Selling a home and the related commisions

[Cullenator]

21 minutes ago, PanthersATL said:

Just because it's digital doesn't mean there's lower cost. There's lighting, minor photoshopping, proper captioning, etc

Check out https://terriblerealestateagentphotos.com/ for reasons why good photos are important -- especially at higher price points.

A lower-priced home may not have the luxury of being able to afford higher-quality photo experiences, especially if professional photos are not included in the agent's fees. 

11k dollars worth lighting and photoshopping?

[PanthersATL]

1 hour ago, Cullenator said:

11k dollars worth lighting and photoshopping?

If that's the difference on making an extra $50k on the house AND getting it sold in a reasonable amount of time with minimal effort on your part?    Then yes, it's probably worth it.
 

[SmokinwithWilly]

On 4/16/2023 at 8:24 AM, Cullenator said:

Ive bought and sold plenty of homes and done the dance with both flat rate listing agents and commission based agents.

The point of the inquiry is an enumeration of costs not activities.  I regularly justify my consulting fees to my clients with a lot of - oh Ill do this, and I know that, my X years of experience, and my connections, but if pressed on what my actual expenses are they are minuscule (and primarily sunk costs for that matter) in regard to my rate.  But I get paid by the hour.

 

It doesn't address the question where two houses are listed on the same day, one at 350k and one at 700k.  They both receive a single full price bid and close in 45 days from listing.  What expenses did that listing agent incur for the more expensive house to justify double the commission? Both houses took the same level of effort to get them into MLS, get photos, etc.

One thing to consider in what's the difference is the pipeline of buyers an agent selling for 700k vs 350k has and who they are in negotiations with. There's also their experience in contracts. My wife is an agent and there are plenty of sneaky things that agents will add into the paperwork that unless you know they're there can end up costing you 10s of 1000's of dollars. A good listing agent won't even list your house until it's ready to maximize every penny for you and that involves time if done right. I don't look at it as what's the difference in the commission, I ask what's the agent bringing to the table to maximize my profit. You should know that before you ever sign an agency agreement. 

[thefuzz]

OK.  I'll take a stab.

First, the question you can't get a good answer to.  It doesn't.  Meaning, it's not 3% at 350k and 3% at 750k...sometimes it is, sometimes not.  The higher the assumed listing, the lower the listing %, in many cases.

That said, the individual broker cannot make that adjustment, they do have to run it by their Broker in Charge, they don't always agree to lower commissions...it's their call.

Again, if a customer is expecting a lot of work...there is zero % chance I'm lowering my fee, and I wouldn't either way until we are talking over 1M or so...unless it's a friend or family member.

[thefuzz]

Now, to the reason may hire, and some don't hire agents.

1:  You likely DO NOT want to get into a face to face meeting, or a phone call with the buyers...you very well could be breaking some rules...and many folks have zero clue how to remain calm when talking about 10's of thousands of dollars, much less hundreds of thousands.  You will be too emotional and the buyer will take advantage.  A seasoned seller MAY be OK, most of the time not.

2:  Your time is valuable.  Sitting at the dinner table with wifey and Jr.....text message, another, another...."the inspection came back, we need to talk about the HVAC" or "we found an old oil tank in the back yard that you didn't tell us about, we need to talk"  or "your house had a leak that was improperly fixed, we need to talk."  Now, you are upset about being disturbed, upset that you have no answers, and have no clue how to "fix" this issue without losing a buyer, or costing yourself too much money.

3:  You will likely not list it at the correct price.  This market is weird, but it will change, and it will get normal again, it always does.  Too high?  No offers, and you are fielding 50 calls per day telling you to list it with them, too low, and you cost yourself a LOT of money.

Not everyone needs a broker, not everyone needs an attorney, not everyone needs an accountant....but...when you do need one, you really need one.

*I'm a broker, but don't do normal home sales.  Not worth my time.

[thefuzz]

On 4/17/2023 at 11:10 AM, Khyber53 said:

A good agent is also your representative and takes a protective role for their client in negotiations and legal matters. This is a huge financial event for most homeowners (whether they are buyers and sellers). There are so many legal ramifications in the event that far exceed just a transactional sale of an item that you need someone who is  knowledgeable about all of the proceedings and requirements just to make sure you don't make some kind of dire mistake or that you don't get screwed along the way. 

Everyone complains about commission rates being paid, but that big chunk of money is split generally four ways between the listing and buying agents and the listing and buying brokers. All of these individuals or companies are providing a vital service from contracts, negotiations, listings, tax issues, filings and even escrow of the  downpayments and purchase monies prior to the transaction being completed. 

It is money that is necessary to be spent and in the cases of good Realtors it is money well spent.

Ha, truth.

Came to post a little breakdown since these numbers seem so high to most not in the business, or that have done few transactions.

thefuzz lists your house.  400k.  6% commission.  Lets say it sells for 400k for easy math.

24k in total commissions paid.  12k to buyers agents brokerage, 12k to sellers agents brokerage.

thefuzz has a 50/50 split with the brokerage.  6k of my 12k goes to the house, 6k to my wallet.

It's time to cover the listing expenses now.  Photos, any maintenance items you did to keep a sale rolling, marketing, fuel, etc....let's say that number is $800.

Now, we are all independent contractors, meaning we pay all of our taxes, including both sides of Social Security....let's say about 30-40% depending on how successful you are.  Let's say 30% to keep it rolling.

Now that 6k has turned into $3,600 or so after taxes.  BUT, you need health insurance, short and long term disability...as you are a contractor remember, and pay yourself for your time....which doesn't really happen.

On top of that, you have MLS dues, Realtor Dues, Desk Fee's, have to have a good computer, your phone is never ever off, you need a nice car...you are driving a LOT, and nicer than usual clothing...again, you have to dress to impress for the most part.

So, after all that, you probably have about $2,500-3k in your pocket after a 100 or so e-mails, 100+ phone calls, putting owners in touch with your little black book full of tradesmen to help them get the house ready, and about 20 visits to said house....many on the weekends.

Yea, it ain't as glamorous as many think it is.

 

[Cullenator]

1 hour ago, thefuzz said:

Ha, truth.

Came to post a little breakdown since these numbers seem so high to most not in the business, or that have done few transactions.

thefuzz lists your house.  400k.  6% commission.  Lets say it sells for 400k for easy math.

24k in total commissions paid.  12k to buyers agents brokerage, 12k to sellers agents brokerage.

thefuzz has a 50/50 split with the brokerage.  6k of my 12k goes to the house, 6k to my wallet.

It's time to cover the listing expenses now.  Photos, any maintenance items you did to keep a sale rolling, marketing, fuel, etc....let's say that number is $800.

Now, we are all independent contractors, meaning we pay all of our taxes, including both sides of Social Security....let's say about 30-40% depending on how successful you are.  Let's say 30% to keep it rolling.

Now that 6k has turned into $3,600 or so after taxes.  BUT, you need health insurance, short and long term disability...as you are a contractor remember, and pay yourself for your time....which doesn't really happen.

On top of that, you have MLS dues, Realtor Dues, Desk Fee's, have to have a good computer, your phone is never ever off, you need a nice car...you are driving a LOT, and nicer than usual clothing...again, you have to dress to impress for the most part.

So, after all that, you probably have about $2,500-3k in your pocket after a 100 or so e-mails, 100+ phone calls, putting owners in touch with your little black book full of tradesmen to help them get the house ready, and about 20 visits to said house....many on the weekends.

Yea, it ain't as glamorous as many think it is.

 

This is the answer Ive been hoping to get.  Thank you.

 

Im going to hire a listing agent.  That goes without question.  I just wanted to be better informed about the costs they incur to justify a percentage as opposed to an hourly rate so that when I do sit down with the 4 or 5 agents my wife has lined up I neither got taken for a ride or insulted them.

[toldozer]

22 hours ago, thefuzz said:

Ha, truth.

Came to post a little breakdown since these numbers seem so high to most not in the business, or that have done few transactions.

thefuzz lists your house.  400k.  6% commission.  Lets say it sells for 400k for easy math.

24k in total commissions paid.  12k to buyers agents brokerage, 12k to sellers agents brokerage.

thefuzz has a 50/50 split with the brokerage.  6k of my 12k goes to the house, 6k to my wallet.

It's time to cover the listing expenses now.  Photos, any maintenance items you did to keep a sale rolling, marketing, fuel, etc....let's say that number is $800.

Now, we are all independent contractors, meaning we pay all of our taxes, including both sides of Social Security....let's say about 30-40% depending on how successful you are.  Let's say 30% to keep it rolling.

Now that 6k has turned into $3,600 or so after taxes.  BUT, you need health insurance, short and long term disability...as you are a contractor remember, and pay yourself for your time....which doesn't really happen.

On top of that, you have MLS dues, Realtor Dues, Desk Fee's, have to have a good computer, your phone is never ever off, you need a nice car...you are driving a LOT, and nicer than usual clothing...again, you have to dress to impress for the most part.

So, after all that, you probably have about $2,500-3k in your pocket after a 100 or so e-mails, 100+ phone calls, putting owners in touch with your little black book full of tradesmen to help them get the house ready, and about 20 visits to said house....many on the weekends.

Yea, it ain't as glamorous as many think it is.

 

If you have 50/50 with your Brokerage you're getting railed and need to find a new one. Also shouldn't pay a desk fee in 2023. I've met my boss in person once. 

Edited April 22, 2023 by toldozer

[LinvilleGorge]

I've had three realtor experiences. Two good, one bad. When buying our first house we got suckered into a bad situation because we were young, inexperienced, and in a tough spot. We needed to find something pretty fast and we were shopping with a family limited budget for the area. Long, pretty irrelevant story of how we got trapped into signing with this particular realtor but she was a completely useless moron. Luckily my wife's coworker was good friends with one of the top realtors in that area and he helped us out. He put us in touch with a great mortgage broker who really saved our ass. He basically operated as our realtor in terms of handling the contracts, date obligations on the contracts, etc. We would've been utterly fuged without him. But we bought a great house with that idiot realtor basically getting a commission to do literally nothing. I did end up reporting her to the local board but I doubt anything came of it. When we sold that house we used the realtor who helped us out for free so he ended up getting his. The house sold quickly at full list at the peak of COVID panic. Just goes to show, do the right thing and help people out even when you have nothing to gain and oftentimes it'll come back to you.

When we bought our current house our realtor was a guy who grew up with my parents. It's a small tight knot community and he knows everybody. Budget wasn't a problem this time around but we had some very specific asks - namely acreage and privacy. We kissed out on our first target despite offering nearly 10% over list. We ended up buying a much better property at asking price before it ever listed because my realtor knew everyone. I actually graduated HS with the seller. She was a nurse working insane hours due to the pandemic, her husband worked from home, and their daughter was doing remote school due to the pandemic so they REALLY didn't want to have to go through the process of showings, etc. They threw out a number and having been shopping the market for awhile I knew the number was more than fair. Wrote up a contract and it was a done deal in less than 24 hours. If it had listed and gone to market it would've sold for a LOT more than we paid but everyone got what they wanted out of the deal so it was a win/win.

[toldozer]

59 minutes ago, LinvilleGorge said:

I've had three realtor experiences. Two good, one bad. When buying our first house we got suckered into a bad situation because we were young, inexperienced, and in a tough spot. We needed to find something pretty fast and we were shopping with a family limited budget for the area. Long, pretty irrelevant story of how we got trapped into signing with this particular realtor but she was a completely useless moron. Luckily my wife's coworker was good friends with one of the top realtors in that area and he helped us out. He put us in touch with a great mortgage broker who really saved our ass. He basically operated as our realtor in terms of handling the contracts, date obligations on the contracts, etc. We would've been utterly fuged without him. But we bought a great house with that idiot realtor basically getting a commission to do literally nothing. I did end up reporting her to the local board but I doubt anything came of it. When we sold that house we used the realtor who helped us out for free so he ended up getting his. The house sold quickly at full list at the peak of COVID panic. Just goes to show, do the right thing and help people out even when you have nothing to gain and oftentimes it'll come back to you.

When we bought our current house our realtor was a guy who grew up with my parents. It's a small tight knot community and he knows everybody. Budget wasn't a problem this time around but we had some very specific asks - namely acreage and privacy. We kissed out on our first target despite offering nearly 10% over list. We ended up buying a much better property at asking price before it ever listed because my realtor knew everyone. I actually graduated HS with the seller. She was a nurse working insane hours due to the pandemic, her husband worked from home, and their daughter was doing remote school due to the pandemic so they REALLY didn't want to have to go through the process of showings, etc. They threw out a number and having been shopping the market for awhile I knew the number was more than fair. Wrote up a contract and it was a done deal in less than 24 hours. If it had listed and gone to market it would've sold for a LOT more than we paid but everyone got what they wanted out of the deal so it was a win/win.

It could be different in Colorado but he could have lost his license here for helping you even without charging.  For future reference if you ever want to be done with an agent even if you have a written agreement just reach out to the broker in charge of the firm. They'll either out right let you out of the agreement or set you up with a better agent from the firm.

[LinvilleGorge]

18 hours ago, toldozer said:

It could be different in Colorado but he could have lost his license here for helping you even without charging.  For future reference if you ever want to be done with an agent even if you have a written agreement just reach out to the broker in charge of the firm. They'll either out right let you out of the agreement or set you up with a better agent from the firm.

Oh, I know. He made damn sure to tell me that he's helping me out as a friend of a friend but I absolutely could not let it be known. Really all he did was give me some general advice then handed me off to a really good mortgage broker who handled the heavy lifting.

The complication was that the realtor was my landlord. The only way I had out of the lease was to use her as our realtor. That was her whole gimmick. 

[toldozer]

16 minutes ago, LinvilleGorge said:

Oh, I know. He made damn sure to tell me that he's helping me out as a friend of a friend but I absolutely could not let it be known. Really all he did was give me some general advice then handed me off to a really good mortgage broker who handled the heavy lifting.

The complication was that the realtor was my landlord. The only way I had out of the lease was to use her as our realtor. That was her whole gimmick. 

Wow she sounds fantastic 

[LinvilleGorge]

9 minutes ago, toldozer said:

Wow she sounds fantastic 

Just fuging awful. Straight up preyed on first time buyers who needed to lease but were really looking to buy and actively tried to get you into contracts with no way out. 

[thefuzz]

On 4/22/2023 at 11:23 AM, toldozer said:

If you have 50/50 with your Brokerage you're getting railed and need to find a new one. Also shouldn't pay a desk fee in 2023. I've met my boss in person once. 

I don't work in that side of the industry....never have, hope I never do.

As to your work environment, good for you.  However, if you are a new agent, who wants help with lead generation, marketing, mailers, etc...then a big brokerage house is what you may want to chase after....or not, there are options.