Real Estate Selling Agent Commission

[OilUzer]

Anyone has any experience with a %1 selling/listing agent vs. a full commission agent?

The seller pays for both the seller/listing agent and the buyer agent.

The buyer agent typically gets a full commission which is %2.5 in our area. I understand that because they do most of the work.

Not sure what the seller agent does besides pictures and listing the house? I talked to a full commission (%2.5 listing) agent that seems to be selling (as a buyer agent) bunch of houses in our area and asked him what's the difference between your agency and a %1 agency if I want to list my house? He said "you get me" and changed the subject. he is selling good but his agency is not the one listing the houses. Maybe one or two were listed by them.

Curious if there is any benefit of paying extra %1.5 to list with a full commission vs. places like Redfin and others that charge %1?

 

[grisby]

Never heard of it. In my area the selling agent gets 6.25% which is split with the buying agent but I don't know the percentage of the split. Learn something new every day.

 

[OilUzer]

Never heard of it. In my area the selling agent gets 6.25% which is split with the buying agent but I don't know the percentage of the split. Learn something new every day.

Sounds about right. Typically used to be %6 divided by the two agents or sometimes the buyer agent get a little more like 4 and 2.

Nowadays in our area %5-6 total is more typical. Split by agents.

Then places like Redfin and others came about and advertise %1 listing fee. Plus %2.5-3 for buyer agent for total of %3.5-4 fee.
I think if Redfin finds you a buyer, they only charge %1 for that also.

 

[grisby]

Thanks for the info.

 

[Speedbird001]

6% here in Virginia. I think you get what you pay for and the difference in service level will pay for itself. I'm selling my high end of the middle house this summer and going the full service route... My goal is maximum effort by the listing agent, maximum "Draw" for buying agents and highest gross I can get (Plus I need some concessions on the back end; specifically rent-back until my new construction house is ready)

Perhaps if I had more flexibility on the back end, or it was a better market, or I had the luxury of time I would go for the friend/family discounted rate, but not this time.

 

[CarLuver]

Depends on how the agent is set up for commision. many new and inexperienced agents work for a real estate broker or company. the broker will feed leads and allow them to use the MLS. they split the % with the broker.

once they get established and have their own clientle, they can go on a full commision system . they do though have to still be with a broker or real estate company, they will have to pay a monthly fee to use the MLS . This is pure no help anything . you find your own leads etc.

using a full service agent gets you contacts . the selling agent sometimes knows folks looking for a home that otherwise would may not see your listing . also, if the selling agent both sells the property and it also the buyers agent its double pay for them .

this is how its is in my state >WA

 

[OilUzer]

@CarLuver

I'm also in WA.
I thought selling agent just list the house on MLS and from then on, MANY other agents will see it and advertise/show it to their clients (the buyer). Basically thinking that after listing, most of the work is done by the buyer agents. that is only one listing agent vs. many other buying agents or people who find the house themselves and then contact an agent. That's how I bought my house.

Maybe the listing agent adds more value than I think. We had couple of houses in our neighborhood listed by Redfin and another %1 realtor and one was just recently sold and the agent that I was talking about was the buyer agent. I called him last week and he told me that he is a %2.5 listing agent (vs. Redfin %1) and I asked what's the difference between you and Redfin, he didn't provide a good answer. Maybe I need to ask him again. lol

 

[CarLuver]

Sometimes the listing agent will have special relations ships with agents that might help push along a sale. tecnically not ethical, but not unheard of. and some agents might have out of state or country folks looking for property . a listing agent also can screen out unqualified folks and deal with paperwork. job bob making $15 and hour but wants to see your 3 million dollar house may or may not be wasting time.

that commision also pays for advertisement stuff like photos etc . also for staging , especially in higher end houses. my realtor friend told me before it cost him $400 for a photographer to shoot a house.

also, the commision is negotiable. in this kind of slow market you might find an agent to do it for less than the normal rate. if you are both selling and buying a home and using the same agent to do both , they will almost for sure be more apt to cut you a discount

if you ever tried a FSBO home sale before, you will realize there is more work than you think in selling a home.

 

[Lubener]

The problem I see is there is little incentive by both agents to spend a lot of time with the sale. The more money the agent makes, the higher attention which will be spent on the transaction.

 

[billt460]

When we sold back in 2019 the real estate fee was the typical 6%. Which, as was mentioned, is split between the listing agent, the selling agent, and the real estate company. These percentage splits vary depending on the "sellability" of the home, price, area, time on market. As well as how "hot" or "cold" the market is at the time of sale.

It so happened our listing agent also owned the real estate company, and sold the listing himself. So he collected the whole enchilada. But he really did a good job with advertising, prepping the house for sale, etc.

There are also other fees and costs associated with the sale that up the fee to over 6%. (The total fee can be up to 7% to 7-1/2%). Again depending. Things like getting a plat of survey to make sure everything added to the home was / is permitted, (We added a concrete driveway extension and a block wall). Clear title search, etc.

Also cleaning costs if the home has been lived in for a long period. My garage floor had several oil stains that required pressure washing, along with furniture indentations in the carpet that had to be lifted, carpet cleaning, and on and on. My house was empty and vacated before we put it on the market.

It all paid off because it sold for $7K over asking price, due to 2 couples getting into a "bidding war" over the purchase on the same day.

 

[Dave Hess]

$7K or $70K over asking price ?

 

[billt460]

$7K or $70K over asking price ?

$7K.

 

[Donald]

I think in many cases the selling agent does little more than get it listed in MLS. Once there is a potential buyer the selling agent "works" the deal.

We sold our NY house and listed with a selling agent that went with 4% (I think) if the house was over $700K. The buyers agent got normal commission but seller got less than half.

I think and hope that the internet will make significant changes into the whole MLS and buying/selling of house. More than it's done already.

I think most people in real estate are borderline dishonest and will say anything for a sale.

 

[tbm5690]

A local agent can run open houses for you in trying to sell if needed, vs what I would assume is a remote agency for the 1%.

 

[alarmguy]

Anyone has any experience with a %1 selling/listing agent vs. a full commission agent?

The seller pays for both the seller/listing agent and the buyer agent.

The buyer agent typically gets a full commission which is %2.5 in our area. I understand that because they do most of the work.

Not sure what the seller agent does besides pictures and listing the house? I talked to a full commission (%2.5 listing) agent that seems to be selling (as a buyer agent) bunch of houses in our area and asked him what's the difference between your agency and a %1 agency if I want to list my house? He said "you get me" and changed the subject. he is selling good but his agency is not the one listing the houses. Maybe one or two were listed by them.

Curious if there is any benefit of paying extra %1.5 to list with a full commission vs. places like Redfin and others that charge %1?

I was a top performing agent in the NY metro market as high as top 13 out of 5,500 agents. My main course of business was marketing homes (listing agent) many homes I also sold myself but I typically didnt make a habit of running people around. I have moved out of state 15 years ago but around 2002 or so at any given time I was tracking my listings and had roughly up 11 million dollars in homes in contract and waiting to close at any given time. Everyone knew me as well as the law firms doing the closings. IT was stressful but fun.
Keep in mind the real estate industry is governed by the individual state.
Being I am passionate about the subject its my hope that my words come out the right respectful way.

1. Buyers agent works for the buyer, their fiduciary responsibility is to find out everything about your house, your situation and negotiate the best possible price for the buyer. Their job is to not disclose anything negative about their buyer to you or your agent.
In addition the buyer agent is to disclose any information they can find about you which may enable to allow their buyer a better price.

2. Seller agent works for you, their fiduciary responsibility is to you, to find out everything they can about the buyer, get you the best possible price for your house. They can not disclose any motivation on your part but anything they can find out about the buyer must be disclosed to you.

Buyer agent commission of 2.5% sounds typical and in here you are comparing a 1% discount broker or 2.5% full service broker.
Ok discount vs full service That is up to you. Buyers agent does not do most of the work, let's clear that up, both tasks are about equal in the industry. A listing agent pretty much controls everything that takes place before and after a buyer is found. Representing you as far as a home inspection report, meeting bank appraiser and overcoming any and all issues that come up. There is A LOT of value in a knowledgeable listing agent, with the right connections and services to get your home marketed and sold.

A discount 1% listing agency typically exposes your house on websites, will provide flyers and see to it once a buyer is found that you get to a successful closing. The 1% broker is no different than a discount automobile brake service. They look to get the segment of the market in their door and once in the door, watch out. Some will gets brakes at a discount price but the upsell pressure is there.

Dont think for a minute that any respectable real estate agency can survive on 1%. It's a shady business with 1%. Same as a $99 brake job. They may hold back buyers unless they find them on their own, discourage others showing the house and hoping they find someone to buy the home on their own and once they do they will convince you that is the best price you will get.
Let's be smart and think for a minute where is the incentive to sell any product for 1%? It doesnt exist.

A full service broker exposes your home on the MLS system (insist on that from day one, no exclusive listing EVER) hires a professional photographer and produces proper marketing material. National chains are best at this, their agents typically better trained and access to better resources. This stuff cost money and 2.5% is VERY reasonable vs a discount broker getting in your door cheap only to offer extras and even more so if your home doesnt sell.
One other question to ask yourself. how can you know what the best price for your home is, if much of the public doesnt even know its for sale???? Being on the MLS system is key, having a good agent that properly produces professional photos is key, as well as marketing materials. Once a buyer is found, the work begins.

SO in your case only 5% to sell a home full service, full exposure on the MLS system, no games, no upsells? That is a bargain to me and in MANY cases more than makes up for any difference in commissions and quite honestly might get you more money, how can you know if your getting top dollar if not fully exposed with every agency showing the home and the MLS system?

We have since moved south 15 years ago and I got out of real estate, I was with a national firm which I think is important vs no name agencies. Anyway, 15 years ago we moved south, last Oct 2022 we sold our home because of my experience I sort of directed my own sale, I told the agency we hired what we wanted the home listed for which was above what they suggested but their method was correct so that wasnt a negative.
We listed our home with the agency, at the time of the listing he really wanted my business as they were newer to the community and looking to establish his/her names over the other local agents.They were not new agents however. I chose them because I looked at their marketing and their AMAZING professionally shot photos of other listings. At the time we listed he only wanted 5% which was great, 2.5 for him/her and 2.5 for the selling agent. They also did/paid for a pre inspection of our 2 heat/air systems and termite inspection before listing the property in case there were any issues it could be cleared up first.

I insisted on a higher commission and I wanted the selling agent to be paid 3% as long as he/she was ok with only 2.5% on the listing side. Of course they could also sell the home and make the full 5.5% He didnt feel it necessary but I did.
Offering 3% to all agents on the MLS creates an incentive, more so with experienced selling agents. Consider it a sales bonus.
Our home sold the first weekend with multiple offers and above asking price and above their recommended price, we closed not quite, just shy of 4 weeks later at one of the highest prices ever for our area.

PS, unrelated but there is always a comment from a few people, some even in here. I love how other people want to decide what other people should get paid and make an income to support a family, laughable, more so in industries they never worked.
The real estate business is no different than any business, 50% or more fail the first year or two. Its amazing the people who come through the door thinking they "have it made" (just like some comments in here) only to find out how expensive it is to be self employed and your only income source is what you generate. The ignorance drives me nuts to this day! *LOL*

Pss. Out of all the states in the USA keep in mind comments in here are a guide to what is out there, every state has its own laws that govern real estate AND agency. (who represents who) There are places that all agents still can work for sellers and the buyers are just customers. Thought that was changing a long time ago, some might still exist. Since this is a global forum, know your specific area. Most are similar now but need to confirm.

 

[Tharber]

There is no way any broker can do a respectful job of selling your home for 1%. I just passed 37 yrs in business and there is just no way that type of company is putting forth the marketing needed to get you top dollar.

You also need to consioder what the co-broke fee is. If you sign with a discount broker, they are discounting the commision that will be received by the buyers agent. Given the oppurtuity to show your house at a reduced commison or one with full commmsion, which one do you think will be shown more? I could show a listing at 2.5% or 1.0%, thats a no brainer.

A sellers agent is going to control the deal and weed out tire kickers and unqualified buyers. Its their job to get you top dollar, no matter what. They are commisioned salespeople so it is to their advantage to sell for top dollar to get paid more. I don't know what state you are in but in Florida, seller picks title company so that is a task of the selling agent to coordinate. If you pick the right agent, all you need to do after showings and inspections is show up to closing.

A buyers agent has the same goal, make more money so the thought that they are going to negotiate you the absolute best deal is misleading. A true buyers agent has a contract with his/her buyer stating that they will be paid X% no matter what, its a way to lock in your buyer to onoly use you for the sale.

Some states, like Florida, have transaction brokers. That enables us to work both sides of the deal but we can not tell a buyer what a seller will take or a seller what the buyer will pay. We must treat each client fairly and responsibly.

I am a commercial only broker, a CCIM. I prefer to list properties versus buy but when I do I will 99% of the time also procure a buyer just from my extensive contacts. I do reduce my compensation if I handle both sides since I'm really not dealing with anyone else to screw the deal up.

My last comment will be that the discount brokers, are dicounting their fee's because they are not good enough to compete with other brokers and can not gahter the same results.

 

[alarmguy]

....

My last comment will be that the discount brokers, are dicounting their fee's because they are not good enough to compete with other brokers and can not gahter the same results.

Well said, I guess I could have cut my post above by about 400 words *LOL* to get to the point!

 

[DwightFrye]

I used one of the 1% discount agents when I sold my condo 4 years ago. I live in California where prices are extremely high and at the time I was selling the average time on market was 30 days.My opinion was that agents were making way too much money for very little work.

And I got what I paid for. He was just about worthless. Took a bunch of photos and put it up on the MLS service. I was seeing other condos that were literally right next to the freeway and with no garages selling rapidly while my unit in a better complex too about 60 days and underwent several price reductions. I asked the agent if he was in communication with other agents in the neighborhood and was pointing out the advantages of my property and just got a runaround answer.

I would have pocketed more money by using a more active and aggressive agent instead of a lazy one who did the bare minimum.
I will think twice before taking the budget approach again. The clown even had the gall to call me because the valve to the gas furnace was shut off as I always did at the beginning of the summer and the buyer's inspector complained that he couldn't check the furnace operation. He wanted me to make a 200 mile round trip to come and open the gas valve. Are you kidding me ?

But in a real estate market where the median price of a home is over $850k and the average time on market is only 30 days, agents aren't working very hard for their 6% and don't deserve that much of a commission.

 

[alarmguy]

But in a real estate market where the median price of a home is over $850k and the average time on market is only 30 days, agents aren't working very hard for their 6% and don't deserve that much of a commission.

Good post but this is over the top. Deciding the income of other people. Laughable, yet some of us think it's ok to pay someone making coffee at Starbucks $20 an hour plus health benefits PTO, OVERTIME, Paid social security tax of roughly 50% and other perks. and an income of 41k a year for making coffee.

Real Estate agents might make that after paying their own health insurance and all the expenses of their vehicles, costs of marketing and every single aspect of being self employed, including the government taking over 12% self employment (social security)tax right off the top.
Working all hours of the day and night, forget being off holidays or any normal schedule and ZERO job security in knowing when the next sale will come through.

Oh well, Its all good and seems to be a jealousy in the industry for decades and decades. Only thing is 80% of the agents out there wish it was true, if they had to rely on their income only I am sure they are on food stamps. Only 20% make a sustainable income and only 10% (all rough numbers) really make it to a truly fulfilling career choice. I just find it amazing all the money made in this world, one of the most significant assets anyone has in their lifetime seem to think some agents make too much money. Yet maybe the ones that make big money is because they know what they are doing and they are in demand.

The word "salary" is incorrect. Agents are self employed, they are not paid by a company. Every expense is their own expense. No company benefits, no health, no 401K no PTO, no O/T and over 12% self employment tax.

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[billt460]

......But in a real estate market where the median price of a home is over $850k and the average time on market is only 30 days, agents aren't working very hard for their 6% and don't deserve that much of a commission.

Here I must agree. In high priced areas in hot markets, homes sell themselves. And 6% to sell a 7 or 8 figure home seems a bit excessive. I think there should be some type of correlation between, selling price, and time on the market, that would better determine the commission that is paid by the seller.

The cheaper the house, and the longer it remains on the market, (determined by price as well as market temperature), the higher the commission should be. Simply because the agent has to work much harder to sell it. And the lower selling price means much less of a commission when he or she does.