There are at least a few threads on this website that deal with the pros and cons of the current arrangement for real estate agent fees, and I’m sure you’l get a number of responses from the agents (I’m not an agent). Your question represents the standard argument over commission sales – sometimes the commission recipient receives somewhat of a windfall, sometimes they end up receiving nothing after putting in a bunch of work. The other option would be an hourly fee, which doesn’t give anyone an incentive to get the property moving. Commission arrangements encourage a listing agent to try to get the seller to a reasonable price, but sometimes it can be argued that commission based sales agents tend to push a somewhat low price point for a quick sale (there is an exhaustive analysis of this issue in the first Freakonomics book). From the sound of what I’ve heard here, in specialized circumstances you can sometimes negotiate a deal with an agent, although that’s not something that I’ve ever done. For what it’s worth, we are working with an agent in SD (we are in the process of buying) and I think it’ll turn out pretty fairly for him. The house that we’re buying is frought with complications, and he’s helped out all the way through. On the other hand, he helped my brother in law buy a condo, and I don’t think he had to show him more than two or three units. So I guess it all kind of works out in the end.
