Knowledgeable sellers (or even thrifty sellers) are starting to realize they can gain MLS access and brokerage services for less than 6% commission. Some are even realizing that they don't have to pay a buyer's agent 3% commission. This being said...

Listing agents: What are your thoughts and what do you do when a seller doesn't want to pay 3% to a buyer's agent? Do you drop your commission to match the buyer's side? Do you not take the listing?

Buyer's agents: Is money...money? 2%, 3%, flat fee, etc. Do you show and sell regardless or do you expect 3% and nothing less?

As a flat fee broker, what the seller wants to offer the buyer's agent doesn't effect me. I'm making less than that no matter what and my flat fee is what it is. I do want to be fair to a buyer's agent though and since the industry standard says 3%...that's what I encourage my sellers to offer. But I've taken a few listings recently where we've offered 1.5% and 2%. And not only have we sold them but we've sold them in under 48 hours.

This makes me wonder...

When will 6% no longer be the norm? When will buyers compensate their Realtor? Will real estate commission ever change on a large scale?

listed our house last week. our agent put 2% for each agent in the contract. she had a client looking for a house like ours. she brought him over before the house went on the market. we had a contract two days later, before the house ever went on the market. we're only having to pay a 2% commission to our agent only.

-if a buyers agent won't show their client a house because they don't like the commission, they ethically wrong.

i stand by that each side would be better off paying their own representation.

No matter what I take a listing for, I always offer the buyer's agent 3% UNLESS it's a foreclosure. The foreclosures I list are only a total of 5% but Wells requires that I split that evenly at 2.5% for each side.

When I represent a buyer, I NEVER refuse to show a buyer or even discourage them from looking at a home based on the commission. We all have to eat and we have bills to pay but if you constantly chase the commission, you're not looking out for the buyer's best interest. Take care of the buyer and the money will take care of itself.

So none of y'all have a problem even when the selling agent is making 3%?

A good plan violently executed now is better than a perfect plan executed next week.
-George S Patton

When you say 'selling agent' are you referring to the listing agent or the buyer's agent? B/c the buyer's agent is the selling agent.

If I had to guess...if a buyer's agent is being offered 1.5% or 2% commission the listing agent is not taking 3% for themselves. Surely the seller wouldn't sign a listing agreement where the listing agent is taking more than the buyer's agent. There was a thread a few months back about this where a Houston Realtor was doing that...taking more for listing the house and offering less to a buyer's agent. I don't think that sat well with other Realtors.

Sorry my bad. Listing making 3% buyer making 2%.

I started one a while ago about a shady agent in Dallas doing that.

I agree that a agent should show all properties in an area. It seems like that is a big red flag as to the expectation of how the transaction will be completed.

I know that if I had 2 loan programs that performed the same, and one paid me 1/2 a point and one paid 1 point, I would not see anything wrong with getting paid. Assuming similar houses isn't the agent putting his client behind the 8 ball?

A good plan violently executed now is better than a perfect plan executed next week.
-George S Patton

[This message has been edited by Deats99 (edited 4/9/2014 11:33a).]

[This message has been edited by Sotheysay (edited 4/9/2014 9:15p).]

buyers agents should sign an agreement with the buyer to be paid by the buyer - problem solved.



can't grasp how it is more difficult to buy a home for $150,000 vs. buy a home for $151,000. it must be because the agent gets paid more.

I guess it also kind of depends on the value of the house. On a house selling for a million or more, I'm sure an agent would take 2%. 2% would be 20000, that's plenty to motivate an agent.

SoTheySay...you know I'm in the same boat as you on the expenses that come with twins...but are you suggesting sellers should pay 3% commission to a buyer's agent b/c the agent has bills/expenses? As an owner of real estate...I'm looking for the cheapest selling option possible...not really concerned with the bills of someone else. That might sound harsh but I'm not just going to give away money for the heck of it.

[This message has been edited by Sotheysay (edited 4/9/2014 9:15p).]

^That's why the buyer should chip in and pay their agent.

I do not believe commission will change on a large scale. The popularity of reduced commission listings correlates with the strength or weakness of the prevailing housing market. Right now it is smoking hot.

[This message has been edited by Sotheysay (edited 4/9/2014 9:15p).]

[This message has been edited by Chloe (edited 4/9/2014 10:04p).]

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I do not believe commission will change on a large scale. The popularity of reduced commission listings correlates with the strength or weakness of the prevailing housing market.

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Here's my thoughts...in a hot market like today, sellers know that with a little exposure (MLS) their property will get tons of looks so why pay a full 6%. On the flip side, in a down or slow market, a seller knows they need MLS exposure but they also know that it may take longer to sell and they penny pinch in slow times...thus the flat fee listing.

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one red flag that pops up is the amount of negotiation the seller is going to be willing to do on price, and then on any repairs that need to be made. If they aren't willing to pay the 3% it does concern me that they are either unable or unwilling to make the transaction work bc they decided to hire a discount or flat fee broker.

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Not sure I follow this. I'd think if the seller has hired a flat fee broker or is paying less to a buyer's agent, they potentially have more wiggle room due to the savings in commission. And what does the broker someone chooses have anything to do with their motivation or willingness to sell their property? What if they're selling due to a job transfer or family medical issues and they have zero equity b/c they've only been there for a few years and got a 97% loan when they bought the place. They might not be comfortable selling on their own so they hire a flat fee broker in hopes the savings in commission might allow them to walk away from closing without having to bring a check to sell their home.

The last dozen or so transactions (some buys, some sells, some both) i'm familiar with over the last year from myself or friends/family, only one transaction paid a full 3%.

HAR Is an easy and powerful tool for the Houston market, and i think it empowers the buyer/seller to the point of diminishing the traditional value of a realtor.

Heck...it's easy enough and cheap enough to get a real estate license so maybe people will just start getting licensed so they can represent themselves.

I can come up with many areas in life to find a cheaper service but will I get the same results? I could find a cheaper doctor, lawyer, home builder..etc. But cutting corners will not always save you money. If you have a good agent, they will make up for any commission you paid them. Problem is I believe most agents are complete idiots. The field is too easy to enter and they have no idea what they are doing. I am an agent and I cannot stand talking to most of them when I am doing a transaction. I'm amazed at how many of them have issues using a computer or even taking pics of a house that are not even clear. If you are an in a very hot area of town.. sure go ahead and list your house yourself and see what happens. There are many smart indivduals who could figure it out if they have the time. We are in a crazy market in Houston so it will most likely sell. But just beacuse you are not paying for an agent does not mean you are coming out ahead. Example.. had someone want to sell their house in energy corridor. I told them the house would sell for close to $300K, $280K on a bad day. Offered a 2% listing fee on it. Well I guess neighbors found out they were selling their house and an agent approached them directly with a buyer.. said they would pay $250K and only had to pay agent 2%. Never even put the house on the MLS. The seller was so excited and took the offer and was VERY proud they did not pay a listing agent. Good job.. you saved a listing agents fee and left $30-50K on the table. Glad they felt they came out ahead

I agree with SpringAg. I for the life of me can not figure out why sellers are allowing agents to do these "coming soon" or "pocket listings" with them and not opening the listing up to the full market via the MLS.

I talked with a seller last week who had sold her property a few months back and she was proud about how her property never hit MLS and her agent made a few phone calls to other agents he knew and got a full price offer in just 2 days. I asked her did she think she could have maybe got more than list price for the property if the whole market knew it was for sale, more then the agents in your agents office? All she could say is she was happy she got her list price and thought it was fair. I predict sometime soon this practice will result in a lawsuit.

Too many people watching TV shows like million dollar listing is the problem. Yes in Houston we have har.com which is a wonderful tool. Yes any agent with half a brain can come to you house, take some pics (hopefully they are at least straight), and if they know what they are doing can run some comps. A good agent using professional photographer, knows how to run comps VERY well. They should also know negotiation skills and hopefully have knowledge to help stage your house and have it ready for buyers. When interviewing agents, ask them if they even own a house of their own. How much do they really know about the process.. its like a financial planner trying to help you when they have nothing in place for themself. I have learned a ton from being a real estate investor. Buying/Selling homes that I own and have my own money on the line. Learned more from that then most of the silly classes they try to teach you.

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Example.. had someone want to sell their house in energy corridor. I told them the house would sell for close to $300K, $280K on a bad day. Offered a 2% listing fee on it. Well I guess neighbors found out they were selling their house and an agent approached them directly with a buyer.. said they would pay $250K and only had to pay agent 2%. Never even put the house on the MLS. The seller was so excited and took the offer and was VERY proud they did not pay a listing agent. Good job.. you saved a listing agents fee and left $30-50K on the table. Glad they felt they came out ahead

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There's exceptions and idiots in any facet of life.

Most everyone knows how to (or knows someone who does) access MLS transaction data and determine the general value of their house.

Expose the property to MLS, and when you get multiple offers and goto a highest and best situation, you're going to get market value. There's no magic involved. This is going to be true with a great realtor or not. There's dozens of anecdotal examples i'm sure most of the realtors here can cite, but with the exception of the silly examples like listed above, but they're not common place.

JMAZZ - As a Broker, I justify my Listing side first, and then approach the Seller with the question of what they wish to offer Buyer's Agents. I wil provide the pros and cons, and let them make the decision. The percentage offered should not be a consideration for Buyer's Agents, but in reality it is for many. I would also say, I strongly avoid the offerring of Buyer's Agents bonuses. With the regard to how it affects the market, in the San Antonio rental market the Landlords Agent's seem to ask for 1st months rent. This is comparable in B/CS. However, unlike B/CS where they offer 1/2 of the first months rent to the Renter's Agent, here they offer ony $100.00 to $200.00. Because of this, many agents will just hand a list of available properties to the prospective tenant, and tell them if they see something they like to call the Listing Agent.

[This message has been edited by aggiebear99 (edited 4/10/2014 1:59p).]

If everything sells at "market value"... then how in the heck have I purchased so many investment homes including the one I live in with lots of equity and under market value?? strange. I would bet there is a little more then just throwing a house on the MLS.

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If you have a good agent, they will make up for any commission you paid them.

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I think my seller clients would say I'm a good agent and they've saved thousands by using me. A good agent doesn't mean 3%.

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Problem is I believe most agents are complete idiots. The field is too easy to enter and they have no idea what they are doing.

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I'd agree with this.

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Example.. had someone want to sell their house in energy corridor. I told them the house would sell for close to $300K, $280K on a bad day. Offered a 2% listing fee on it. Well I guess neighbors found out they were selling their house and an agent approached them directly with a buyer.. said they would pay $250K and only had to pay agent 2%. Never even put the house on the MLS. The seller was so excited and took the offer and was VERY proud they did not pay a listing agent. Good job.. you saved a listing agents fee and left $30-50K on the table. Glad they felt they came out ahead.

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Blame lies on the seller here. Can't help it if they failed to do any kind of research.

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A good agent using professional photographer, knows how to run comps VERY well.

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So in order to run comps well you have to utilize a professional photographer? Professional pictures for a listing cost around $100. That's not a game changer.

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If everything sells at "market value"... then how in the heck have I purchased so many investment homes including the one I live in with lots of equity and under market value?

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You did pay market value...for the condition the home was in when you purchased it. You might not have paid top market value but you did pay market value.

So if everything sells at market value.. if 5 of us all went to buy the same house, we would all pay the same price? doubtful. As for 3% listing.. I hardly ever charge 3%.. never said I did. No a photgrapher has nothing to do with comps. Yes I realize a photgrapher is only $100.. you would think most agents taking crappy pics would use one! This goes back to the statement of how horrible most agents are!

[This message has been edited by springagg (edited 4/10/2014 2:46p).]

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If everything sells at "market value"... then how in the heck have I purchased so many investment homes including the one I live in with lots of equity and under market value?? strange. I would bet there is a little more then just throwing a house on the MLS.

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There's exceptions to every rule. Some sellers are in an enormous hurry, are being compensated by their company to sell, genuinely have no idea where there ass hole is (see example a few posts above), or other oddity.

The rule is different than the exceptions. But that's also true in almost everything on Earth, not just real estate transactions.

Market value is what someone will pay for a property. So yes, everything sells at market value. A fixer upper might sell below what would be considered top market value for that area but it sells at market value for the condition it is in. A property might even sell above market value for a given area if the buyer really wants it and is willing to pay more than the average market value for that type property in that given area.

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if 5 of us all went to buy the same house, we would all pay the same price?

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I don't know...perhaps. We'd probably all be in the same ballpark for the property in the condition it is in.

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Market value is what someone will pay for a property. So yes, everything sells at market value.

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This is not market value and no, everything does not sell at market value.

If what you were saying was correct, lenders wouldn't pay appraisers to assess market value if it was just going to be what some particular buyer was willing to pay.

Non arms length transactions are examples of not paying market value.
For examples, if I have to sell my house in two weeks because I got a job transfer, and therefore list under what the market would pay 10/10 times, then the sale would not be arms length.

This is why appraisers when using sales comps must determine if those prior sales were not under unusual circumstances. Think about it, if I am appraising your house and I compare it to the house in our example that sold way under market value without determining that it was arms length, do you think my valuation is going to be high or low of your property?
Its going to be low, and its going to be wrong, because the house that sold under due to job transfer was not selling for market value.



[This message has been edited by Bob_Ag (edited 4/10/2014 6:03p).]

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Market value is what someone will pay for a property. A property might even sell above market value for a given area

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say what?

Springagg- please tell me you are NOT a real estate agent. If you are - there is the closing argument

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This is why appraisers when using sales comps must determine if those prior sales were not under unusual circumstances. Think about it, if I am appraising your house and I compare it to the house in our example that sold way under market value without determining that it was arms length, do you think my valuation is going to be high or low of your property?
Its going to be low, and its going to be wrong, because the house that sold under due to job transfer was not selling for market value.

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That is correct. That is why it is up to the appraiser to determine why some property might have sold for less (or more) than the subject property they are appraising. I never said they shouldn't look into the comps they are using.

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say what?

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Yes...houses sell for over list price quite frequently...especially in today's market. So if a buyer is willing to pay more for a property than it is listed for...that may be considered paying more than "market" value if "market" value for that type house in that area is traditionally less than what this particular buyer is paying.

You can define market value how you want. Market value is discerned by looking at "apples to apples" sales. But if you're buying a fixer upper for $50,000 due to the condition it is in and it's in a neighborhood full of $100,000 houses...it's a $50,000 house the way it sits...so the market value is $50,000. Now, after you spend $20,000 rehabbing it to make it 'like new' and comparable to the $100,000 houses in the neighborhood...now the market value is $100,000.

Market value is what a willing buyer pay a willing seller for a property exposed to the open market for a reasonable amount of time.

Anything non-arms length, isnt market. Buying from your bro in law, or buying being transferred for work, or buying from a lender, or a whole host of other scenarios arent arms length.

If a dummy lists his house tomorrow for $250k in an area where homes are selling for $350k (assuming all are in like condition, size, desirability, utility), you can bet there will be 10 offers on it within 48 hours and the open market will sort out market value for the dummy.



[This message has been edited by Samuel E. Cronkowitz (edited 4/10/2014 10:06p).]

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Market value is what someone will pay for a property. A property might even sell above market value for a given area

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say what?

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i was simply pointing out that you defined market value as what someone will pay for a property. then you state that a property might sell above market value. by your definition, a home can never sell above or below market value.