I know this is dangerous but... - Posted by Mike

Real Estate Investing
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Posted by rm on October 16, 2003 at 21:14:46:

>>In my response to Tony’s post I indicated I would pay the agents gas but I was just making a point that I would only pay them what their time was worth.>>

You’re not paying an agent for their time, your paying for the results they can provide.

If you were paying for their time, then you’d have to pay an up-front, non-refundable retainer.

There are fee-for-service brokers out there, but they’re very few and far between.

To determine if the fee to list is worth it, try selling on your own for 4-6 weeks.

If it sells- great- you just saved some money. If it doesn’t work out, then maybe the commission is worth it.

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I know this is dangerous but… - Posted by Mike

Posted by Mike on October 15, 2003 at 14:37:30:

How can I minimize agent commissions while also listing on the MLS? Per a suggestion from another CREonline participant I will be seeking an agent that will list my property on the MLS for a flat fee. Can I be listed on the MLS and also control what I am willing to pay to buyers agents? I am open to “creative” suggestions.
Thanks,
Mike

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Re: I know this is dangerous but… - Posted by jasonrei

Posted by jasonrei on October 17, 2003 at 21:58:20:

I list most of my houses on MLS for a flat fee, and I pay 3% to the buyer’s agent.

This morning I was driving to a sale closing. I’d put a property up for sale about three weeks ago, but didn’t post it in MLS (I usually let it sit a couple of weeks first, in case someone is interested that doesn’t have an agent). A lady called me, but she wanted to use her agent, who’d been showing her houses for a while. I said that was fine, and I told the agent I’d pay her 3%. Basically this agent did almost nothing throughout the process. I got all the docs to title, to the lender, etc. This morning, I was thinking how it must be nice to do nothing and still get a nice fat commission. But you know what? That agent did do something. She didn’t steer that buyer away from my house. As much as I don’t like most of the agents I deal with, they provide a valuable service to me that is easily worth the 3% I pay them.

Truth is, I only like a few of my prospects, few of my contractors, and none of my employees. But they are all on my team and we scratch each other’s backs.

BTW, I cleared over $23000 on my sale today, after ALL expenses (except taxes). Owned the house less than 3 months. It’s so nice when a deal goes better than you’d hoped!

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done that - Posted by Nancy PA --CA

Posted by Nancy PA --CA on October 16, 2003 at 18:38:49:

I did that a couple times and works for me. The point is save Seller’s agent’s commission (by paying a flat fee avg 400-500) but DO NOT try to cut commission on Buyer’s agent, otherwise no one is going to show it. It will not take much of your time, just have a few open houses on weekends(advertise it on MLS) then put a lock box, you’ll be the person taking appointments and the Buyer’s agents will show the house. not much work at all. Good luck!

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Re: I know this is dangerous but… - Posted by Nate(DC)

Posted by Nate(DC) on October 16, 2003 at 12:09:47:

If you’re not going to pay a competitive commission to buyers agents, don’t bother listing it in the MLS. The reason buyers agents will show your house is because a commission is being offered. If not, or if the commission is lower than other houses in the system, then they will show those houses and not yours.

NT

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don’t be cheap - Posted by CS

Posted by CS on October 16, 2003 at 07:18:42:

In my neck of the woods I can have a house listed in the MLS on a flat fee listing for $299.

Would you rather spend your time showing a house that you are trying to sell or use that time for other things?

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Re: I know this is dangerous but… - Posted by Eric - GA

Posted by Eric - GA on October 15, 2003 at 14:58:04:

You can minimize your expense with a flat fee listing, typically $300 - $500 in my area. Better be careful messing with the selling agent’s commission though. The whole point of putting a house on the MLS is to advertise it to agents who are motivated by the commission you are offering. If you show up offering 2% or 2.5%, they’re gonna drive their buyer right by your house down to the one that’s offering 3%-3.5%.

Eric - GA

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Re: I know this is dangerous but… - Posted by Mike

Posted by Mike on October 15, 2003 at 15:04:15:

Thanks Eric- I figured this was the case but I am always looking for a way to maximize profit! I appreciate your honesty.

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Realtors maximize profits (and I don’t like them) - Posted by Eric - GA

Posted by Eric - GA on October 15, 2003 at 21:50:51:

Also, although they usually aren’t my favorite people do deal with, realtors can help you maximize your profit, like you are saying. How is that? Chances are that you will be able to sell your house quicker using an agent. If that makes the difference between selling in 4 months and selling in 3, then that gives you the opportunitiy to do 4 deals per year instead of 3 with the same money…which, if you’re doing the right deals, should be more valuable to you than avoiding half a commission on some of your sales.

And remember, about all you can save is half a commission. Even if you do a strict FSBO with No Realtors involved, then the buyer who is willing to deal with a FSBO is going to want some of the savings you’re getting to end up in their pocket too…otherwise, they might as well pay full price for another comparable house and have someone representing them included.

(Please note that the statements above don’t mean I like realtors. But, until someone comes up with a better system that is accessible to independent sellers and buyers, they will remain a necessary evil.)

Eric - GA

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Re: I know this is dangerous but… - Posted by tony

Posted by tony on October 15, 2003 at 20:18:55:

If you want to max your profit, sell it yourself. Advertise…spend some money. Show the house. If you are listing a house…offer max commissions…so that your house will be shown more. Stop being so cheap. Remember,…most of the time…you get what you pay for!

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Re: I know this is dangerous but… - Posted by Mike

Posted by Mike on October 16, 2003 at 12:36:10:

tony- Thanks for your response. I don’t think this is being cheap, I think it is being wise. Let’s assume I list my property on the MLS for a flat fee. The next day a customer walks in to agent smiths office and says he wants to buy a house. The agent sees my listing and shows the property and the buyer puts in a bid. Are you telling me that I am being cheap because I do not want to pay agent smith thousands of dollars for driving a buyer to my property? I will pay for his gas but that is it. Unless there is something more I am missing here this seems wise to me, not cheap.
Please convince me otherwise, I am interested in learning how a agent earns the commission on the property that he has not even listed.
Thanks,
Mike

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Re: I know this is dangerous but… - Posted by tony

Posted by tony on October 16, 2003 at 20:11:35:

Mike, you talk like a beginer! Gas??? Cab Drivers?? … You can hire a cab driver to ride any jerk to see your house, muddy up the carpet, bring their kids over and crayon the walls, etc. You pay a Realtor, to find a buyer who will purchase the house and close the deal…PERIOD.

Listen… the fact that you found a agent who will list the property for a flat fee,…is great. Listing a property is not that much work…the work is in selling the property!

Find a good agent who works your market niche…give him a good commission and watch your property sell 10 TIMES faster! Otherwise…be cheap and sell it yourself!

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Re: I know this is dangerous but… - Posted by E.Eka

Posted by E.Eka on October 16, 2003 at 14:29:36:

You’re missing the point Mike. The point is if the Realtor is not going to make ANY or very little money on the showing and sale of your house, why would he/she bother showing it? All that work he did would be for free. No one WORKS for free. Usually when a realtor sees a property that is listed by another agent, the realtor and that agent agree on a commissions split. If you list on your own, and the realtor has another house that is comparable to the one you listed, guess whose house gets shown?? That’s right, his, not yours.

You’re somehow under the assumption that Agent Smith HAS to show the prospective home buyer YOUR house. He doesn’t and he won’t. That’s a guarantee. Now if the customer brings it up, that’s a possibility but in order for the agent to facilitate the sale, he/she would and should be compensated. I also guarantee you that the agent would try to steer the customer away from your listing to another property or even bad mouth your listing etc. The customer or you wouldn’t know otherwise.

The point everyone is trying to make is that you’re trying to move a house. As a result you’ll incur certain expenses related to that. Would you rather sell the house yourself while you wait 4 months to close? the whole time you’re making mortgage payments? Or employ the help of a realtor to sell it in half the time and be done with it? You obviously would have to factor in your costs for commissions, but it would be a viable selling expense.

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Agent Smith - Posted by tray giddens, Houston

Posted by tray giddens, Houston on October 19, 2003 at 06:50:52:

Agent Smith , that’s pretty funny…Mr. Anderson, i agree, agent smith is looking at the bottom of the mls sheet for commissions numbers… he’s also looking at the comments to see if they say to contact the homowner directly…

Mr. Anderson,
there is also a little matter of the labor involved and who is responsible for following up to make sure the inevitable problems get dealt with…is your flat fee lister going to spend hours handling a divorcing couple delicately to get your deal closed?
i wouldn’t , i’ve got my money and i’m out marketing for more listings that i don’t have to worry about.

as an investor, you want the realtor to find you properties at 65% ltv, then when you buy it, you want the realtor to flat fee list it for chump change or slash his commission??? Guess what , who gets that next sweet deal?

time is valuable…if you are taking up my time to make money you are going to be charged and you should be willing to pay… if you want me to take your money up front and care not a lick about your property selling , i’ll do that too. if you want me to tell you how to find properties and submit offers directly, i’ll do that…i’ll do as little or as much as you want me to do as long as i think i’m going to be appropriately compensated for my time and effort.

you can have it the jack in the box way with pickles on top every time or you can have something nicer, custom taylored for your appetite.

but put all that aside,i get emotional about it every time i get into commission cutting…

it costs money to maintian the giant system that facilitates the marketing and selling of real property… you have the MLS , the Supra Key’s, the scheduling services the data entry…and every one wants it but nobody wants to pay for it…read the posts on here, “where can i get free or cheap ______?”

if you look at this like a business, consider the commissions fee for services…realtors, appraisers, businesses and investors all use the mls and we all pay the fee’s…if you got a beef with paying a realtor an “unjustified” fee, just think to yourself that it’s your contribution to making your job as an investor easier by maintining the data infrastructure the appraiser will use to get you full value for your next deal.

in business, i think it pays to be frugal , but you can’t afford to be cheap…

think to yourself, would you want to be the waiter at a restaraunt for someone like you?

Tray Giddens, Realtor
Houston, Texas

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Re: I know this is dangerous but… - Posted by Mike

Posted by Mike on October 16, 2003 at 14:45:50:

Very well put, thank you. In my response to Tony’s post I indicated I would pay the agents gas but I was just making a point that I would only pay them what their time was worth. In my original message I asked about minimizing the costs. From everyone’s feedback (thanks to everyone) even paying a lower commission will decrease my chances of selling.
BUMMER!!!