Why Does Realtor Freak on Commission Split? - Posted by David

Posted by David on April 15, 2007 at 19:50:52:

It seems most posters think I’m off on this one and I appreciate this
feedback. I did sign the contract for the 5%, she’s worked it, and so I
will chill. But I guess it makes me realize that on my next sale I’m going
to try using a flat fee MLS service, offer the 2.5% or 3% to a buyer’s
agent, and do my own marketing. It seems like a high price to pay an
extra $12,000 to a realtor (3% on a $400,000 property) when I think I
can do most of the work myself. Especially if I’m flipping a property
where I may only be realizing a gain of $20K or so.

Why Does Realtor Freak on Commission Split? - Posted by David

Posted by David on April 12, 2007 at 10:59:56:

I’m selling a townhome in the central NJ area and am using a realtor we’ve
known for awhile and she offered a 5% rate, which was great. The homes
been on the market about 3 months and we’ve had to lower the price about
10%. Recently, I decided to supplement her efforts and put listings on
craigslist, run some of my own ads, put up signs. Nobody cares about selling
this place like I do. So I send an email to her saying, well, if I bring a buyer,
will you reduce the 5% to 2.5% as you won’t have to pay a buyer’s agent. Well,
she freaked out in the email response, essentially saying that I signed the
contract to pay the realtor 5%. Then she said that I’m not an agent and she’ll
be doing all the paperwork, etc. Well, I know my attorney can do the
paperwork for maybe $600 at most, not the $8000 or so that the 2.5%
represents. So what’s with the heavy response. Shouldn’t she say, yes, I’m not
giving the 2.5% to a buyer’s agent, you should get it? Isn’t she being a little
overreaching, to put it nicely?

Re: Why Does Realtor Freak on Commission Split? - Posted by Frank Chin

Posted by Frank Chin on April 15, 2007 at 09:04:50:


Been an owner of several smaller businesses, I get caught in dilemmas where I take on jobs to do, which I need to cover fixed expenses, and the customer’s need to cut his costs to the bone.

If I as the realtor, besides waiving my right to the contract, I’m starting agreeing to cut my price by 50% already, and thinking, “I have to put on a happy fact, say ‘what a great idea’, while thinking, ‘I’m doing the best I can, the guy is saying I’m not doing a good enough job’”.

Off course I’ll be ticked off.

It reminds me one time at our business, some guy thought the price of a brake job was too high, so he says “I’ll get the parts, you put it in, and I’ll just pay the labor”.

Of course, the parts the man got wasn’t exactly the right ones, not the brand we normally use and now he thinks the job is taking too long, and wouldn’t we charge less for him helping out too".

In fact, it took us more time to horse around with this customer helping us out. A regular brake job for let’s say $100.00, we would get the parts for $35.00, we mark it up to $50.00, and maybe another $50.00 for labor. We spend time horsing around with this guy to make $25.00, and in his view, helping us out, tying up the rack for over an hour, negotiating, and to make $25.00. More helpful customers like these, the sooner we close our doors.

When I was computer consulting business, some customers think consultants charge too much. So they’ll say, I’ll buy the software, it only takes 15 minutes to load it in, and as you hourly rate is so much, then 15 minutes is how much"?? Knowledge of computer software, etc, never register on their minds.

With hourly rates of $75.00, would I take jobs to make $20.00 each running around and “not freak out”. I might as well run a hotdog stand.

Did I freak out?? Yes.

You have to remember businesses have business models, and guys charging 5% have a certain overhead. I got realtors in my area advertising themselves as 2% brokers, and have the corresponding business model.

Of course, they’ll probably freak out if you tell them, “let me help out with Craigslist if you charge 1%”,

Talking about business models, I did get some guy dropping by, charge me $20.00 to put in a floppy drive for a PC at my business, because everybody else wanted too much. He actually is an IT guy working for a contractor doing work for the local school system, drives around in a truck all day, and sneaks in to my place, on his bosses time, to put the drive in. Because our equipment was too old, I was afraid if I took things apart, it work work. Sure enough, we had problems, we called him to squawk, and he had to come back, give us a new keyboard, mouse, free of charge, all for the $20.00. Did I take advantage of him?? Sure did.

But as I said, it’s all in the business model. He made $20.00 extra for himself. Someone doing it legitimately can not stay in business spending almost 4 hours, and give away keyboards to boot.

BOTTOMLINE, if you choose a full fee broker, negotiate, but be prepared for them to not cut rates. What we did in these cases is negotiate 90 day listings. We ask them, list it at a price where it will sell in 90 days, and we’ll talk them about extending it if we feel you’re doing an adequate job.

My 2 cents.

Frank Chin

Why Does Realtor Freak on Commission Split? - Posted by Rich

Posted by Rich on April 13, 2007 at 22:52:31:

Its probably because she was basing her effort on a certain return and was trying to find a buyer so she could keep the whole thing. Be careful, some jurisdictions do not permit paying of finders fees or commissions to anyone who is not licensed, so check this out.

Personally, I would start looking for a replacement agent or go to one of those “help you sell” places that can get the MLS listing without the hassle. Unless she’s doing open houses, the paperwork is not worth all that much.

Re: Why Does Realtor Freak on Commission Split? - Posted by Dave T

Posted by Dave T on April 12, 2007 at 17:40:14:

You did sign an Exclusive Right to Sell agreement with your listing agent, right?

If you read the agreement, you will find a clause that says you owe the agency the full commission regardless of the procuring cause. So, even if you find a buyer, you have already agreed to pay the listing agency a 5% commission.

Your agent sees you trying to weasel out of your contract obligation after investing a lot of time and out of pocket money in marketing your property, so I don’t think you should be surprised that the agent freaked.

Your tenant is your real problem here. Your tenant is blocking your sale because you have a tenant in the first place, and, the tenant’s clutter detracts from the property’s presentation. Remember, the buyer has to honor your tenant’s lease so potential owner-occupant buyers who want would want the property immediately are eliminated from your buyer pool.

I suspect you will need to sweeten the pot to get this property sold under the current property conditions. Raise the commission by offering a 1% bonus to the buyers agent, and/or offer closing cost assistance to the buyer. Raise your listing price back to $399K (as long as the comps will support this price) so you can afford the concessions without lowering your net.

If the tenant’s lease will expire soon, you may be better off getting the tenant out of the way, then professionally staging the property to sell.

Re: Why Does Realtor Freak on Commission Split? - Posted by Eric (MI)

Posted by Eric (MI) on April 12, 2007 at 16:01:52:

I have only sold a house via a Realtor one time but right from the beginning I made it clear I would only list if I didn’t have to pay if she wasn’t the procuring cause of the sale. I only put ads up at my work place on the employee bulletin board and told people I knew so it was easy to tell if she was the reason the house sold or if I was. Ended up a lady I work with called from my ad posted by the time clock and I didn’t pay a fee. Only sees right to me.

If I had not asked for the concession up front though and I sold it I wouldn’t fight over it simply because I did agree to pay the fee. I try to negotiate for everything and anything though :wink:

Re: Why Does Realtor Freak on Commission Split? - Posted by Billy

Posted by Billy on April 12, 2007 at 13:56:08:


Kylee made some good points, and I would like to step into your Realtors shoes for a second. First I gave you a discount already. I’m not trying to sell a nice single family home in a hot market, I’m basically selling a condo(even if it is a townhouse) in a slow market, and I’ve already invested 3 months of my time and now your trying to cut into the deal we already made.

What I don’t know, first your market place but I think at least condo prices are dropping and if your pricing above market your price gets higher in relation to the market as time goes by and thus less attractive to buyers as time goes by.

What I do know, if it were me when I gave that listing I would have offered 6 percent because of market conditions and required the agent to offer selling agents 4% because in most areas 80% of the current buyers are working with an agent and offering only 2.5% instead of the 3% most agents are looking for only reduces my access to the current buyer pool.

Secondly, due to market conditions I would have put in the listing that if I found the buyer the brokerage fee would only be 2%, 1% for doing the buyers paperwork, and 1% for doing my paperwork. 4% goes to me for finding the buyer. Most knowledgeable agents know you will seldom find the buyer first and its an acceptable risk.

Maybe she will cancel the old listing, never give more than 3 months, and try it the way I suggested after doing an up to date cma and pricing it right.

Billy, for this post anyway

Re: Why Does Realtor Freak on Commission Split? - Posted by Kylee

Posted by Kylee on April 12, 2007 at 12:15:42:

I’m a Realtor. I like this board, as the discussion helps me help my clients, but I’m sure you’ll get lots of anti Realtor comments.

Not sure of all the laws in your state so hard to be exact, however…in my practice I NEVER charge the “full commission” if I am the only agent. The caveat is that if I am the only agent, whether the seller refers me to a buyer, or I bring the buyer, is that I reduce my commission to 4 or 4.5 %. That’s down from 5 or 6%.

The naysayers here will tell you Realtors do nothing, but I know how hard I work, and at 2.5%, I also can’t cover the liability costs (oh yea,and the lord…my broker…won’t allow me to go lower than the 4%).

If a client wants to represent themselves and is willing to sign every pain in the ass piece of paper to that effect, I will run paperwork for my “half”, but offer no advice nor interpretation of the contract.

In your case, you may be tied into that 5% as that is what the contract states. Usually the reduction is something that is negotiated at the time of listing a property. You might try to get an addendum to the listing agreement stating that if you bring the buyer, your agent will do the transaction for 4%??? And you might want to have the buyers and the info lined up before you negotiate that reduction, as that’s a good negotiating tool (to already have the buyer ready for him/her).

Re: Why Does Realtor Freak on Commission Split? - Posted by David

Posted by David on April 14, 2007 at 16:59:58:

Thanks, Rich. That must be it, that she was thinking she’d find a buyer
and was salivating about the whole thing. Because otherwise if she’s
thinking she’s going to give 2.5% to a buyer’s agent, then what gives if
I bring the buyer and she gives the 2.5% to me, or some part of that. I
know I could pay my attorney to do the paperwork for probably $600,
not $8000. We’re looking into some other options now like refinancing
the place, pulling out cash or lowering rate, and taking it off the
market. Right now the market sucks big time, but it’ll come back in a
few years. Meanwhile rents are very very strong–so why fight against
an overwhelming tide. Better to swim with it, if we can pull off a good
enough refi. I have to admit I’d find it satisfying to tell the realtor that
we’re pulling it from the market. Her response hasn’t endeared her to
me, that’s for sure.

Re: Why Does Realtor Freak on Commission Split? - Posted by David

Posted by David on April 12, 2007 at 16:17:14:

Appreciate all the feedback. I’ve been very aggressive in trying to sell
this unit, listed unit initially at $415K, then within a month lowered it
to $399K. Then as things sat, I lowered again just recently to $385K.
So I’ve been very aggressive and the realtor has been good about
having many open houses. We’ve had a good amount of interest, but a
2 different buyers bought other units in the complex. The problem is I
have a tenant who, while keeping the unit fairly clean, still has a good
amount of clutter–in other words, the unit doesn’t look in tip-top
shape which is critical in this market. I’m not unhappy with my realtor’s
efforts. Basically, what people are saying is that once I sign the
contract, it’s sour grapes to try and change it. Seems like the time to
make a deal about bringing my own buyer is in the beginning. I’ll keep
that in mind on my next sale.

Re: Why Does Realtor Freak on Commission Split? - Posted by Natalie-VA

Posted by Natalie-VA on April 15, 2007 at 09:36:31:


You said in an earlier email that you were happy with her efforts. Open houses take a lot of time and usually don’t sell houses. Agents do them to either pick up more clients, or just to make their sellers happy.

A deal is a deal, it sounds like you’re trying to go back and renegotiate the deal. The agent should be peeved, not you. I don’t defend agents too often, but this lady’s seems to have spent a lot of time trying to sell your overpriced, cluttered property. How would you like it if your boss came to you and said, “Ya know, we really don’t want to pay you for all that work you did last month. We just don’t need it after all.”

Oh, and by the way, do you really think an agent that negotiates away half of her commission would do a good job negotiating for you?

I think you should lighten up on the agent and stay in your contract for the agreed upon time.


Why Does Realtor Freak on Commission Split? - Posted by Rich

Posted by Rich on April 13, 2007 at 22:58:41:

The tenant is a problem. As long as you have a tenant you are marketing solely to investors. And I doubt very much that a $385k or so townhouse yields enough rent to attract an investor. So either you lose the tenant (I paid mine to move when we decided to sell) or you lower the price to where an investor can cover their holding costs. That might be quite a bit lower than you’re willing to go. So, its lose the tenant or sit on the market for a long time.

Re: Why Does Realtor Freak on Commission Split? - Posted by Natalie-VA

Posted by Natalie-VA on April 13, 2007 at 08:09:52:


In addition to the tenant’s clutter being an issue, you need to be priced better than the other units on the market. Also, if your agent is only offering other agents 2.5%, they might not bother showing yours. Around here, usually, when the commission is only 5%, the agent still offers 3% to the buyer’s agent. Just remember, if a buyer’s agent has plenty of houses to show, they’ll show the ones that pay them more.