Real Estate Talks

I'm putting my condo on sale. The realtor says her commission is 7% on the first $100k and 3.25% on the balance. Is that right? She says that she pays the buyer's agent 2.5%?

No wonder so many realtors drive luxury cars and wear Hermes scarves.

Pay her 7% and 2.5%. Buyers agent gets 46.5% of that

No wonder so many realtors drive luxury cars and wear Hermes scarves.

Hmm... I wonder why 80% of new realtors leave the business after two years

Pay her 7% and 2.5%. Buyers agent gets 46.5% of that

Thanks.

Anyone managed to cut the commission on $$$$ propertie? Seems to me that the rate structure dates back to the last generation when RE was a fraction of the price today?

I agree with Jimtan,

So, an average house in Vancouver is worth 1.5 million (estimate). Commission paid will be $42,000? These places sell instantly. One open house & multiple offers. I would think even if the commission was cut in half its still a huge payout for the small amount of time the realtor puts in to sell the place.

I think they should lower the commission for the portion of the price over 500K. Drop to 1% maybe? I mean let's face it whether a house is 1million or 2M does the realtor really have to spend more time to sell it? I don't think so.

everything is negotiable in a RE transaction, including the commission paid to your listing agent.

How successful you will be depends on the situation. When we bought our house, our realtor also acted as the agent for the sellers. Instead of paying full commission, the sellers offered him a flat fee that worked out to roughly 65% of what the commission would be. Our realtor accepted it - he was making both ends of the deal anyway, and had a buyer that was ready to purchase, so the work involved was only paperwork. It was probably an easier negotiation since our realtor did have both ends of the deal, but the seller probably saved 10-13K in fees by negotiating, which is not insignificant. You miss 100% of the shots you don't take.

In this market, I would definitely negotiate on commission, and would probably go with the lowest bid. Simply having an open house for a SFH listed on the MLS is probably enough to get multiple offers through the door, and I don't think a particular realtor is going to add any value over another. Maybe a different mindset in a slower market.

They are not needed. Sell privately and get a notary to do the paperwork.

A realtor isn't interested in getting you the best price. They just want to sell ASAP. The selling price makes a big difference to you, but there isn't much difference in the commission on a $1.3m sale compared to a $1.5m sale.

I agree with Jimtan,

So, an average house in Vancouver is worth 1.5 million (estimate). Commission paid will be $42,000? These places sell instantly. One open house & multiple offers. I would think even if the commission was cut in half its still a huge payout for the small amount of time the realtor puts in to sell the place.

I think they should lower the commission for the portion of the price over 500K. Drop to 1% maybe? I mean let's face it whether a house is 1million or 2M does the realtor really have to spend more time to sell it? I don't think so.

You'd have thought with the Internet and other disruptive ideas/companies like Uber and Airbnb we'd have seen the demise of realtors by now. With the ludicrous commissions they charge it will happen one day.

Pay her 7% and 2.5%. Buyers agent gets 46.5% of that

No wonder so many realtors drive luxury cars and wear Hermes scarves.

Hmm... I wonder why 80% of new realtors leave the business after two years

They've probably retired.

its on a percentage basis because the higher the price of the home the more they make then everyone wins

What others are saying is the realtor % was fair when a house was 300K but it doesn't make sense when houses are over 1 million. Realtors are not doing more work nor are they spending more time to sell a house as compared to before. Therefore, they should not get paid double even though house prices have doubled. The market has earned the sellers are higher not sale. The realtor has not.

By your logic I can tell my boss to double my salary even though I work the same hours as before and I produce the same amount of work as before. I wonder what my bosses response will be. LOL.

You should shop around and get the Realtors to bid on your business. Tell them to give you the lowest price they would do it for.

We've sold a few condos in the past paying our listing agent a flat fee of $4-6k (depending on the price of the unit). Didn't have any problems selling them at all. One sold above the avg $/sqft price of the recent sales and most are around the same. We think staging is more important than the realtor since most buyers have their own agents that regurgitate from the same feature sheet anyways. The one thing we were willing to compromise on with our listing agent is that we would open the door for viewers when possible (not during business hours as we both have full time jobs). Most showings were in the evenings or weekends so we didn't mind. Plus we got to scope out who the buyers were and had the peace of mind to lock up by ourselves. Well worth the effort to save thousands of dollars.

You can't skimp out on the Buyer agent's side of the commissions though. The industry 'standard' is 3.255% ON 1ST 100K/1.1625% ON THE BALANCE. (Sorry realtors, I know there's no standard commissions and there's no such thing as price fixing in this industry). In fact, a couple of times we offered a bonus of $3000 to the Buyer's agent when there were alot of similar units on the market and our place sold the fastest.

PM me if you want some names of the Realtors who are willing to negotiate.

Thanks. Much Appreciated.

its on a percentage basis because the higher the price of the home the more they make then everyone wins

Getting the sellers a higher sale price doesn't make much difference to the realtor's commissions. For example, netting the sellers an extra $10K will only give the agent an extra $100 bucks.

7%/2.5% on say $500,000 is $7000+2.5%*400,000 = $17000. Prices go up by 20%, Realtor commish goes up by $2500 to $19500, which is an increase of 14.7%.

The same on $2,000,000 is $7000+2.5%*1900000 = $54500. Prices go up by 20%, Realtor commish goes up by $10000 to $64500, which is an increase of 18.3%.

The higher prices get away from $100,000 (an arbitrary value picked for historical reasons and at a much lower pricepoint), the higher the %increase in commish with %price changes.

Not bad. Factor in the number of transactions right now is the highest it's ever been. In net, unless there are a ton more Realtors (and one would expect there to be given how lucrative these transactions are becoming but last year was a bit of a surprise in terms of demand and this year is even higher), Realtors are doing pretty well for themselves at 7/2.5% right now. But hey I know it doesn't work that way, a Realtor will claim (see the subsequent posts for the pending explaination).

If you are a seller, there is room for negotiation right now.

What others are saying is the realtor % was fair when a house was 300K but it doesn't make sense when houses are over 1 million. Realtors are not doing more work nor are they spending more time to sell a house as compared to before. Therefore, they should not get paid double even though house prices have doubled. The market has earned the sellers are higher not sale. The realtor has not.

By your logic I can tell my boss to double my salary even though I work the same hours as before and I produce the same amount of work as before. I wonder what my bosses response will be. LOL.

I think with the internet today and the posting of pictures and videos online you could argue that the realtor's job has become much easier. By posting the pictures online most of the buyers who make an appointment to see the house in person will already have a very good idea of what the property is like, reducing the number of people actually having to look at the house in person. Realistically though if you are making $15,000 commission on a $1,000,000 lower priced house in this hot market how much time is required to show the house to buyers over a few weeks or better yet have a few open houses.

I went to an open house 2 blocks froim my house last weekend and there were 2 realtors at the open house. The biggest challenge both the realtors seemed to have was making sure they printed off enough sales brochures and making sure the inflatable Remax balloon on the front lawn didn't blow away. A relative will be selliong their house soon in Surrey for $800,000 to $900,000 and we are thinking of talking to several realtors and offereing a straight 2.5% commission for the selling realtor and buying realtor to split. A similar house one block away sold in one week in March 2016 to multiple offers.