OT: Real Estate Broker commission 6%?

[iReC89]

A waitress would have to serve 1666 $100 meals to make $30,000 in tips. That's work. A flat fee for selling homes is absurd. It should at least be related to somewhat market conditions and price range. If the transactions costs weren't so high, people would move more often and they would make more on volume. There are 42,000 licensed sales persons in NJ, plus brokers, referral agents, etc.That's probably too many. It can't be long before a company like Amazon figures out how to change the game.

That said, it is what it is. You will loose more waiting for your property to sell in taxes and interest if you cheap out on the going rate. Find the person who has sold the most in your area then make them happy.

 

[RutgersUnion]

There is no such thing as "standard fee" as it violates antitrust laws. Brokers charge these fees because consumers are willing to pay them.
Posted from Rivals Mobile

 

[KingHigh]

I handle around 150 transactions per year on the legal side. 6% is the highest commission rate you'll normally see. I'm a believer that the higher commission offer does tend to get the realtors more motivated to sell your unit to their buyers. The clients who love to negotiate down the value of their professionals tend to get reduced value in return. Give the 6%. That amounts to an extra $1,600 based on the $160,000 price. You'll find that you'll feel more justified sticking to your guns later when it comes to negotiating the price.

"You wanted 6% and I gave it to you. Now do your job and get that buyer to increase their offer."

 

[Knight_Light]

Originally posted by brad1218:
I have gone to more open houses (my wife loves looking) then I can remember and the agent at the open house is always always terrible. They say things like this price is too high. Wait a month and I will get the homeowner down and I will call you. They are really are terrible. Do it yourself.

Very good agents normally don't need open housing (i.e. slow moving property), as they are normally marketed correctly and many times get offers as soon as the property hits the market (just like my neighbors did this past month).

PS. Sounds like you should find another hobby and let your wife hit all the open houses (looking for free food?) by herself.

 

[Knight Shift]

From our experience in selling a condo many years ago-

We were desperate to sell because I took a job in Ohio. At the time it was a buyer's market. We had an end unit (considered desirable) near one of the main parking areas. I used to watch a realtor parade buyers right past our condo to show the unit behind us, which we knew was in bad shape. We were not allowed to have realtor or for sale signs on our front yard or in our windows. After this went on for several weeks, I politely confronted the agent why she never showed my property--it turns out the listing behind us was listed with her office, and she got a higher commission if she sold a house through her office.

Moral of the story is find a realtor who will do the right thing and is connected with other realtors in the area. Ask if they will do a realtor's open house, which in my opinion is the best way to get your listing out to the people who will sell it. Your listing realtor may agree to 5%, but there are plenty of selling agents that will skip your listing if it is listed lower.

One other thing we learned. As we got desperate to sell, we considered renting our place, and a friend of a friend was interested in renting. Our realtor informed us that the contract required us to pay her 10% of rental proceeds. I thought this was overreaching at the time, and it ultimately did not become an issue. But if you think you MAY rent your unit out, and you don't want to pay a commission on rental, strike this language out of the agreement. In NJ, I believe realtors operate on what is called the "procuring cause" of the transaction. So, even if you strike this language and the realtor finds a tenant, you will likely have to pay a rental commission, which is fair.

If you want to sell your townhouse/condo quickly, make sure it is nearly immaculate. Paint rooms that need it. If the tile grout is dirty or cracked, have it re-grouted. Get rid of clutter. Nothing makes a condo/townhouse look worse than clutter. Make sure all of your light bulbs in overhead lights and chandeliers are working and match. I am amazed when I go through houses how people don't do simple, inexpensive things to make their houses look minimally presentable .

 

[SHUSource]

Originally posted by RutgersUnion:
There is no such thing as "standard fee" as it violates antitrust laws. Brokers charge these fees because consumers are willing to pay them.

Like anything else, it's based on the market. For a long time, 6 percent was standard, but during the 2000s boom, 4 percent became very, very common. Agents didn't care because so many houses were selling that they more than made up for the lower percentage in increased volume. Now, we're back to 5 and 6 percent as being common.

 

[derleider]

Originally posted by iReC89:
A waitress would have to serve 1666 $100 meals to make $30,000 in tips. That's work. A flat fee for selling homes is absurd. It should at least be related to somewhat market conditions and price range. If the transactions costs weren't so high, people would move more often and they would make more on volume. There are 42,000 licensed sales persons in NJ, plus brokers, referral agents, etc.That's probably too many. It can't be long before a company like Amazon figures out how to change the game.

That said, it is what it is. You will loose more waiting for your property to sell in taxes and interest if you cheap out on the going rate. Find the person who has sold the most in your area then make them happy.

Then why don't those waitresses become real estate agents?

 

[Knight_Light]

Originally posted by derleider:

Originally posted by iReC89:
A waitress would have to serve 1666 $100 meals to make $30,000 in tips. That's work. A flat fee for selling homes is absurd. It should at least be related to somewhat market conditions and price range. If the transactions costs weren't so high, people would move more often and they would make more on volume. There are 42,000 licensed sales persons in NJ, plus brokers, referral agents, etc.That's probably too many. It can't be long before a company like Amazon figures out how to change the game.

That said, it is what it is. You will loose more waiting for your property to sell in taxes and interest if you cheap out on the going rate. Find the person who has sold the most in your area then make them happy.

Then why don't those waitresses become real estate agents?

POTD!

 

[iReC89]

Originally posted by derleider:

Originally posted by iReC89:
A waitress would have to serve 1666 $100 meals to make $30,000 in tips. That's work. A flat fee for selling homes is absurd. It should at least be related to somewhat market conditions and price range. If the transactions costs weren't so high, people would move more often and they would make more on volume. There are 42,000 licensed sales persons in NJ, plus brokers, referral agents, etc.That's probably too many. It can't be long before a company like Amazon figures out how to change the game.

That said, it is what it is. You will loose more waiting for your property to sell in taxes and interest if you cheap out on the going rate. Find the person who has sold the most in your area then make them happy.

Then why don't those waitresses become real estate agents?

See bold. The market on screwing over home sellers has been cornered, and its well protected.

 

[Knight_Light]

Originally posted by iReC89:

Originally posted by derleider:

Originally posted by iReC89:
A waitress would have to serve 1666 $100 meals to make $30,000 in tips. That's work. A flat fee for selling homes is absurd. It should at least be related to somewhat market conditions and price range. If the transactions costs weren't so high, people would move more often and they would make more on volume. There are 42,000 licensed sales persons in NJ, plus brokers, referral agents, etc. That's probably too many. It can't be long before a company like Amazon figures out how to change the game.

That said, it is what it is. You will loose more waiting for your property to sell in taxes and interest if you cheap out on the going rate. Find the person who has sold the most in your area then make them happy.

Then why don't those waitresses become real estate agents?

See bold. The market on screwing over home sellers has been cornered, and its well protected.

See BIGGER BOLD.

Who's to say when there is a max number of real estate agents? Just like with so many other jobs, some are happy working part-time...some are very successful...some are not....some are retiring...new agents are coming into the market.

New agents (some, not all) end up successful each and every year...just like waitresses (some are more successful than others).

Again, if waitresses think real estate agents having easy jobs and are overpaid...all are free to become "overpaid" real estate agents themselves.

 

[Steveriknight]

I think a lot depends on what town where you are selling your property. Some towns in NJ have a very high demand and everyone wants to live there, so the property really does sell itself. You don't need much if any marketing other than having it on the MLS...and probably Zillow too.

I think realtors are something that was much more useful before the advent of the internet. They were relied on to introduce people to new areas and show them houses and things that were in line with what they were looking for. In other words, they did much more to earn their commission. This is a service that nobody really needs nowadays because that information is just a google search away.

In our experience with property selling and then buying...the realtor basically just listed the property on MLS for us and opened the door for people. Really, not much more than that. The attorney did the rest of the heavy lifting on the transaction...and for a measly $1k.

 

[batts]

Originally posted by KingHigh:
I handle around 150 transactions per year on the legal side. 6% is the highest commission rate you'll normally see. I'm a believer that the higher commission offer does tend to get the realtors more motivated to sell your unit to their buyers. The clients who love to negotiate down the value of their professionals tend to get reduced value in return. Give the 6%. That amounts to an extra $1,600 based on the $160,000 price. You'll find that you'll feel more justified sticking to your guns later when it comes to negotiating the price.

"You wanted 6% and I gave it to you. Now do your job and get that buyer to increase their offer."

I couldn't agree more. If your primary objective is to sell your condo at the maximum price, i would pay the 6% commission. The old adage is true: "You get what you pay for."

 

[mdk01]

Originally posted by batts:

Originally posted by KingHigh:
I handle around 150 transactions per year on the legal side. 6% is the highest commission rate you'll normally see. I'm a believer that the higher commission offer does tend to get the realtors more motivated to sell your unit to their buyers. The clients who love to negotiate down the value of their professionals tend to get reduced value in return. Give the 6%. That amounts to an extra $1,600 based on the $160,000 price. You'll find that you'll feel more justified sticking to your guns later when it comes to negotiating the price.

"You wanted 6% and I gave it to you. Now do your job and get that buyer to increase their offer."

I couldn't agree more. If your primary objective is to sell your condo at the maximum price, i would pay the 6% commission. The old adage is true: "You get what you pay for."

I partially agree. With respect to a $160,000. property I agree entirely. However, with a higher priced property, say over $500k, the motivation is the property itself rather than the difference between 5% & 6%.

 

[RUJohnny99]

"A waitress would have to serve 1666 $100 meals to make $30,000 in tips. That's work."

And a realtor would have to sell 4 $500,000 houses to make that same $30,000. My guess is there's just as many waiter/waitresses making $30,000 as there are realtors. Heck, Freakonomics devoted a whole chapter to this. Barriers to entry in the real estate market are so low that the average licensed realtor makes something like $7,000 in commission each year. The society pages aren't exactly full of rich & powerful realtors.
Posted from Rivals Mobile

 

[RU to the Core]

Just bought a house last month. From my experience the only "annoying part" is what the lawyer needs to do. A $160K Condo are a dime a dozen so basically you just need to find someone who wants a cheap condo and there are a lot out there. Not a ton of ways someone is going to "position" and market your cookie cutter condo.

The Real Estate Agent won't do much for a condo at that price. For a $160K Condo I'd list it yourself and get it on the MLS which gets it onto Zillow and Trulia. Zillow and Trulia are the key here. Have an Open House and a bunch of people will show up with brokers, but a bunch will also show up without brokers because they saw your listing on Trulia and Zillow.I'd also list it for 159,900 so that it shows up in the under 160K search criteria on zillow and trulia.

You can offer someone without a broker less than your 160K and still come out on top. The lawyer handles all the annoying paperwork part afterward.

I know this works because I showed up at an open house without a broker and the person selling the house was also the real estate agent. The fact that 2.5% could stay in her pocket since I didn't have a broker made me the ideal person to buy the house. So basically I got the house over everyone else with a broker.

You could wind up saving the entire 6% by listing it yourself if you find a buyer without a broker or pay the buying broker 2.5%. You don't need a selling broker for a cheap condo.

As someone said previously all the work is done by the lawyer and they do it for like 1,000 to 1,500 bucks which is peanuts compared to how much stuff they need to do.
This post was edited on 4/1 1:53 PM by RU to the Core

 

[RU-ROCS]

Originally posted by mdk01:

I couldn't agree more. If your primary objective is to sell your condo at the maximum price, i would pay the 6% commission. The old adage is true: "You get what you pay for."

I partially agree. With respect to a $160,000. property I agree entirely. However, with a higher priced property, say over $500k, the motivation is the property itself rather than the difference between 5% & 6%.

+1. The last house a sold was a dozen years ago. It sold for the asking price of $699K in the first 2 weeks. Brokers made $35K (5%). That's plenty of money to expect great service. The neighborhood I live in now has several million dollar houses. I don't believe it's necessary to give 6% (i.e., $60K) on those houses to "get what you pay for." It's not like brokers will do something magical on a million dollar house that they wouldn't do to sell a $200K house. Plus, it seems every other formerly stay-at-home mom in my town is now a realtor. So the market must be pretty good!

 

[Saint Puppy]

Thanks everyone - lot of great advice on here. I would love to rent out the home but the wife is against that. Would also love to sell it myself but wife is against that too. Condo is in North Brunswick if anyone is interested about a mile and a half from where they are building the new train station going into NYC in 2018 and also a new downtown. Value of condo is supposed to be going up over the next couple of years because of this. If you are interested email me at sigherph @ gmail.com.

 

[Knight Shift]

Originally posted by Saint Puppy:
Thanks everyone - lot of great advice on here. I would love to rent out the home but the wife is against that. Would also love to sell it myself but wife is against that too. Condo is in North Brunswick if anyone is interested about a mile and a half from where they are building the new train station going into NYC in 2018 and also a new downtown. Value of condo is supposed to be going up over the next couple of years because of this. If you are interested email me at sigherph @ gmail.com.

Coincidentally, that's not far from the condo I sold back in 1995. It was the Hovnanian development behind the movie theatre (was not there when I lived there), right off of Cozzens Lane, which runs between Route 1 and Route 27. Great area, and close to Jersey Ave train station. North Brunswick is a great town too.

 

[Saint Puppy]

Originally posted by Knight Shift:

Originally posted by Saint Puppy:
Thanks everyone - lot of great advice on here. I would love to rent out the home but the wife is against that. Would also love to sell it myself but wife is against that too. Condo is in North Brunswick if anyone is interested about a mile and a half from where they are building the new train station going into NYC in 2018 and also a new downtown. Value of condo is supposed to be going up over the next couple of years because of this. If you are interested email me at sigherph @ gmail.com.

Coincidentally, that's not far from the condo I sold back in 1995. It was the Hovnanian development behind the movie theatre (was not there when I lived there), right off of Cozzens Lane, which runs between Route 1 and Route 27. Great area, and close to Jersey Ave train station. North Brunswick is a great town too.

Agree North Brunswick is a nice town and there are certain parts I will miss (especially the proximity to New Brunswick). They are actually building the train station and downtown right across the street from where you used to live (Regal movie theater). We are looking for something bigger, closer to her job and to settle into a school district now that the little guy will be in public school next year. Cant complain about my sons first 4 1/2 years here - great starter home and/or investment property - wish me and the wife were on the same page as I'd love to rent it out.

 

[anon_0k9zlfz6lz9oy]

I own the largest real estate school in NJ and was nominated for a national sales award and here is my take.

We have statistics that show that seller's net more money on 6% listings vs 5% listings. What it really comes down to is which agent is worth it vs which agent is not. Ask the agent about their "sales to list price ratio". Ask them how they will go about maximizing your ROI and their experience negotiating inspection items (these could really cut into your bottom line).

I actually lost out on a listing last week because I offered a 6% rate (and the highest sales to list price ratio 102.7% in NJ amongst nearly 125k total agents) to some schmuck who couldnt sell water in the desert because he gave them 5% and told them what they wanted to hear as far as price is concerned. These are dumb homeowners because they agent they went with had a sales to list price ratio in the 95% range so they viewed commission as an expense not an investment. Don't make that mistake.

At the end of the day what matters most to you, the amount of money that you net in your pocket or how much you pay in commission?

Also list your home right at market value if youre in an area of low inventory, this will cause a bidding war and have your home sell for a premium. Don't fall into the "let's price it and give ourself some wiggle room". Doesn't work

 

[RU to the Core]

I agree on that last point about the bidding war thing.

I just bought a house and the homeowners tried pricing it too high initially and they received no offers. Once they lowered the price to what everyone thought it was worth they received 4 offers including mine which drove the price up to a little bit more than what they were listing it for. The bidding war thing is a unique animal. It's like the realtor says give us your final and best by Friday and you better come out swinging or you lose the house.

 

[anon_0k9zlfz6lz9oy]

You nailed it RUcore. Biddings wars can definitely be enticed by a proper preparation/marketing plan. Over 90% of my listings last year went for above asking price through bidding wars. I've had homes sell for as much as 13% ABOVE asking price, it gets crazy.