<p>Trooper and all</p>
<p>Good question.</p>
<p><em>"As we all know, the industry standard real estate commission is 6% of the sales price. Typically this breaks down to 3% going to the listing agents broker and 3% going the the buyers agent broker. The 5% commission seems to be gaining more popularity as sellers become more informed."</em></p>
<p><strong>ALL COMMISSIONS ARE NEGOTIONABLE</strong>. I actually saw more lower commissions when the market was hot because there was more competition to get a listing. 5% was becoming the norm, at least in the higher end, with a 2.5% per side. As the market got tighter the 5% was split 3% selling agent 2% listing agent. Now with too many listings and too few buyers I see an increase of 3% or more to the selling agents. We don't see the amount to the listing agent in the MLS. We only tsee he selling side but it seems to be around 3%.</p>
<p><em>"Perhaps you can explain how a seller might negotiate their commission rate when using you for a listing."</em></p>
<p>Being a marketing type, I had a program I called a "VIP Client Program" that I offered up front of 5% with 2% to me and 3% to the selling agent. If the listing was above 1 mil I would do 1.5% to me and 3% to selling agent. I also included the cost of the Home Owners Warrenty. I offered this without being asked since some people don't feel comfortable negotiating.</p>
<p>I actually worked more with buyers and had a rebate program of 10% of my net commission up to a million dollar sale and 15% on sales above that as a credit in closing costs. For this I asked for a Buyer/Broker agreement and did not rush buyers to make decisions. If a buyer wanted to find their own property and basically have me negotiate the sale and follow the escrow then I would increase the rebate based on the buyer's amount of involvement. I would also do this on a fee basis. </p>
<p>I did not negotiate beyond that because the liabitity of a transaction and costs did not make it worth my time. But that program beat most qualified agents out there and saved both the buyer or seller money. I also had a "cushion" if something was needed at close to make the deal work.</p>
<p>"<em>I'm also very curious to see if you refuse to show your buyers homes that are only offering a 2% commission cut to you as the "buyers agent".</em> </p>
<p>Of course I would show 2% listings because I am a "damn fine guy". LOL</p>
<p>My standard way of working with a buyer was to qualify them as to wants and needs then run a search of all properties within their peramiters and provide this information directly to them. Since they were getting a rebate I felt it was fair that they knew what the selling commission was up front. I did not drop out any homes based on commissions. </p>
<p><strong>It may be worth expanding on the commission structure a bit to help people understand where the money goes and why some agents can take less commission and net more money.</strong></p>
<p>Lets say you are dealing with a new agent at one of the big name corporate companies such as Prudential or C-21. Most new agents are on a 60-40 base split with the broker getting the 40%. Some are as low a 50/50. Corporate takes 6 to 8% off of the top prior to the inhouse split. Example a 3% commission on a $600K sale would be $18,000-6% (1080)=16,920x60%=$10,152 net to the agent before taxes and costs.</p>
<p>The broker has a direct interest in getting the highest commissions since they make 6-8% off the top and split the remainder as profit.</p>
<p>The other business model is the desk rental or fee to the broker where the agent pays a set fee per month and receives all the commission or pays a set fee per transaction and receives the remainder. The broker has no vested interest in what the agent receives as a commission. In my case I was on a set fee and could net more by giving rebates to buyers than splitting 20 to 40% with a broker and paying 6-8% to the corporate types. Therefore a 2% commission to me still was decent where a new agent paying a big load off the top would probably not be as inspired to show those lower commission listings. I believe this was a win-win situation.</p>
<p>Example: $600,000x2%=$12,000 gross commission - $700 transaction fee =11,300 - 10% rebate to buyer=$10,170 net to selling agent. Actually the agent would net $18 dollars more on that sale than the 3%. Things aren't always what they seem.</p>
<p><em>"What percentage of Realtors, do you think, would refuse. (I only ask this b/c my "buyer's agent" did just this thing to me...so much for "looking out for my best interests"). "</em></p>
<p>I hope the above explaination sheds some light on this question. I wouldn't feel comfortable in quantifing this but I always tried to offer at least 3% to the selling agent to make sure that my seller did not face this problem. I also think it depends on the market since 2% of something is better then 3% of nothing, but not all agents would feel that way. In the above example I would have netted $18 dollars more by showing you a 2% listing and hopefully had a "Happy Trooper" client who reffered me when someone asked about a good agent.</p>
<p>Was that the same agent that complained about showing you 10 homes? If so how did you select that person?</p>
<p>I hope these facts don't step on any other agents toes that post here. All names have been change to protect the innocent!</p>
<p>Enjoy!</p>
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