Homeowners and/or Realtors... commission question

[SR1729]

Cliffs:

- Buyer and seller of house are $2,000 apart. Neither has any more resources to meet in the middle.
- Want to ask our realtor (we are the seller) to reduce her commission from 6% to 5% to save the deal.
- Realtor will make $11,000+ at 5% (between the sale of this house and the one we're building).

Long version:

We're in the process of negotiating a contract with a buyer for our house and we have another house already purchased (a new build that is contingent on the sale of our current home).

Obviously in today's market we're lucky just to get an offer. We've actually received two, but the first one was so horrid and laden with obstacles that we just let it expire.

The second offer is pretty "clean" except that it's rather far below our "bottom line". Our realtor had us drop our asking price by about 1% two weeks into being on the market because had had only received 7 showings and she had expected far more. We really wanted to capture all of the buyers looking to take advantage of the tax credit that expires at the end of the month. We told her that we couldn't afford to drop the price because that would mean dropping our bottom line, but she fed us some nonsense about how being priced more reasonably in the buyers' eyes would be more likely to generate an offer closer to our bottom line than our original price.

Sounded like snakeoil salesmen talk to me, but whatever. We went with it.

So here we are with an offer on the table, and it's looking like us and the buyer are going to be about $2,000 apart. I can't speak for the buyer, but we have tapped into every financial resource possible to get this deal done, and we simply have no more wiggle room.

When we hired our realtor, we tried to negotiate her commission to 5%. She balked. Perhaps we should have interviewed more realtors to find one a little more flexible, but we didn't. Fast forward to today, where that $2,000 happens to amount to exactly 1% of her commission. Finally, here's the question:

Would it be unreasonable to ask her to consider reducing her commission to make this deal happen?

She stands to lose just as much as anyone else if this deal falls through and the house doesn't sell (and since it's very possible the market could stall after 4/30, this is a very real possibility). She keeps trying to frame this whole thing up in terms of "well, I know it's $2,000, but what is it worth to you and your family to sell your house and be able to move forward."

I so want to respond with "We're tapped. What's it worth to you to get your commission on this house AND the house we've purchased?" If this all goes sideways, she's out $13,000. She could settle for $11,000 and this would be wrapped up in pretty short order.

 

[tfinch2]

Would it be unreasonable to ask her to consider reducing her commission to make this deal happen?

I don't think so. It depends on how bad she wants to make a sale if she does it though.

When I purchased my house last year, the seller and I were 3k apart, and neither of us would budge. The realtors ended up splitting the difference from their commission in my favor.

 

[DesiPower]

With just a few days remaining, everyone is desperate, if the Realtor is smart enough he/she would agree, given the fact that the deal will definitely go south... market will be pretty bad after this month. Some companies like coldwell are thinking about introducing their own discount/intensive just to avoid a total blackout.

 

[Vette73]

If the realtor does not agree fire them on the spot. A small cut for guranteed money is better then none. Let alone the deal is in their hands, and thats their job to get it done.

 

[isekii]

Isn't the realtor commission 3% unless this realtor is representing both sides ?

 

[DietDrThunder]

In my opinion, realtors make too much money for the work they do. The first realtor we hired did nothing to sell our house. She didn't bring a single person through. It was other realtors that brought people through our house, yet she was going to get 3% for doing nothing if it sold. We had only signed a 60 day contract and it didn't sell during that period. We figured if we can't get a realtor to sell it, why not find an agent that will just list it on MLS. We paid $500 for the MLS listing and a buyer realtor sold our home. We paid 3% commission plus the original $500 and another $300 for a realestate lawer to look at the contract instead of 6% in comissions.

 

[DietDrThunder]

Isn't the realtor commission 3% unless this realtor is representing both sides ?

No it typically is 3% seller realtor commission and 3% buyer realtor commission.

 

[rh71]

having just sold ours I've learned a few things...

- everything is negotiable. You did sign a contract with her that it'd be 5% but if she wants the deal, she has the capability to be flexible. Ours was 4% total unless it was her buyers too and it would've been 3%. See how they're flexible? They have to split it with their company too so if she doesn't want to lose any $, maybe she can talk to her boss about their cut. Obviously you want to be very convincing that the sale would not happen if they don't. Another option is to have her split the loss with the other realtor just to make the deal happen.

- $2k to the buyers over the life of the mortgage is chump change. $10k apart is a different story. I have a hard time believing they can't do $2k unless they are FHA and are very stretched as it is (they also have closing costs to consider short term).

- Have you tried additional open houses? After the first 4 to 6 weeks, our traffic went to near nil - the most was in the first 2 or 3 weeks. If you have offers, and you want to sell (which it sounds like you do), you don't want to lose them. We had 5 offers but so many of them were flaky... like they bid on more than 1 house as backups, etc. We also learned that your house will sell at its worth (comps) no matter how you negotiate so don't be greedy. If you can swing $2k from parents or other relatives as a short-term loan, you should try your hardest. You don't want to have gone through all this to lose it over a couple thousand (which you presumably don't need right away).

- I agree these realtors make too much for what they do. Although we had a very hard-working, dedicated, and knowledgeable listing agent, the month of work she did for her $7k... everybody should try it - it doesn't even take a college degree. Granted they don't always sell quickly or at all, it's still the amount of work they do for you and the money they've taken from you. Buyers agents have it way too easy too... some buyer agents didn't say a word when they walked through our house with their clients... some help they are. And these people make the same, off of you.

Maybe this is for another thread but I don't know why there aren't more for-sale-by-owners given that most of the marketing of a home is online now. It's the lack of a listing service that's free for FSBO I suppose but what's stopping anyone from creating that when free operations like Craigslist exist...?

 

[SR1729]

Maybe this is for another thread but I don't know why there aren't more for-sale-by-owners given that most of the marketing of a home is online now. It's the lack of a listing service that's free for FSBO I suppose but what's stopping anyone from creating that when free operations like Craigslist exist...?

I don't understand this, either. I can't put into words how much disdain I have for realtors, but I guess that's for another day.

Another offer just rolled in and our agent is busy with another client. Awesome.

 

[Jzero]

So we're talking a $200k-$210k transaction and they can't come up with an add'l $2000? That's barely a drop in the bucket...is it their first lowball offer? If so, you should definitely be able to make this work if you can hold out.

Maybe this is for another thread but I don't know why there aren't more for-sale-by-owners given that most of the marketing of a home is online now. It's the lack of a listing service that's free for FSBO I suppose but what's stopping anyone from creating that when free operations like Craigslist exist...?

My experience with FSBO is it's usually some greedy hack who has already consulted a professional AND seen the comps himself online and for some reason STILL thinks his house is worth 15% more than the exact same house 2 doors down with an hardwood floors and updated kitchen because he is "handy" and put in a laminate floor and painted the cabinets in the kitchen.

 

[SR1729]

My experience with FSBO is it's usually some greedy hack who has already consulted a professional AND seen the comps himself online and for some reason STILL thinks his house is worth 15% more than the exact same house 2 doors down with an hardwood floors and updated kitchen because he is "handy" and put in a laminate floor and painted the cabinets in the kitchen.

My experience with realtors is that they waste no time bashing those who wish to keep the equity THEY'VE built over the years, rather than fork 6% of it over to someone who will average eleventy billion dollars an hour by the time the place is sold.

The Internet pretty much killed the need to use residential realtors. As each older generation exits the housing market, so will the need to use a realtor to sell your house.

 

[Capt Caveman]

Cliffs:

- Buyer and seller of house are $2,000 apart. Neither has any more resources to meet in the middle.

$2,000 apart and you can't meet in the middle? This is the biggest problem.

You can always ask for all parties to chip in $500 both brokers, buyer and seller and save the deal.

 

[Capt Caveman]

My experience with realtors is that they waste no time bashing those who wish to keep the equity THEY'VE built over the years, rather than fork 6% of it over to someone who will average eleventy billion dollars an hour by the time the place is sold.

The Internet pretty much killed the need to use residential realtors. As each older generation exits the housing market, so will the need to use a realtor to sell your house.

Please. Try selling a home when you're out of state.

 

[SR1729]

$2,000 apart and you can't meet in the middle? This is the biggest problem.

You can always ask for all parties to chip in $500 both brokers, buyer and seller and save the deal.

You are not privy to my finances, nor am I privy to the buyer's finances. I do not have another $2k to spare, or I can't accomplish what I need to accomplish on my home build. For all I know my buyer is at his limit, too.

Of course, if bloodsucking realtors hadn't wedged themselves in the middle, I could split the difference and pocket $6500 and reduce the price $6500.

Please. Try selling a home when you're out of state.

That is the exception, not the norm.

For your typical transaction, one realtor, let alone two, are completely unnecessary and serve no purpose other than to inflate prices and create TWO middlemen.

Back in the day when the MLS was under lock and key and (for all intents and purposes) inaccessible, realtors served a purpose. They were still overpriced, but they were at least necessary to a degree. These days you should only need the internet and an attorney. An attorney (who's far more qualified to write/read a contract - too many agents think they're attorneys and love to play lawyer) will change a couple hundred bucks to write your contract and review received contracts.

God forbid the buyer and seller actually be permitted to speak with one another face to face and get the deal done in an hour or two versus a week of faxing bloated nonsense back and forth.

 

[Jzero]

You are not privy to my finances, nor am I privy to the buyer's finances. I do not have another $2k to spare, or I can't accomplish what I need to accomplish on my home build. For all I know my buyer is at his limit, too.

Was it the buyer's initial offer? If so it seems unlikely the buyer would be at his limit...would be pretty goofy to offer below asking price without expecting (and being able to manage) a higher counter offer!

Of course, if bloodsucking realtors hadn't wedged themselves in the middle, I could split the difference and pocket $6500 and reduce the price $6500.

Honest question here - your opinion of the R/E agent's role in the process is pretty clear...why did you hire one????

 

[evident]

realtors are the reason why i'm so afraid of buying a house

 

[Capt Caveman]

You are not privy to my finances, nor am I privy to the buyer's finances. I do not have another $2k to spare, or I can't accomplish what I need to accomplish on my home build. For all I know my buyer is at his limit, too.

Of course, if bloodsucking realtors hadn't wedged themselves in the middle, I could split the difference and pocket $6500 and reduce the price $6500.

On a $220k purchase, $2k difference that can't be met means the buyer shouldn't be buying the house and you probably shouldn't be buying the new place.

That is the exception, not the norm.

For your typical transaction, one realtor, let alone two, are completely unnecessary and serve no purpose other than to inflate prices and create TWO middlemen.

Back in the day when the MLS was under lock and key and (for all intents and purposes) inaccessible, realtors served a purpose. They were still overpriced, but they were at least necessary to a degree. These days you should only need the internet and an attorney. An attorney (who's far more qualified to write/read a contract - too many agents think they're attorneys and love to play lawyer) will change a couple hundred bucks to write your contract and review received contracts.

God forbid the buyer and seller actually be permitted to speak with one another face to face and get the deal done in an hour or two versus a week of faxing bloated nonsense back and forth.

Not everyone is good at negotiating and for more complex transactions, an experienced agent can be a god-send. And there are many exceptions to the norm. Based on all of your comments, I'm still confused why you used a broker.

 

[D1gger]

Of course, if bloodsucking realtors hadn't wedged themselves in the middle, I could split the difference and pocket $6500 and reduce the price $6500.

/SR1729's Employer ... Hey SR, we are really close to landing a big deal with our client, but we can't quite get there and make the company finances work ... how about if we just cut your paycheck by 16 or 17% and then we can make our deal. /SR17929's Employer

 

[Turin39789]

From my extreme experience in buying houses(total so far = 1) I found that the only benefit we got from our realtor was being able to get into a large number of houses in a short period of time.

We were driving in from about an hour away and would come in on a saturday or sunday and go see a dozen houses. All the realtor ones were on a keybox(they don't use ones with number codes anymore, you have to be a realtor or service person and have the electronic key that gets programmed with the code).

Otherwise I found every house before they could, I looked up pva values on the county site, tracked houses that had been selling through zillow and others etc. I found my own home inspector, I found our closing attorney.

I give myself a pass because it was my first time and though I thought I could do it myself I didn't know for sure. Next time, buying and selling I am doing it on my own. If I buy from a realtor listed property I hope to negotiate a discount for being on my own or negotiate for my non-existant realtors 3%, but who knows if I will be succesful.

 

[SR1729]

Honest question here - your opinion of the R/E agent's role in the process is pretty clear...why did you hire one????

Because as long as buyers are using realtors, sellers need to as well in order to achieve maximum exposure. The house I'm selling is my second home and I'm purchasing my third. In all three cases of home purchase, my agent has excluded all homes with no selling agent from the list of options presented to us. This is despite the fact that many FSBO's are willing to co-op at 3%.

The home I'm selling now was actually one such case: we found it on our own after our realtor couldn't bring us any quality homes that matched our needs. So we used her own company's website and found this home. It was a FSBO co-op'ing at 3%. We insisted that she show us the home, and boy did she protest to hell and back. We got the whole spiel: "FSBO's are usually people who are 'difficult' and don't know what they're doing. They don't realize they need 'professional' advice blah blah blah."

Well, this home was a far greater value than anything she brought to us. Why? Because the seller was able to use more of his equity to "move" the home, and we got a newer home with more sq. ft. and amenities than any home our realtor brought to us. And no, they were not difficult to work with.

Anecdotal, yes, but this bullshit about how FSBO's are troublesome is just that: bullshit. Any seller/buyer has the potential to be troublesome, and realtors themselves are capable of being troublesome and causing more harm than good in any given deal.

So anyway, that's why we decided to use one. But as more and more buyers realize that they don't really need an agent and that they could actually get more bang for their buck without one, you'll see more and more sellers like me - who were on the fence - lean the other way.

 

[SR1729]

/SR1729's Employer ... Hey SR, we are really close to landing a big deal with our client, but we can't quite get there and make the company finances work ... how about if we just cut your paycheck by 16 or 17% and then we can make our deal. /SR17929's Employer

The difference being that I actually do work, posses a skill, and generate a product. Thanks for playing, though.

 

[SR1729]

realtors are the reason why i'm so afraid of buying a house

Don't be. As a buyer, if you can use the Internet, then you don't need an agent. Hire an attorney to draft your contract: it will cost a few hundred dollars. You'll save far more when you place an offer on a house and can negotiate the selling agent fees down (probably to 4%) and have the rest deducted from the price of the home. EVERYONE will win in that scenario.

 

[Turin39789]

Because as long as buyers are using realtors, sellers need to as well in order to achieve maximum exposure. The house I'm selling is my second home and I'm purchasing my third. In all three cases of home purchase, my agent has excluded all homes with no selling agent from the list of options presented to us. This is despite the fact that many FSBO's are willing to co-op at 3%

You just need to stop being stupid when choosing your realtor. If a realtor had told me she/he wasn't going to deal with FSBO's, F that.

 

[evident]

Don't be. As a buyer, if you can use the Internet, then you don't need an agent. Hire an attorney to draft your contract: it will cost a few hundred dollars. You'll save far more when you place an offer on a house and can negotiate the selling agent fees down (probably to 4%) and have the rest deducted from the price of the home. EVERYONE will win in that scenario.

Don't realtors always have first dibs on houses though and can take their clients to houses right when they come on the market?

 

[rh71]

But as more and more buyers realize that they don't really need an agent and that they could actually get more bang for their buck without one, you'll see more and more sellers like me - who were on the fence - lean the other way.

More pros and cons:

Sellers sell on MLS (agents) to get maximum exposure because it's all in one place. Everything's readily available & free... you get 95% of homes for sale. What's more is that a buyer's agent is "free" to buyers.

However, they'd probably get a better deal if they just use your listing agent as their buyer's agent (double duty, not in their best interest) since the seller can save money on commission and have give leeway with negotiations.

Is it worth it to the buyer to seek out FSBO and deal with everything including paperwork and followups themself? Probably not. Another good point was made that a buyer agent can get you in the door to many properties - a lot of sellers won't show otherwise - also scheduling these things with multiple people/personalities can be a headache. Our buyer agent was also able to get a feel from the seller agent about the interest they've gotten and if offers were made and inspections performed - try asking the sellers that if you're the actual buyer - they'd probably lie right to your face or not respond at all.

What's interesting that I learned this weekend is that attorneys can act as realtors to submit offers and basically do everything... they are just less personable as they're in the office and never with you. But you can save money that way as well.

Don't realtors always have first dibs on houses though and can take their clients to houses right when they come on the market?

They have what they call broker's open house for the realtors on a certain day, but it seems these are the same week after the first public open house. I have not seen a situation where a broker would be able to get you in before the seller allows a first showing anyway (could be before public open house) so it's the same as if you were to contact the seller agent to see the house. Unless you're a builder / flipper, it doesn't really benefit you to get in first anyway as the seller would want to see what offers they get over the course of a week or two at the very least. We were given access to listingbook.com by our realtor and they show days on market. We've seen some come on the market but the first showing isn't until a certain day after.. so again no benefit.