real estate commission

Discussion in 'Homesteading Questions' started by leigha, Jan 20, 2004.

  1. leigha

    leigha Well-Known Member

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    Our house went on the market last Saturday. Our agent went out of town and won't be back until Thursday. We have a signed contract with her to list our house and get 6% commission of selling price. We have had a couple extremely interested in our house. I'm frustrated. This couple may not make an offer, but if they do, we'll still have to pay the real estate agent 6%. That makes me sick. I guess we just played the game and lost. The couple heard from my brother in law that we were going to sell not from any advertising or listing. Basically, the real estate agent hasn't done much but still gets a good chunk. I just needed to vent.
    On a happy note, we did find "our place", I shouldn't be complaining.
     
  2. mawalla

    mawalla Well-Known Member

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    Can you let the contract expire then sell to the interested party yourself? If not, make that agent work for you. They get a big chunk of change from the sale and they need to earn it.
     

  3. RAC

    RAC Guest

    Leigha,

    For next time, when you're thinking of selling, put out the word yourself FIRST to people you know, like next door neighbors, relatives, co-workers, etc. Your neighbor might just want to move an elderly relative in to make it easier to look in on them, and if you had told them first, you could have lowered the price a bit because you did not need an agent. Especially if any of these people show any interest in it at all, when you write that contract with the agent, put those people in as exclusions, because you already found them, you're correct, the agent didn't do anything in that regard--so the agent should only get say 2 or 3% for putting the deal together.

    I can remember getting a call from our agent's admin once about a house near us for sale, and couldn't help thinking that the owner could have just sent out post cards or made a cold call or two and saved a ton of money that way, depending of course on what the 6% means in cash.
     
  4. RAC

    RAC Guest

    Mawalla, once the sign is in the ground and the contract is signed with the agent, if Leigha signed the usual "exclusive right to sell" contract, anyone contacting and buying during that time means the agent is entitled to a commission from that sale, whether or not the agent has an "active" role or not in finding the buyer, and even if you bring in a buyer, unless you exclude your prospects beforehand in the contract.

    If say the person contacts the agent, looks at the property, doesn't buy at that time, but waits until the listing lapses, the agent is still entitled to a commission up to like 90 days later because they contacted the agent during the active listing period. Believe me, when properties sell they check on these things, and will be after the seller for their cut. This does all vary by state of couse.

    As far as letting it lapse, 90 days (usual time for such contracts) is 3 mortgage payments that Leigha has to make, which may mean her dream property can't close, and might cause the seller of that property to bow out of the deal.
     
  5. Alice In TX/MO

    Alice In TX/MO More dharma, less drama. Supporter

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    The most important part of what a real estate agent does is NOT finding the buyer. It's monitoring the paperwork. If this person does buy, you want the agent to handle the legal end of things, ESPECIALLY if you have never sold a house before and don't know what you are doing.
     
  6. Sherri C

    Sherri C Plays with yarn

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    Now don't go counting your chickens before they've hatched. My house has been on the market since May. I've lost count of the number of people who've said they love the place and are going to make an offer, and then I never hear from them again. :(

    Another thing to think about: most agents charge 6% commission but they have to split that with the buyer's agent. If your agent finds the buyer she should give you a break on the commission.

    I agree with Rose about the paperwork. Finding buyers is the easy part. Finding qualified buyers who can actually get financing and close on the deal in a timely fashion is something else entirely.
     
  7. Ken Scharabok

    Ken Scharabok In Remembrance

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    This might have been a good situation for a FSBO attempt. Research what fair market value would be and then put up a For Sale by Owner sign in the front yard. If it doesn't sell in say three months, then list.

    I have tried FSBO on two different properties. About six months each time. Listed and sold one in about a week and the other within three days. Both times I netted out more than if I had sold through the FSBO.

    Ken S. in WC TN
     
  8. If you found the people their only entitled to half and the person who buys pays the comission anyway. In Michigan anyway. Fire them sell the house with a lawyer and let them sue. Realestate people are the most un-ethical bunch I've ever met. Screw em before they get you.I could go on all day.

    mikell
     
  9. RAC

    RAC Guest

    For every house that sells within a week or two of a sign going up, there are many that sit for months with people going through but not making offers, because sellers won't face facts that the price is too high for the market, or the house should have been painted and cleaned up BEFORE it went on the market, instead of drawing all lowball offers after buyers take into account how much time and money it will take to make a place decent to live in, etc.

    Agents don't qualify people, banks do. Many buyers these days get themselves preapproved for loans before they go shopping for homes. Agents prequalify for their interest (how expensive a house can they hopefully push you into looking at and buying), not yours. They are interested in selling any property, not necessarily yours.

    I will say that agents don't do a lot of drive-around showing anymore, which is not good. They tend to give you a map, and tell you to call them when you want to go in a place. When you do all the looking, you don't get a good chance to ask questions of the agent.

    In an "exclusive" agency contract, it *really* does mean the agent gets it all (even if you bring in the buyer, unless you have previously revised the contract to correct this), unless another agent is brought in on the buyer's side. 6% (or whatever) is still paid, but it is split 50/50 between the two agencies, and then the 3% left is split between the agent and their broker. So the 6% sounds like a lot of money if the agent handles both ends of the deal, but that doesn't happen most of the time.

    Rose brings up a good point about paperwork--and I would also add making sure inspections and such are being done in a timely matter. Lots of times owners drag their feet, especially when they know that defects will be found. If the home is vacant it is the agent letting these people in and in many cases supervising the work, although the contract will read that they are only hiring these people on the seller's behalf, and any problems will be between the seller and the contractor. Agents can be really bad about getting the utilities turned on for home inspections in vacant houses :-(

    And escrow and/or title companies are also usually involved in sales too--they can and do screw up.

    If everything is done correctly by everyone and there are no surprise defects to be corrected in a property you really can close in a week or two. Escrows are dragged out because of qualifying problems or property issues for the most part.
     
  10. ozarkmtmama

    ozarkmtmama Active Member

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    I don't know where you are, but in AR the agent still gets the full 6% no matter who finds the buyer (been thru this myself), and the seller pays the agent's fee since the seller hired the agent, unless you work out a special arrangement with the buyer and they agree to split the fee, or pay it all for you. If they do, this should be stipulated in the initial agreement you both sign.

    Even tho is doesn't seem fair, you did agree to these terms when you signed the contract, and trying to fire them now will certainly get you sued, plus you'd have to pay court costs and lawyers fees (talk about an unethical bunch!).

    I'm no fan of real estate agents either, but I'd say honor the contract you signed, chalk it up to experience, and enjoy your new home.
     
  11. special-k

    special-k Well-Known Member

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    We picked our agent because he was a friend through an organization we belong to. Thought we would help him out. Big mistake. He gets 7% commission plus half the commission off the house we buy. 10 % in all about $8 to $9k. He put the house on the market way too high, only advertised it once in the paper and it was on the internet the 1st time with the wrong picture- a small shack in the woods.

    We live in a 150 yr-1800sq ft- drafty house. Because we live in a very good school district, he thought people were going to beat the door down to buy it and he wasn't going to have to do anything.

    Our contract is up Feb 15th and guess what--he calls and says we need to drop the price he didn't get the response he thought he was going to get. ( I should be in real estate) I told him NO WAY advertise it more and havn't heard from him since. 2 weeks tommorrow.

    So leigha hang in there and don't give up. The 6 or 7 % we pay is worth it if they really work for you.

    The next agent we list with had better look. I'm on to them now and will call them every week if need be. :yeeha:

    special-k
     
  12. ajoys

    ajoys Well-Known Member

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    Don't feel to bad. Around here the good houses sell in weeks and people fork out 25-35k in commisions (4-4.5%). The houses that are FSBO usually don't sell because the agents will talk negative about the house to their clients. A house down the street was FSBO for 6 months and then they sold it within two weeks once they listed it with a realtor. There are only a handful of realtors that sell probably 90% of the real estate in the area. Since almost all the buyers use agents and the agents refuse to show FSBO homes unless the owner will pay a commision it is not easy to sell a home with out listing it here.
    Life in the big city :rolleyes:

     
  13. Ken Scharabok

    Ken Scharabok In Remembrance

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    Special-k:

    A realtor sort of lives or dies by their sales record. However, don't take someone's statement of "Oh, I did $10M in sales last year" at face value. Have them break it down for you. For example, on what portion were they the listing agent, but it sold either through another agent in their office or another office entirely. Some agents specialize in getting the listing knowing they will receive a percentage of the sales amount regardless of how it is sold. They may not make much direct sales effort. Prime number should be how much they directly sold.

    Also note the comment above about more and more realtors encouraging prospective buyers to do drive-bys first. This make it very important to have that curb appeal.

    I have heard several agents tell of houses which sat on the market for a long time until the owner painted, put in new carpeting and did some landscaping. Then it sold quickly.

    I knew one agent who recommended the owners be baking something like cookies or home-made bread for the kitchen aroma factor. Another consideration may be to declutter by renting a storage locker as it helps make the house look larger.

    Allowing open houses are a toss-up. I've talked to many who have done so and said the realtor wasn't interested nearly as much in selling their home as to greet and meet prospective buyers for other properties.

    Ken S. in WC TN
     
  14. cc-rider

    cc-rider Baroness of TisaWee Farm Supporter

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    I've been thinking of the FSBO thing, too. Around here, though, unless you are listed in the MLS book, no one knows you are for sale.

    There is a company that you can "list" with that will list you in the MLS, but you are still basically selling it on your own. They will provide you with FSBO signs, etc., and do the paperwork and closing for you for a fee. (Only if you sell do you owe the fee).

    I bet you are right, though, and realtors won't show your house, even if someone asks about it, because they aren't getting the commission. They'll probably bad-mouth you to prospective clients. :(
     
  15. RAC

    RAC Guest

    Ajoys, I doubt that an agent cares who pays the commission, as long as it's paid. :) Commissions are down to 4.5% in CA now? Wow, is the market in places that bad where agents are scrambling for listings or is there just too much competition in the field so agents are lowering their rates?

    I think the main problems with FSBOs anywhere, not just in CA are:

    1. Sellers don't/can't expose their property to the greatest number of potential buyers. The MLS is a great tool, but I don't know if it is flat fee to list on it or if it is a percentage of the final price.

    2. A lot of sellers doing FSBO don't realize that savvy buyers expect to save at least 1/2 of that real estate commission that the seller isn't paying. People looking at FSBOs rather than through agents tend to be locals, or at the very least extremely familiar with prices in an area.

    3. People are too timid to do their own negotiating and feel more comfortable using an agent, and/or they have problems with for example financing that agents can help with because of their network of contacts in the mortgage field (and their potential for repeat referrals the other way). Also, with all the mandatory disclosures now, an agent is just one more person you can sue in the lawsuit chain.... I think this last statement is especially true in CA.

    As soon as the sign goes up any FSBO seller will always get calls from agents saying they want to list the property or they have a buyer right now (yeah, so they can get a look at the property themselves to perhaps lowball you). There is nothing to prevent a seller saying "No, I won't pay a commission, but I can pay a finder's fee (anywhere from $200-$1000 depending) because I will be using my own contract for the sale." Some people just don't want to work with agents in the normal relationship.

    If a house is in a desirable area, and the price is right (price is usually wrong if a house sits for six months) for the house, FSBOs can sell just as easily as agent-represented houses. In CA, even FSBO's aren't exempt from disclosures and the usual septic/roof cert, etc., correct?

    Also, there is a book out by Bill Effros called How to Sell Your Home in 5 Days, where you basically have one open house walkthrough scheduled in the local paper, and then have bidding sessions. Might work for some people. The book is a very quick read, and might be at your library.
     
  16. RAC

    RAC Guest

    Ajoys, I doubt that an agent cares who pays the commission, as long as it's paid. :) Commissions are down to 4.5% in CA now? Wow, is the market in places that bad where agents are scrambling for listings or is there just too much competition in the field so agents are lowering their rates?

    I think the main problems with FSBOs anywhere, not just in CA are:

    1. Sellers don't/can't expose their property to the greatest number of potential buyers. The MLS is a great tool, but I don't know if it is flat fee to list on it or if it is a percentage of the final price.

    2. A lot of sellers doing FSBO don't realize that savvy buyers expect to save at least 1/2 of that real estate commission that the seller isn't paying. People looking at FSBOs rather than through agents tend to be locals, or at the very least extremely familiar with prices in an area.

    3. People are too timid to do their own negotiating and feel more comfortable using an agent, and/or they have problems with for example financing that agents can help with because of their network of contacts in the mortgage field (and their potential for repeat referrals the other way). Also, with all the mandatory disclosures now, an agent is just one more person you can sue in the lawsuit chain.... I think this last statement is especially true in CA.

    As soon as the sign goes up any FSBO seller will always get calls from agents saying they want to list the property or they have a buyer right now (yeah, so they can get a look at the property themselves to perhaps lowball you). There is nothing to prevent a seller saying "No, I won't pay a commission, but I can pay a finder's fee (anywhere from $200-$1000 depending) because I will be using my own contract for the sale." Some people just don't want to work with agents in the normal relationship, or any relationship.

    If a house is in a desirable area, and the price is right (price is usually wrong if a house sits for six months) for the house, FSBOs can sell just as easily as agent-represented houses. In CA, even FSBO's aren't exempt from disclosures and the usual septic/roof cert, etc., correct?

    Also, there is a book out by Bill Effros called How to Sell Your Home in 5 Days, where you basically have one open house walkthrough scheduled in the local paper, and then have bidding sessions. Might work for some people. The book is a very quick read, and might be at your library.
     
  17. betty modin

    betty modin Well-Known Member

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    I've been on both ends of the real estate agent's work in the past year...once to sell my home and once to buy my new home. I sold my home to my neighbor, who was interested from the start....did I need a realtor to find a buyer? Not really...did I gladly pay the fee? YES! I hate the paperwork, the phone calls to get inspections done, etc. HOWEVER...without my agent I would never have been able to get the needed inspections done on this house in order to complete the deal! Yes, the selller 'paid' the realtor BUT the sale wouldn't have happened without it!!! AND this couple may not be able to afford your house, it may not meet their needs once they really think about it, they find something they like even better tomorrow....don't ever count your chickens before they hatch! BTW the realtor shares that comission with several people who also do work on the sale....from the intial listing, the advertising, right down to the last flourish of the pen on the last piece of paper at the very end....don't be upset. Next time you can try FSBO and see if it was worth the money or not. AS for ME...if I ever sell this place I'll call a realtor first! I HATE PAPERWORK (and I don't know the laws that would keep me from being sued either) sometimes you just let the professionals do their jobs? betty