I am selling my oceanfront condo in Myrtle Beach. I had a pocket listing with my agent that officially ended May 20 with a 3% commission (vs the typical 6% he charged before the rule changes). He has still be showing the condo and we just listed on the MLS last Friday.

There haven't been any showings since the listing, but there is a potential buyer that saw it before and they are asking if I'm offering compensation for the buyer's agent. My agent is recommending offering the compensation which allows them to roll it into their loan. I don't have an issue with that, I'm just wondering about the amount and if I should negotiate a different amount based on the fact they saw the place prior to the official listing? I know I need to negotiate something new with my agent as well and would appreciate some insight/recommendations.

Thank you!

https://www.zillow.com/homedetails/100-Ocean-Creek-Dr-APT-E1-Myrtle-Beach-SC-29572/2067031461_zpid/

My agent just told me he is seeing 2.5% offered for the buyer's agent. It is probably a matter of semantics of who is paying for it. If it is up to the buyer to pay, they will offer less, if the seller pays it they are able to roll it into the mortgage rather than having to pay it out of pocket. For cash deals it probably won't matter.

TokinAg said:

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Maybe I'm new school.. but aren't most buyers finding houses through alerts and searches and then asking their realtor to take them?

How many prospective buyers aren't using Zillow or some other search tool to find listings?

You think a buyers agent is going to say no, we can't go look at that house, they aren't paying me enough?

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If they aren't getting paid, why would they waste their time? And currently you can't just go look at a house without a realtor (unless seller's agent is showing it)

As a buyer, why not just use the seller's agent? The buyer hires their own inspector and maybe an attorney to look over papers.

There would be more room for negotiation with the sellers agent's 6% commission.

From what I understand, the buyer's agent has to have some sort of written contract with the buyer that outlines their expected compensation.

Let's say they're offering their services for 2-3%... the buyer is on the hook for paying that if it's not offered by the seller through the listing.

Is that not how the new rules are set up? The seller is NOT on the hook for BA fees anymore, they can still offer it, but it's not required.

I think you're right that the seller isn't on the hook for the BA anymore. I read somewhere else that BA's may go to a flat fee which would make sense.

Why would a buyer pay 3% for a home they found on Zillow?

BiggiesLX said:

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I think you're right that the seller isn't on the hook for the BA anymore. I read somewhere else that BA's may go to a flat fee which would make sense.

Why would a buyer pay 3% for a home they found on Zillow?

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Not defending the 3%. There are realtors out there, TexAgs sponsor anyone...., who don't charge 3%.

But finding a home on zillow is, what, 1% of the process of what realtors do?

I really don't know if it's only 1% of their workload, but I'd sure feel shafted if I had to pay 3% commission for a home I found and for someone to sign a bunch of papers that are fill in the blank at closing.

Why should it be different than buying a used car? Take it to a mechanic for an independent inspection and have the bank make sure the sale is kosher… negotiate price based on what is found and walk away if need be.

TokinAg said:

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Maybe I'm new school.. but aren't most buyers finding houses through alerts and searches and then asking their realtor to take them?

How many prospective buyers aren't using Zillow or some other search tool to find listings?

You think a buyers agent is going to say no, we can't go look at that house, they aren't paying me enough?

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this is where I land.

I'm not going to refuse to show a house because they're not offering 3%.

The tricky situation comes up if/when seller's start to offer no (or nominal) commissions.

Conversations will have to be had (up front) with buyers as far as what they floor is for the services, with them kicking in the difference.

It will be interesting to see how this all shakes out. I'm guessing it will be very market dependent. When things are slow, sellers will be more than happy to pay 3%. When they're red hot, not so much.

Here's the part that I don't understand... back before the housing market was made SO much more transparent by the internet (zillow for example).. Average home/sale prices were like 100k (in 2000).

How does it make sense that in 2000 (before the internet), buyers agents could do all the leg work for 3% of 100k (3k dollars).. but fast forward to now, where listings are readily available to buyers to search on their own and home prices are up near 400k.

From 2000 to 2024, 3% compensation for a buyer's agent has gone from 3k to 12k but their job has gotten easier. CMA's are basically a quick process that are automated based on some basic parameters... buyers are doing their own "searches"..

I understand cost of living adjustments and inflation from 2000-2024, but I can't think of any other industry where compensation has quadrupled in the same time period... has the job gotten 4x harder?

home prices have outpaced inflation, but I think your $100K figure is off.

Average home prices were close to $200K back in 2000.

The median value of a home in the United States in 2000 was $119,600, according to findings in Census 2000.

https://www.census.gov/library/publications/2003/dec/c2kbr-20.html#:~:text=The%20median%20value%20of%20a,to%20findings%20in%20Census%202000.&text=This%20value%20represented%20an%20increase,%24101%2C100%2C%20after%20adjusting%20for%20inflation.

I meant the median, which would represent the "middle" for home sales by volume... the average would be skewed by luxury properties.

everything I've read is closer to $165K in 2000.

Having sold real estate in the early 2000's in (what used to be a) low cost of living market, I don't believe I ever sold a home under $100K.

https://fred.stlouisfed.org/series/MSPUS

In any case, you're not wrong that home prices have outpaced inflation. I think that's a big reason why you're seeing so much pushback on the 3% "norm"

All good, reading the fine print... the link I shared included "expected" value of homes not on the market where the data you shared was actual sales.

I think your 160k # is fair.. and yeah, I'm still searching for an explanation/defense of agent compensation more than doubling, almost tripling in the last 24 years.

I only bring this up b/c I've seen too many realtors getting outright defensive over the change.. I get it, it was VERY GOOD money for a long time, but it doesn't seem reasonable or sustainable for the long run.

nobody likes change. Agents have had 3% beaten into their heads their whole careers.

You can already see evidence of that number dropping.

Jamie (and myself in a previous life) offers an alternative service, but (for me at least) it was exhausting explaining to potential clients that they're not getting short changed somehow by paying less. At a certain point, you want to tell them they're free to pay more if they want to!

I'll gladly pay for effort and expertise. We hired an experienced listing agent for our area and found another great agent for our target area. We wouldn't be in this house if not for the effort of our buyer's agent.They were fantastic.

TokinAg said:

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Effort of your buyer agent? In what way? You see a listing on Zillow (600k house @ 3k sqft)... you ask your agent to go see it and you decide to place an offer..

Yes, buyer agents have experience with vetting a property & providing guidance on making a competitive offer.. but you really think that's worth 3% (18k) ?

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Ya lost me at Zillow. You're making false assumptions. The house was never on Zillow and never available to the general market. Pocket listing. (Since you referenced Zillow I'll wait while you Google pocket listing) Saved us at least 20k. Thank you Bott for facilitating financing.

The general public does not realize how challenging buyer rep can be. Seller rep is 10X more desirable than buyer rep IMHO. Everyone thinks they're the ideal client where the buyer rep shows them 3 houses, the buyer picks one and boom 3%. The reality is for every ideal client like that, there are 5-10 others where you show them 15-20 houses, and they end up not buying any of them, or they wait a few years and you have to start the process over again. The funny thing is buyer rep is where the fee compression will be and that is the much more difficult side of the business...

I agree.. that's why it makes much more sense to have stated contracts that outline the relationship between buyer and agent.

For example, perhaps a flat fee of 1500 + % commission (if purchase happens) for a 3 months duration contract or up to 10, 15, or 20 showings.

It's a wide open world for how BAs can structure their compensation, but I'll tell you that 3% flat rate no matter the time & effort or price of the home is not good.

So in real estate as with life, you get what you pay for.

So in response to your assumption about high dollar properties. So what do I charge the widow to sell a $15000 lot in East Texas because that is all that he left to her kids?

More than 3% I'd say.. this isn't a charity and IMO, you're just making the point for me that a flat rate fee doesn't make any sense.

Amen

This is what I told a friend.

Figure out your commission on the average hours, figure out how many hours you worked on the purchase/sale, and then figure out your hourly rate - charge that + a end fee.

ktownag08 said:

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RustyBV said:

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The general public does not realize how challenging buyer rep can be. Seller rep is 10X more desirable than buyer rep IMHO. Everyone thinks they're the ideal client where the buyer rep shows them 3 houses, the buyer picks one and boom 3%. The reality is for every ideal client like that, there are 5-10 others where you show them 15-20 houses, and they end up not buying any of them, or they wait a few years and you have to start the process over again. The funny thing is buyer rep is where the fee compression will be and that is the much more difficult side of the business...

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Pay by showing or hourly rate plus success fee all paid for by the buyer makes the most sense. Aligns behaviors and incentives. So if a buyer wants to drag you all over town for weeks on end until they find the "perfect" home, you're happy to do it as getting paid that and then for the work of closing the deal the success fee kicks in.

On the other end, they can choose to use online tools (pics, video walk throughs, etc), open houses, and self regulate number of showings requiring a realtor to save money. Realtor spends less time but is still compensated for showings plus success fee.

Again, buyers and sellers pay for their own realtors makes the most sense.

Never understood the buyer gets a free ride model...

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There's unintended consequences to this model that is worse for the vast majority of sellers. The impact will be all the buyers in an area will probably flock to the top 4 or 5 marketed homes in the area or the lowest few priced homes and everything in the middle will just sit on the market longer and struggle to get loads of showings. This means probably more cash out the door by the sellers or sellers agents to get the showings.