20ag07 said:

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I would also like to make perfectly clear that there is NO SUCH THING AS A STANDARD COMMISSION RATE. All commissions rates are negotiable, and that is determined between the Listing Broker and the Seller. The Listing Broker determines and provides the commission rate they are willing to pay a Buyers Agent.

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Oh please. It's absolute horse**** to tell us that almost all brokers/agents in almost all situations aren't telling sellers that it is absolutely standard to pay buyers agents 3%. To pretend that this is totally negotiated between sellers and their agents/brokers is laughable.

You'll much sooner see a seller's agent back off their side of the commission than you will see them offer the buyers agent less.

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I'm telling you what the Texas Real Estate Commission Code of Ethics states. I would ask you to review a listing agreement, and obtain a clear understanding of why the commission rate payable is a blank. Hint- because there is no standard rate. I certainly cannot speak for almost all brokers/agents in almost all situations, or how they communicate nor did I do so. My company and agents know better than to state that there is a standard commission rate. At the same time, the comparable market commission rate can be extrapolated by reviewing comparable listings and the commission being offered to buyers agents. There is a difference between a market rate and a standard rate. Consider this, if your Listing Broker negotiates their commission rate by stating that it is the standard rate, they might not be very strong at negotiating, and you should consider a more worthy Listing Broker.

Depending on the client, the property and their expectations, I have asked for and received far above 6%, just as I have offered and accepted commissions well below. Commission rates are variable and negotiable. Now, you are more informed when entering into your next listing agreement, and your welcome.

No offense Steve, but lenders are the only participant in the transaction without any liability until the sale is closed. If borrowers finacial position is strong enough, they will negotiate your fees as well. If not, well.....they are over the barrel.

OK broker with no standard rates- on what % of your current listings are sellers agents shown as less than 3%?

I've negotiated my fee with my clients for 15 years. I do not have any xxx commission built into my offer. I take consideration multiple data points and roll the dice every deal. I negotiate my profit every deal unlike some Realtors but not all.

I'm just saying your client does not care what your expenses are.

SteveBott said:

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I've negotiated my fee with my clients for 15 years. I do not have any xxx commission built into my offer. I take consideration multiple data points and roll the dice every deal. I negotiate my profit every deal unlike some Realtors but not all.

I'm just saying your client does not care what your expenses are.

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Steve, I am sure you serve your clients well and with integrity as you have been competing in the same business successfully for 15 plus years. I apologize for offending you.

I agree that rarely does a client nor most posters on this thread care what expenses must be deducted from the gross commissions paid. It seemed reasonable to add such information to the discussion since many comments use the gross commission as an example of what their Realtor actually got paid.

20ag07 said:

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OK broker with no standard rates- on what % of your current listings are sellers agents shown as less than 3%?

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With all the complaining about Realtors being overcompensated, how do you think that conversation plays out during a listing interview?

We discuss my company acting as your listing agent, and I negotiate you to pay my company X% of the final sales price as a listing commission when the property closes and funds. Next as per the listing agreement, we have to discuss what percentage of that rate I will offer to cooperating buyers agents and/or subagents. Are you going to approve of me keeping a greater percentage of the listing fee? What if the comparable listings in your neighborhood in which you are competing with are offering cooperating buyers agents substantially more? I will let you finish the thought process on your own.

My comment was simply a matter of fact that from the Texas Real Estate Commissions position, there is not a stand commission rate.

20ag07, You do bring to light an interesting ethical point. As a buyer, would you feel like your representative was putting their own financial interests first if they show you a listing with an additional buyers agent bonus being offered? What about if the buyers agent commission offered is higher than what you deem to be comparable to the current market? I am avoiding using percentages as it is frowned upon by the TREC. Conversely, if you are the seller, do you consider offering the buyer agent a higher percentage as an incentive? What about an additional buyers agent bonus? Would you consider that a favorable marketing strategy?

Personally, in many such situations, I have always discussed such offerings prior to showing the listing. Several times my client has responded with the question, why do you deserve a bonus, I'm the one purchasing the property. There is not a viable response in my favor.

Interesting articles.. one on the commercial side and one on the residential side..

https://commercialobserver.com/2018/07/wework-launches-space-services-division/

https://therealdeal.com/2018/07/19/compass-is-spending-billions-on-end-to-end-platform/

A commercial, short term, lease space company offering brokerage services?

A residential company that believes that agents don't get paid enough, so will build a platform for agents to get paid for insurance, mortgage, title, furniture, etc referrals.

SteveBott said:

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Realtors on This thread...your clients do not give a DAMN about your taxes or expenses or commissions split or any other data point on these subjects. It is a Red Herring.

What matters is the value you bring to them and if the value matches your fee.

My clients want agreeable interest rate and closing costs. They don't pay me extra because I pay my own taxes.

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Of course they dont. But this is economics Steve.

A realtor is not going to waste time if the money they net from a transaction doesn't push the bottom line forward

If after commission rebate to client, broker split, taxes, fees, dues, and expenses.. I am not making very much money.. then what are the two things I can control without offering lesser service?

1. Rebate to client. I am likely offering them too much and need to cut back.

2. Whether I should even work with a client expecting me to rebate them back so heavily.

20ag07 said:

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OK broker with no standard rates- on what % of your current listings are sellers agents shown as less than 3%?

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Each year I was in real estate, my average commission rate for the year would come out to 2.7% or less.

That was without offering any rebates to clients.

There is also a state licensing that is a barrier for me to be a lawyer. That doesn't make the BAR a monopoly. Once again, you are refusing to acknowledge that anybody can represent themself, and that anybody can attempt to profit from the acquisition or disposition of real estate state.

A Physician, Accountant and many other professions have similar regulatory requirements. Additionally, as mentioned perviously attorneys can facilitate real estate transactions and receive compensation. Real Estate licensing does not prevent one from buying or selling real estate or assisting in facilitating a transaction, but rather from being paid for providing such professional services.

I don't even know where to start with the home rental vs hotel example. I understand that he is coming from the BRB situation, and the argument that Hotel owners are at a disadvantage in that they must collect and pay hotel/motel taxes both on the state and local level while the BRB owner does not at this time. But, I would contend that home rental precluded the beginning of the hotel/motel industry, however, I cannot state so with certainty because that occurred a little before my day.

Sasappis said:

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mazag08 said:

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There is also a state licensing that is a barrier for me to be a lawyer. That doesn't make the BAR a monopoly. Once again, you are refusing to acknowledge that anybody can represent themself, and that anybody can attempt to profit from the acquisition or disposition of real estate state.

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It is absolutely a monopoly on the legal industry. Can you go and represent someone? If you do not have a law license it is a crime. We have created an artificial monopoly through regulation and licensing requirements.

People can represent themselves but not others, the same in real estate.

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But anyone can become a Realtor. Relatively easily as we've discussed. Your problem is with NAR. You think they have a monopoly. When in reality, nothing has ever prevented another group from competing with NAR. You can argue lobbyists and money until you're blue in the face. But the reason people haven't tried is because it is extremely difficult and costly to run an efficient, multi state, completely legally regulated trade association.

A monopoly would be the government attempting to take over MLS like Maine tried to do in 2006.

A license is a barrier to entry, but it isn't monopolistic on its own.

Sasappis said:

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ATM9000 said:

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A license is a barrier to entry, but it isn't monopolistic on its own.

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Agreed but the other anti competitive regulations and restrictions are. As mentioned above part of the issue is the nar and local associations.

Ask yourself what is the chances of an agent being successful (at least on the residential side) if they are not part of the orgs that have MLS access?

I am serious in this question. Give me an answer. Let me know in any given market how many of the top 100 or even 1000 agents are not members of the two?

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I did in my previous post

Sasappis said:

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ATM9000 said:

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A license is a barrier to entry, but it isn't monopolistic on its own.

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Agreed but the other anti competitive regulations and restrictions are. As mentioned above part of the issue is the nar and local associations.

Ask yourself what is the chances of an agent being successful (at least on the residential side) if they are not part of the orgs that have MLS access?

I am serious in this question. Give me an answer. Let me know in any given market how many of the top 100 or even 1000 agents are not members of the two?

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There would be no MLS services without the paid fees from the real estate licensee members, and certainly not without their labor to input correct data. These organizations are paid memberships, and have the requirement of licensing. I would also note that teams of legal experts have created these regulations. As you failed to respond to in one of my previous posts, why should anyone who does not contribute both financially and with labor have access to such information. The websites mentioned throughout this post are limited in accuracy due to the ability to accumulate accurate information.

I am starting to gather that you feel everyone should be entitled to information they did not contribute to financially or with labor. Such a position has a very socialistic/liberal smell to it.

Except it's not anti competitive. People being unsuccessful in attempts or refusing to try does not mean it is unfair.

It's unfair that I can't buy a 1,000,000 SF manufacturing plant and open a competitor to Nabisco. But it's not because it's anti competitive. It's because it's hard and expensive.

There's a huge difference for anyone who understands capitalism and economics.

Sasappis said:

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mazag08 said:

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Except it's not anti competitive. People being unsuccessful in attempts or refusing to try does not mean it is unfair.

It's unfair that I can't buy a 1,000,000 SF manufacturing plant and open a competitor to Nabisco. But it's not because it's anti competitive. It's because it's hard and expensive.

There's a huge difference for anyone who understands capitalism and economics.

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A group of competitors coming together and joining efforts to exclude others from competing is anti competitive. If there was not a specific exception for such industry associations in the anti trust acts it would be otherwise illegal.

The agreement to share certain information amongst competitors who join a group and deny the same information to those competitors who are not members by its very nature is a restraint on trade. I am not sure why you are arguing with a very basic idea. Lawyers are some of the most egregious examples of putting up barriers and restricting competition.

Your comparison to Nabisco is completely misguided. A better example would be if keebler and Nabisco has access to a certain key ingredient and you could only get that key ingredient by joining their trade group. Their agreement would be a restraint on trade because you could not make cookies without joining the group.

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I'm sorry, but who's excluding anyone? Once again.. ANYONE can start an organization to attempt to compete with NAR. Just because they don't doesnt mean it's anti competitive.

And Realtors pay money to have access. It's not anti competitive to require members to pay fees for access to things that others are contributing to.

And no, my example was not misguided. There is no key ingredient missing in real estate. Anyone can either A. Become licensed and join NAR, or B. Attempt to start a competitor to NAR.

mazag08 said:

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Martin Q. Blank said:

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I know a realtor in Houston (a very good one) who rebates buyer's commission based on how many houses he shows. 1.5% if he opens the doors for less than 5 houses. 1% if 5-10. 0.5% if 11-15. 0% if 16+. I think it's a great business model.

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When a Realtor reaches a certain scale of business, something like this is very possible.

But it can't work for everyone.

Going off of statistics from NAR.com, the average Realtor grossed about $42,500 in 2016. After you account for brokers fees, that means their total commissions totaled approximately $56,000. That would indicate a total sales volume of approximately $1,866,667 (which would equate to 13 sales at an average sale price of $150,000, or 10 sales at an average sale price of $200,000).

So taking those numbers, if you reduce the average commission to 2% from 3%, that means their gross commission before brokers fees and taxes would come out to about $37,333 per year, a loss of about 12% before take home pay. After brokers fees and taxes and cost of doing business.. the average Realtor would be looking at somewhere between $25,000 - $30,000 in take home pay.

Now.. a Realtor who grosses $80,000 per year could still take home over $50,000 if they reduced their average sale rate to 2%. So it can work at higher levels.

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I would hope it works at higher levels. Your assumptions make it look like the realtor lives below the poverty line. What those numbers fail to show is... if they took the 1% discount and sold 10 homes at ~$200,000....
That means they sold less than 1 house a month and only did 5-10 showings. That's not even a full time gig.