6% RE fee model?

[familyguy]

I read in another post on this site (regarding the sale of a Santaluz property) that the 6% fee model is a bit outdated. At the risk of offending the board’s resident agents, I have thought this for some time. I’d love some feedback on the idea from buyer, agents, and sellers alike.

From a seller’s standpoint, paying 6% fee on a million dollar listing seems a bit (actually more than a bit) high. Am I missing what’s involved here? With the amount of information available to buyers on the internet regarding listings, 20+ pictures of many properties, addresses, school information, sales history, comparables, etc. I don’t necessarily understand what a seller gets for his/her 60k in fees.

I understand the agent has to market the home, maybe pay a photographer / videographer, print the fliers, and respond to offers. However, I can’t imagine there is more than 20-30 hours work total in a typical sale. Admittedly I am not an agent, so maybe there is a ton of work that goes on that I am unaware of, if that’s the case then I apologize. But is the work performed by a selling agent on a million dollar listing really worth 60k?

[njtosd]

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.

[njtosd]

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.

[njtosd]

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.

[njtosd]

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.

[njtosd]

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.

[LAAFTERHOURS]

When we bought and sold back east in DC, we did more work than our realtor on both the purchase and the sale. When we purchased, I scanned listings and asked the agent to meet me at the homes with the keys. The agent didnt do anything more than discuss an offer price with me and unlock the door. When we sold, the family that bought our home drove up to pull a flyer from the box while i was out walking my dog so I walked over to them and offered to show them the home. They got their agent on the phone with me and we chatted for a bit. I lured the buyer in, showed them the home and they purchased it. Our agent in DC was pretty useless and many lessons were learned.

When we purchased here in SD county, we puchased in North County but our agent serviced and is familiar with the areas near downtown. Thanks to sites like SDlookup and others, most of the work was done upfront by my wife and I. Our agent mostly had to show up and unlock the house. I give them their credit since its a long drive and we tossed offers at a lot of properties so we put them to work. Our realtor and her fiance both helped show us many properties and were knowledgeable on the current marketplace. They werent knowledgeable with our zipcode but we did a few years of research to know what we were looking for.

Im saying all of this to make a point that with the tools available to us as consumers, we are empowered to be proactive by doing a lot of the legwork that traditionally the realtor did. If I recall correctly, there are agents out there that are open to reduced commission. Redfin is 2.5% seller commission I think.

I think all agents should work in different ways depending upon the client. For full service, hand holding approach, charge the full 3%. For clients that know how to stage the home, prep it for showings etc., consider offering a reduction.

[LAAFTERHOURS]

When we bought and sold back east in DC, we did more work than our realtor on both the purchase and the sale. When we purchased, I scanned listings and asked the agent to meet me at the homes with the keys. The agent didnt do anything more than discuss an offer price with me and unlock the door. When we sold, the family that bought our home drove up to pull a flyer from the box while i was out walking my dog so I walked over to them and offered to show them the home. They got their agent on the phone with me and we chatted for a bit. I lured the buyer in, showed them the home and they purchased it. Our agent in DC was pretty useless and many lessons were learned.

When we purchased here in SD county, we puchased in North County but our agent serviced and is familiar with the areas near downtown. Thanks to sites like SDlookup and others, most of the work was done upfront by my wife and I. Our agent mostly had to show up and unlock the house. I give them their credit since its a long drive and we tossed offers at a lot of properties so we put them to work. Our realtor and her fiance both helped show us many properties and were knowledgeable on the current marketplace. They werent knowledgeable with our zipcode but we did a few years of research to know what we were looking for.

Im saying all of this to make a point that with the tools available to us as consumers, we are empowered to be proactive by doing a lot of the legwork that traditionally the realtor did. If I recall correctly, there are agents out there that are open to reduced commission. Redfin is 2.5% seller commission I think.

I think all agents should work in different ways depending upon the client. For full service, hand holding approach, charge the full 3%. For clients that know how to stage the home, prep it for showings etc., consider offering a reduction.

[LAAFTERHOURS]

When we bought and sold back east in DC, we did more work than our realtor on both the purchase and the sale. When we purchased, I scanned listings and asked the agent to meet me at the homes with the keys. The agent didnt do anything more than discuss an offer price with me and unlock the door. When we sold, the family that bought our home drove up to pull a flyer from the box while i was out walking my dog so I walked over to them and offered to show them the home. They got their agent on the phone with me and we chatted for a bit. I lured the buyer in, showed them the home and they purchased it. Our agent in DC was pretty useless and many lessons were learned.

When we purchased here in SD county, we puchased in North County but our agent serviced and is familiar with the areas near downtown. Thanks to sites like SDlookup and others, most of the work was done upfront by my wife and I. Our agent mostly had to show up and unlock the house. I give them their credit since its a long drive and we tossed offers at a lot of properties so we put them to work. Our realtor and her fiance both helped show us many properties and were knowledgeable on the current marketplace. They werent knowledgeable with our zipcode but we did a few years of research to know what we were looking for.

Im saying all of this to make a point that with the tools available to us as consumers, we are empowered to be proactive by doing a lot of the legwork that traditionally the realtor did. If I recall correctly, there are agents out there that are open to reduced commission. Redfin is 2.5% seller commission I think.

I think all agents should work in different ways depending upon the client. For full service, hand holding approach, charge the full 3%. For clients that know how to stage the home, prep it for showings etc., consider offering a reduction.

[LAAFTERHOURS]

When we bought and sold back east in DC, we did more work than our realtor on both the purchase and the sale. When we purchased, I scanned listings and asked the agent to meet me at the homes with the keys. The agent didnt do anything more than discuss an offer price with me and unlock the door. When we sold, the family that bought our home drove up to pull a flyer from the box while i was out walking my dog so I walked over to them and offered to show them the home. They got their agent on the phone with me and we chatted for a bit. I lured the buyer in, showed them the home and they purchased it. Our agent in DC was pretty useless and many lessons were learned.

When we purchased here in SD county, we puchased in North County but our agent serviced and is familiar with the areas near downtown. Thanks to sites like SDlookup and others, most of the work was done upfront by my wife and I. Our agent mostly had to show up and unlock the house. I give them their credit since its a long drive and we tossed offers at a lot of properties so we put them to work. Our realtor and her fiance both helped show us many properties and were knowledgeable on the current marketplace. They werent knowledgeable with our zipcode but we did a few years of research to know what we were looking for.

Im saying all of this to make a point that with the tools available to us as consumers, we are empowered to be proactive by doing a lot of the legwork that traditionally the realtor did. If I recall correctly, there are agents out there that are open to reduced commission. Redfin is 2.5% seller commission I think.

I think all agents should work in different ways depending upon the client. For full service, hand holding approach, charge the full 3%. For clients that know how to stage the home, prep it for showings etc., consider offering a reduction.

[LAAFTERHOURS]

When we bought and sold back east in DC, we did more work than our realtor on both the purchase and the sale. When we purchased, I scanned listings and asked the agent to meet me at the homes with the keys. The agent didnt do anything more than discuss an offer price with me and unlock the door. When we sold, the family that bought our home drove up to pull a flyer from the box while i was out walking my dog so I walked over to them and offered to show them the home. They got their agent on the phone with me and we chatted for a bit. I lured the buyer in, showed them the home and they purchased it. Our agent in DC was pretty useless and many lessons were learned.

When we purchased here in SD county, we puchased in North County but our agent serviced and is familiar with the areas near downtown. Thanks to sites like SDlookup and others, most of the work was done upfront by my wife and I. Our agent mostly had to show up and unlock the house. I give them their credit since its a long drive and we tossed offers at a lot of properties so we put them to work. Our realtor and her fiance both helped show us many properties and were knowledgeable on the current marketplace. They werent knowledgeable with our zipcode but we did a few years of research to know what we were looking for.

Im saying all of this to make a point that with the tools available to us as consumers, we are empowered to be proactive by doing a lot of the legwork that traditionally the realtor did. If I recall correctly, there are agents out there that are open to reduced commission. Redfin is 2.5% seller commission I think.

I think all agents should work in different ways depending upon the client. For full service, hand holding approach, charge the full 3%. For clients that know how to stage the home, prep it for showings etc., consider offering a reduction.

[sdrealtor]

That pretty much covers it. There are no guarantees in what we do and that is why a commission based model works. I could spend years showing people property and never make a penny or I could show someone a single house and get paid well. sometimes I lay out a couple thousand dollars on staging, photography, marketing materials for houses that sellers cahnge their mind and decide to stay in. For us, its about sustained effort and it all averaging out OK. As in life sometimes things are easy and sometimes they arent. What matters is the outcome as a whole. This job isnt easy as many of you would beleive as you only see the $ of what we get in the end but not all the uncompensated work we do. I would work on an hourly rate in a minute if people would pay me that way.

[sdrealtor]

That pretty much covers it. There are no guarantees in what we do and that is why a commission based model works. I could spend years showing people property and never make a penny or I could show someone a single house and get paid well. sometimes I lay out a couple thousand dollars on staging, photography, marketing materials for houses that sellers cahnge their mind and decide to stay in. For us, its about sustained effort and it all averaging out OK. As in life sometimes things are easy and sometimes they arent. What matters is the outcome as a whole. This job isnt easy as many of you would beleive as you only see the $ of what we get in the end but not all the uncompensated work we do. I would work on an hourly rate in a minute if people would pay me that way.

[sdrealtor]

That pretty much covers it. There are no guarantees in what we do and that is why a commission based model works. I could spend years showing people property and never make a penny or I could show someone a single house and get paid well. sometimes I lay out a couple thousand dollars on staging, photography, marketing materials for houses that sellers cahnge their mind and decide to stay in. For us, its about sustained effort and it all averaging out OK. As in life sometimes things are easy and sometimes they arent. What matters is the outcome as a whole. This job isnt easy as many of you would beleive as you only see the $ of what we get in the end but not all the uncompensated work we do. I would work on an hourly rate in a minute if people would pay me that way.

[sdrealtor]

That pretty much covers it. There are no guarantees in what we do and that is why a commission based model works. I could spend years showing people property and never make a penny or I could show someone a single house and get paid well. sometimes I lay out a couple thousand dollars on staging, photography, marketing materials for houses that sellers cahnge their mind and decide to stay in. For us, its about sustained effort and it all averaging out OK. As in life sometimes things are easy and sometimes they arent. What matters is the outcome as a whole. This job isnt easy as many of you would beleive as you only see the $ of what we get in the end but not all the uncompensated work we do. I would work on an hourly rate in a minute if people would pay me that way.

[Author]

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