who think that their primary job function is to "show houses" and "list houses" but overlook the importance of learning the paperwork inside and out. These are the agents that don't even know how to properly fill out a purchase agreement and these are the agents that I feel are not doing their client any justice. Sure, they may dress sharply, drive an expensive car, have all the tech tools available, appear in every home magazine in town, but without strong contract knowledge, they're not much more than a door-opener who writes a contract by simply filling in the blanks.

I hope I have not offended anyone by offering my honest feedback as a real estate broker. Viewers can either take it or leave it, this is only my opinion I've shared from my own experience.


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RE: what is realtors average percentage

bobleilani - Thanks for your post and your honest opinion.


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RE: what is realtors average percentage

I am not a new real estate agent and I am at the 50/50 level. I think the split levels are regional as well. One company was even lower than this. Just wanted to let you know that we do exist and there are a lot of others out there.


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RE: what is realtors average percentage

Wow, I'm so moving to North Cali!

seamer1- What did you decide to do in the end?

For the record, I keep my face off of my listing's ads. The only place you'll find a picture of me is my website. I'll second bobleilani on his last point, though- Ask any agent you interview direct questions to ascertain that you are comfortable with their level of legal/paperwork competence. Too many agents, new and seasoned, expose their clients liable to the very things we're supposed to protect them from.


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RE: what is realtors average percentage

In my area (Missouri)
7% but can be negotiable to 6-1/2%
6% but must be approved by Broker

I don't think that many people realize that the commission is usually split 4 ways. The two Brokers split with each other and their agents split with their respective brokers.


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RE: what is realtors average percentage

Leilani, Thank you for the good wishes, however, I've been in the business since 1985, and sell between 10 and 12 million a year in real estate where the average price is about $400,000. I do agree in a buyers market you have to offer an incentive to a buyers agent, however, there has to be money in there for exposure to the listing agent too. We do not have companies in my area that will take a $500 fee and put you in MLS so marketing is key. My website comes up in the top three sites in just about any search engine when people search my area.(this costs alot of money) Because of this, my sellers houses get alot of exposure. I will admit most people on this board seem more familiar with the ins and outs of real estate than the majority of sellers homes I go to. Agents know what sells a house, people still want to see their house out there.(Just read the post from the woman who wants to fire her agent because she's doesnt have pictures on realtor.com) They pay alot of money to get their house sold. They want to see something for it. Now it could very well be a regional thing. In most areas of the country it takes 2-3 weeks to close a house. In my area it takes between 6-8 weeks, (ridiculous, I know, but its true)sometimes longer, thats alot of work for the 1% commission that you think a listing agent should take.


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RE: what is realtors average percentage

Cpowers21, start interviewing with other offices. Typically, the more you produce, the higher your commission splits. If you say nothing, you get nothing.


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