Lowering real estate agent costs when selling?

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miamivice
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Lowering real estate agent costs when selling?

Post by miamivice » Tue Dec 05, 2017 10:43 am

What options do I have to lower the real estate cost of selling our house?

Looking at a calculator, the real estate agent cost to sell our house comes to $36,000 - if I use a discount brokerage house. A full price brokerage house might come to $54,000.

The breakdown is about $27,000 to the buyer's agent and $9,000 to the listing agent.

This cost seems absurdly high. I could do a lot of work for $54,000!

What are my options to lower the cost of selling the home?

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Sandtrap
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Re: Lowering real estate agent costs when selling?

Post by Sandtrap » Tue Dec 05, 2017 10:51 am

Typically, it's 3% to the agent, 3% to the house (broker/brokerage firm). You can use various "listing/Realtor" brokerages for up to half or less than that. They will list the property on the MLS and put a sign out. Realtor agents can sell the home because it's on the MLS for all to see. But the cost to you is reduced. You can also negotiate with various agent/brokerages for reduced fees. The ultimate low cost is to do a FSBO (for sale by owner) and have the title company do all the paperwork, escrow, transfers, etc. The discount brokerages lay somewhere between a full service "named" brokerage and a FSBO.
There is a lot of advantage to at least getting it on the MLS service for all the agents in the area to sell.
Actionable:
1
If you are in a high demand area, right now R/E is doing well in many areas, inventory is low for good properties, you can try a FSBO first.
2
Then if it doesn't sell right away, move on to a Flat Fee MLS R/E listing service,
3
then finally a regular Brokerage. What the large brokerages offer is the added exposure and effort of a larger house of agents (something like a large car dealership) as well as their own advertising). Agents will scramble to get your listing contract because henceforth they will get a cut no matter which agent/brokerage sells the property. Some do well with just getting listings and never selling much on their own.

DW and I do most all of the work to buy and sell R/E so it seems a bit "pricey" to pay so much for a Realtor/Brokerage to just handle the paperwork.
j :D
Last edited by Sandtrap on Tue Dec 05, 2017 11:53 am, edited 2 times in total.

J295
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Re: Lowering real estate agent costs when selling?

Post by J295 » Tue Dec 05, 2017 11:17 am

OP .... irrespective of the cost, do you believe you need a real estate agent to effectively sell your home?

riverguy
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Re: Lowering real estate agent costs when selling?

Post by riverguy » Tue Dec 05, 2017 11:30 am

List it with a flat fee MLS service. I've done it for $200 each on multiple properties. Show it yourself or put a lockbox on it and give the combo to realtors that call.

You can choose what to give a buyer's agent. Could be the standard 3% or less. I think you will find most buyers have a realtor because it doesn't "cost" them anything. Seller's realtors are pretty much worthless.

miamivice
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Re: Lowering real estate agent costs when selling?

Post by miamivice » Tue Dec 05, 2017 11:31 am

J295 wrote:
Tue Dec 05, 2017 11:17 am
OP .... irrespective of the cost, do you believe you need a real estate agent to effectively sell your home?
Somebody needs to open the door and let them walk through the house.

1% listing agent fee is about $9000. That's fine. 3% buyers agent fee is $27,000, and I think that's too high. Can I just offer 1.5% to the buyer's agent?

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Sandtrap
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Re: Lowering real estate agent costs when selling?

Post by Sandtrap » Tue Dec 05, 2017 11:34 am

miamivice wrote:
Tue Dec 05, 2017 11:31 am
J295 wrote:
Tue Dec 05, 2017 11:17 am
OP .... irrespective of the cost, do you believe you need a real estate agent to effectively sell your home?
Somebody needs to open the door and let them walk through the house.

1% listing agent fee is about $9000. That's fine. 3% buyers agent fee is $27,000, and I think that's too high. Can I just offer 1.5% to the buyer's agent?
You can negotiate with any agent/brokerage. Asking is free. They can decline or counter. Just ask, "is it negotiable"?
There are a lot of agents and brokerages to work with in most areas. They are salesman competing for your business.

surfstar
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Re: Lowering real estate agent costs when selling?

Post by surfstar » Tue Dec 05, 2017 11:37 am

Redfin

They're trying to break into reducing fees...

staythecourse
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Re: Lowering real estate agent costs when selling?

Post by staythecourse » Tue Dec 05, 2017 12:03 pm

Sandtrap wrote:
Tue Dec 05, 2017 10:51 am
Actionable:
1
If you are in a high demand area, right now R/E is doing well in many areas, inventory is low for good properties, you can try a FSBO first.
2
Then if it doesn't sell right away, move on to a Flat Fee MLS R/E listing service,
3
then finally a regular Brokerage. What the large brokerages offer is the added exposure and effort of a larger house of agents (something like a large car dealership) as well as their own advertising.

DW and I do most all of the work to buy and sell R/E so it seems a bit "pricey" to pay so much for a Realtor/Brokerage to just handle the paperwork.
j :D
Agreed with the approach above. Just a few caveats, the cost of MLS listing services are pretty low (I paid $500). So it may just benefit going straight to that instead of FSBO. Personally, I think the best approach to selling is putting it up ONCE at a real competitive price (at or a little below list to sales price of comps) and then get a bunch of people competing and raising the price that way. I think it looks more professional for some folks to have some real estate company involved (who do the MLS listing services) then just some random person putting a sign in front of house. Also, not sure if it looks negative if you do FSBO for awhile doesn't sell then switch to MLS listing service. Looks a little more desparate.

Also, as mentioned in another response I would go to Redfin BEFORE using any other real estate agent company. At least they will cut you some money back (done on a sliding scale based on sales price). Everybody I know who used it has LOVED their service.

BTW, I sold my previous place in 8 days using a MLS listing service. Was pretty easy. Some things I learned along the way... \
1. Get redfin to come out and give you a free analysis of comps and likely a good sales price before listing. They do that as a courtesy and don't bother you to use them later.
2. Clean the place out competely. Get rid of EVERYTHING that is not essential. Make the place look BIG and empty.
3. Make sure you are not around when folks come looking at the property. Say hi (since you basically your own selling agent) then leave the house and go for a walk and tell them to text you when they leave.
4. Remember since you are cutting out the 2.5%-3% to selling agent you can place your property more competitive and still come out ahead post transaction fees.
5. Post your house in early spring (think March Madness). There is clear disparity in sales based on time of year.

Good luck.

p.s. There is use for real estate agents, such as: if your live in cold area, your property is old or outdated, you don't want to get involved with the whole sale and don't mind giving some money for someone else to do the work, you are inxperienced, etc... But if you live in a hot market with a houses similar to yours selling quick then I would definitely try to save some money.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

adamthesmythe
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Re: Lowering real estate agent costs when selling?

Post by adamthesmythe » Tue Dec 05, 2017 12:20 pm

Sandtrap wrote:
Tue Dec 05, 2017 11:34 am
miamivice wrote:
Tue Dec 05, 2017 11:31 am
J295 wrote:
Tue Dec 05, 2017 11:17 am
OP .... irrespective of the cost, do you believe you need a real estate agent to effectively sell your home?
Somebody needs to open the door and let them walk through the house.

1% listing agent fee is about $9000. That's fine. 3% buyers agent fee is $27,000, and I think that's too high. Can I just offer 1.5% to the buyer's agent?
You can negotiate with any agent/brokerage. Asking is free. They can decline or counter. Just ask, "is it negotiable"?
There are a lot of agents and brokerages to work with in most areas. They are salesman competing for your business.
If demand is reasonably strong, you can get 5% not 6% just by asking. At least in my experience.

Keep things in perspective. When I sold the tax/ tranfer fees were about the same as RE commission. You may well end up paying for some repairs. You need to pay moving costs.

When I sold my market was working professionals. These people don't have lots of spare time, will retain a buyer's agent, and won't make an effort to seek out FSBOs.

pshonore
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Re: Lowering real estate agent costs when selling?

Post by pshonore » Tue Dec 05, 2017 1:11 pm

Generally if you list your house with a conventional agency, the commission is 6%. You can ask for 5% and you might be successful. The agency decides the split, but its usually 50/50 with the agency that produces a buyer. So each of the following four parties usually gets 1.5% - the agent who got the listing, that agents broker, the agent who introduced the prospect to the property, and that agents broker. Sometimes the listing agent IS the broker and gets 3% (half of the total); sometimes the one person plays all four roles and gets 6%, which was very common many years ago before complaints started about one broker representing both the buyer and the seller. Also remember that in most locales, a buyers agent probably works for a broker as well depending on the laws in that state. Also remember that agents will push the house with the higher commission rate, other things being equal.

LSLover
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Re: Lowering real estate agent costs when selling?

Post by LSLover » Tue Dec 05, 2017 1:46 pm

staythecourse wrote:
Tue Dec 05, 2017 12:03 pm
Sandtrap wrote:
Tue Dec 05, 2017 10:51 am
Actionable:
1
If you are in a high demand area, right now R/E is doing well in many areas, inventory is low for good properties, you can try a FSBO first.
2
Then if it doesn't sell right away, move on to a Flat Fee MLS R/E listing service,
3
then finally a regular Brokerage. What the large brokerages offer is the added exposure and effort of a larger house of agents (something like a large car dealership) as well as their own advertising.

DW and I do most all of the work to buy and sell R/E so it seems a bit "pricey" to pay so much for a Realtor/Brokerage to just handle the paperwork.
j :D
Agreed with the approach above. Just a few caveats, the cost of MLS listing services are pretty low (I paid $500). So it may just benefit going straight to that instead of FSBO. Personally, I think the best approach to selling is putting it up ONCE at a real competitive price (at or a little below list to sales price of comps) and then get a bunch of people competing and raising the price that way. I think it looks more professional for some folks to have some real estate company involved (who do the MLS listing services) then just some random person putting a sign in front of house. Also, not sure if it looks negative if you do FSBO for awhile doesn't sell then switch to MLS listing service. Looks a little more desparate.

Also, as mentioned in another response I would go to Redfin BEFORE using any other real estate agent company. At least they will cut you some money back (done on a sliding scale based on sales price). Everybody I know who used it has LOVED their service.

BTW, I sold my previous place in 8 days using a MLS listing service. Was pretty easy. Some things I learned along the way... \
1. Get redfin to come out and give you a free analysis of comps and likely a good sales price before listing. They do that as a courtesy and don't bother you to use them later.
2. Clean the place out competely. Get rid of EVERYTHING that is not essential. Make the place look BIG and empty.
3. Make sure you are not around when folks come looking at the property. Say hi (since you basically your own selling agent) then leave the house and go for a walk and tell them to text you when they leave.
4. Remember since you are cutting out the 2.5%-3% to selling agent you can place your property more competitive and still come out ahead post transaction fees.
5. Post your house in early spring (think March Madness). There is clear disparity in sales based on time of year.

Good luck.

p.s. There is use for real estate agents, such as: if your live in cold area, your property is old or outdated, you don't want to get involved with the whole sale and don't mind giving some money for someone else to do the work, you are inxperienced, etc... But if you live in a hot market with a houses similar to yours selling quick then I would definitely try to save some money.
What is your rationale behind the statement “Make sure you are not around when folks come looking at the property. Say hi (since you basically your own selling agent) then leave the house and go for a walk and tell them to text you when they leave”?

I heard this statement many times from my local real estate agents but none of them made it convincing to me as to why the owner needs to leave the premises...

I sold my last house myself (paid $200 for the MLS listing). I was always in the house when a prospective buyer toured the house, was answering questions, emphasizing strong points of the house. Sold the place in 6 days for $750K... So, why not being around?

miamivice
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Re: Lowering real estate agent costs when selling?

Post by miamivice » Tue Dec 05, 2017 1:50 pm

LSLover wrote:
Tue Dec 05, 2017 1:46 pm
staythecourse wrote:
Tue Dec 05, 2017 12:03 pm
Sandtrap wrote:
Tue Dec 05, 2017 10:51 am
Actionable:
1
If you are in a high demand area, right now R/E is doing well in many areas, inventory is low for good properties, you can try a FSBO first.
2
Then if it doesn't sell right away, move on to a Flat Fee MLS R/E listing service,
3
then finally a regular Brokerage. What the large brokerages offer is the added exposure and effort of a larger house of agents (something like a large car dealership) as well as their own advertising.

DW and I do most all of the work to buy and sell R/E so it seems a bit "pricey" to pay so much for a Realtor/Brokerage to just handle the paperwork.
j :D
Agreed with the approach above. Just a few caveats, the cost of MLS listing services are pretty low (I paid $500). So it may just benefit going straight to that instead of FSBO. Personally, I think the best approach to selling is putting it up ONCE at a real competitive price (at or a little below list to sales price of comps) and then get a bunch of people competing and raising the price that way. I think it looks more professional for some folks to have some real estate company involved (who do the MLS listing services) then just some random person putting a sign in front of house. Also, not sure if it looks negative if you do FSBO for awhile doesn't sell then switch to MLS listing service. Looks a little more desparate.

Also, as mentioned in another response I would go to Redfin BEFORE using any other real estate agent company. At least they will cut you some money back (done on a sliding scale based on sales price). Everybody I know who used it has LOVED their service.

BTW, I sold my previous place in 8 days using a MLS listing service. Was pretty easy. Some things I learned along the way... \
1. Get redfin to come out and give you a free analysis of comps and likely a good sales price before listing. They do that as a courtesy and don't bother you to use them later.
2. Clean the place out competely. Get rid of EVERYTHING that is not essential. Make the place look BIG and empty.
3. Make sure you are not around when folks come looking at the property. Say hi (since you basically your own selling agent) then leave the house and go for a walk and tell them to text you when they leave.
4. Remember since you are cutting out the 2.5%-3% to selling agent you can place your property more competitive and still come out ahead post transaction fees.
5. Post your house in early spring (think March Madness). There is clear disparity in sales based on time of year.

Good luck.

p.s. There is use for real estate agents, such as: if your live in cold area, your property is old or outdated, you don't want to get involved with the whole sale and don't mind giving some money for someone else to do the work, you are inxperienced, etc... But if you live in a hot market with a houses similar to yours selling quick then I would definitely try to save some money.
What is your rationale behind the statement “Make sure you are not around when folks come looking at the property. Say hi (since you basically your own selling agent) then leave the house and go for a walk and tell them to text you when they leave”?

I heard this statement many times from my local real estate agents but none of them made it convincing to me as to why the owner needs to leave the premises...

I sold my last house myself (paid $200 for the MLS listing). I was always in the house when a prospective buyer toured the house, was answering questions, emphasizing strong points of the house. Sold the place in 6 days for $750K... So, why not being around?
The reason not to be around is that it's annoying having a salesman follow you around the house trying to talk you into buying it. I remember one house where the seller was presented. My wife made a comment about a countertop and then we had to listen to the sellers discuss that particular countertop in detail, as if that would sell our house.

One house might not be bad, but if the sellers were present at every house, it'd feel akin to buying a used car at a car lot, and a lot less folks would be willing to tour houses to think about buying homes.

staythecourse
Posts: 5075
Joined: Mon Jan 03, 2011 9:40 am

Re: Lowering real estate agent costs when selling?

Post by staythecourse » Tue Dec 05, 2017 1:58 pm

LSLover wrote:
Tue Dec 05, 2017 1:46 pm
staythecourse wrote:
Tue Dec 05, 2017 12:03 pm
Sandtrap wrote:
Tue Dec 05, 2017 10:51 am
Actionable:
1
If you are in a high demand area, right now R/E is doing well in many areas, inventory is low for good properties, you can try a FSBO first.
2
Then if it doesn't sell right away, move on to a Flat Fee MLS R/E listing service,
3
then finally a regular Brokerage. What the large brokerages offer is the added exposure and effort of a larger house of agents (something like a large car dealership) as well as their own advertising.

DW and I do most all of the work to buy and sell R/E so it seems a bit "pricey" to pay so much for a Realtor/Brokerage to just handle the paperwork.
j :D
Agreed with the approach above. Just a few caveats, the cost of MLS listing services are pretty low (I paid $500). So it may just benefit going straight to that instead of FSBO. Personally, I think the best approach to selling is putting it up ONCE at a real competitive price (at or a little below list to sales price of comps) and then get a bunch of people competing and raising the price that way. I think it looks more professional for some folks to have some real estate company involved (who do the MLS listing services) then just some random person putting a sign in front of house. Also, not sure if it looks negative if you do FSBO for awhile doesn't sell then switch to MLS listing service. Looks a little more desparate.

Also, as mentioned in another response I would go to Redfin BEFORE using any other real estate agent company. At least they will cut you some money back (done on a sliding scale based on sales price). Everybody I know who used it has LOVED their service.

BTW, I sold my previous place in 8 days using a MLS listing service. Was pretty easy. Some things I learned along the way... \
1. Get redfin to come out and give you a free analysis of comps and likely a good sales price before listing. They do that as a courtesy and don't bother you to use them later.
2. Clean the place out competely. Get rid of EVERYTHING that is not essential. Make the place look BIG and empty.
3. Make sure you are not around when folks come looking at the property. Say hi (since you basically your own selling agent) then leave the house and go for a walk and tell them to text you when they leave.
4. Remember since you are cutting out the 2.5%-3% to selling agent you can place your property more competitive and still come out ahead post transaction fees.
5. Post your house in early spring (think March Madness). There is clear disparity in sales based on time of year.

Good luck.

p.s. There is use for real estate agents, such as: if your live in cold area, your property is old or outdated, you don't want to get involved with the whole sale and don't mind giving some money for someone else to do the work, you are inxperienced, etc... But if you live in a hot market with a houses similar to yours selling quick then I would definitely try to save some money.
What is your rationale behind the statement “Make sure you are not around when folks come looking at the property. Say hi (since you basically your own selling agent) then leave the house and go for a walk and tell them to text you when they leave”?

I heard this statement many times from my local real estate agents but none of them made it convincing to me as to why the owner needs to leave the premises...

I sold my last house myself (paid $200 for the MLS listing). I was always in the house when a prospective buyer toured the house, was answering questions, emphasizing strong points of the house. Sold the place in 6 days for $750K... So, why not being around?
Wouldn't matter to me, but many folks simply do not like thinking about buying a house when the owner is hovering around. I don't understand it myself as I would have no problem if I liked the house. Besides, in general, it is much harder emotionally to screw over someone else if you met them and know them face to face. That would be reassuring to me as a buyer. MANY real estate agents, however, say they have seen poor outcomes with owners loitering around. I figure one thing real estate agents have is experience seeing THOUSANDS of situations play out. That has to mean something.

Either way, I see it as a bit of a Pascal Wager. If you are not around and it doesn't matter no big deal. If you aren't around and it does matter it was good you weren't there. If you are around and it does matter you may lose a potential buyer due to something trivial. Any questions that the potential buyer may have can be texted at that time or later. So, I figure the safe bet is to not be around. That just means going outside and playing in the lawn or take a walk nearby.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

ICMoney
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Re: Lowering real estate agent costs when selling?

Post by ICMoney » Tue Dec 05, 2017 2:08 pm

We recently FSBO'd our house and it sold in less than 2 weeks. It was a higher end home in a semi-rural area, but we priced it right which I think helped it to go quickly. We posted it on a local Facebook buy/sell/trade site and it was under contract in less than 2 weeks. We did offer in the ad to pay a buyer's agent commission - first showing was to an agent with buyers, second was to an unrepresented buyer who was the one that ended up buying the house. Attorney's fees were under $500 to draw up the contract and subsequent amendments - WAY less than what we would have paid using realtors.

Best,
ICM

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marti038
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Location: Birmingham, AL

Re: Lowering real estate agent costs when selling?

Post by marti038 » Tue Dec 05, 2017 2:40 pm

miamivice wrote:
Tue Dec 05, 2017 10:43 am
What options do I have to lower the real estate cost of selling our house?

Looking at a calculator, the real estate agent cost to sell our house comes to $36,000 - if I use a discount brokerage house. A full price brokerage house might come to $54,000.

The breakdown is about $27,000 to the buyer's agent and $9,000 to the listing agent.

This cost seems absurdly high. I could do a lot of work for $54,000!

What are my options to lower the cost of selling the home?
We did a FSBO last year and it was easier than I thought. We used a listing service to take pictures of the house and put it on MLS. I think it was about $800. You can always hire an agent if the FSBO is not going well.

jlcnuke
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Re: Lowering real estate agent costs when selling?

Post by jlcnuke » Tue Dec 05, 2017 2:40 pm

I don't understand why anyone would agree to pay the person who was hired by and worked for someone else. Pay someone to list it on the MLS (because that's cheap). Then only bother paying a realtor if you find you can't sell the house on your own AND you are sure it is priced appropriately AND you decide that paying a flat-rate realtor will be worth their fee. If it were up to me, there'd be no such thing as a "percentage commission" and that crap only exists because people are too scared or ignorant to demand a better method.

That $600k house didn't involve anymore work to sell than that $200k house, so what kind of person volunteers to pay 3 times as much as the other guy for the same work to be done? The kind that doesn't mind throwing away money... that's who.

adamthesmythe
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Re: Lowering real estate agent costs when selling?

Post by adamthesmythe » Tue Dec 05, 2017 3:05 pm

jlcnuke wrote:
Tue Dec 05, 2017 2:40 pm
I don't understand why anyone would agree to pay the person who was hired by and worked for someone else. Pay someone to list it on the MLS (because that's cheap). Then only bother paying a realtor if you find you can't sell the house on your own AND you are sure it is priced appropriately AND you decide that paying a flat-rate realtor will be worth their fee. If it were up to me, there'd be no such thing as a "percentage commission" and that crap only exists because people are too scared or ignorant to demand a better method.

That $600k house didn't involve anymore work to sell than that $200k house, so what kind of person volunteers to pay 3 times as much as the other guy for the same work to be done? The kind that doesn't mind throwing away money... that's who.
It depends on your market. As I noted earlier, when I sold the market for my house was working professionals. They retain a buyer's agent to minimize the time involved in looking AND for advice about neighborhoods and offers. If the buyer's agent directs them to an FSBO they contractually owe money to the buyer's agent. So without the seller's offer to compensate the buyer's agent, they would need to offer higher to compensate. The only way to cut out the buyer's agent is if the buyer finds the FSBO himself.

RudyS
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Re: Lowering real estate agent costs when selling?

Post by RudyS » Tue Dec 05, 2017 3:09 pm

About being home when buyers come: The house we are in now was a FSBO. When we came, after work, the owners were sitting on the screened-in porch having dinner, while we toured the house. Afterwards, we talked, and did wind up buying. That little scenario really helped us decide on that house. Note, they did NOT follow us around as we went from room to room.

dreamjob9
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Re: Lowering real estate agent costs when selling?

Post by dreamjob9 » Tue Dec 05, 2017 3:11 pm

As others have mentioned, use REDFIN!

It's by far the best way to sell a home. The customer service is outstanding! Reduced fee w/ better service than a typical real estate agent + they sell for 4% higher on average. Best of luck!

staythecourse
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Joined: Mon Jan 03, 2011 9:40 am

Re: Lowering real estate agent costs when selling?

Post by staythecourse » Tue Dec 05, 2017 3:24 pm

adamthesmythe wrote:
Tue Dec 05, 2017 3:05 pm
If the buyer's agent directs them to an FSBO they contractually owe money to the buyer's agent. So without the seller's offer to compensate the buyer's agent, they would need to offer higher to compensate.
Do you have a link confirming that as that sounds wrong.

If a buyers agent shows a FSBO to a buyer when the seller is not giving a commission to the buyers agent then they get nothing. That is why buyer's agents don't show FSBO properties that are not offering said commission. They show only properties where they are going to get paid.

Personally, I think one should offer commission to a buyers agent. They are bringing in the buyer, holds their hands during the whole process, makes sure it gets to the finish line (making sure mortgage and inspections are done), and actually helps out a seller doing it on their own (just so they don't lose the commission knowing the seller is a novice in the field of real estate).

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Diogenes
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Re: Lowering real estate agent costs when selling?

Post by Diogenes » Tue Dec 05, 2017 3:34 pm

Be wary of anyone who tells you that 6% is the going rate or ‘normal’ in your area. Many realtors wish that were so, but it hasn’t been in most places for a long time.
Everything is negotiable.
There are realtors here that might disagree, but it’s true. That price model has been on life support for some time, for good reason.

jlcnuke
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Re: Lowering real estate agent costs when selling?

Post by jlcnuke » Tue Dec 05, 2017 3:55 pm

Diogenes wrote:
Tue Dec 05, 2017 3:34 pm
Be wary of anyone who tells you that 6% is the going rate or ‘normal’ in your area. Many realtors wish that were so, but it hasn’t been in most places for a long time.
Everything is negotiable.
There are realtors here that might disagree, but it’s true. That price model has been on life support for some time, for good reason.
The proliferation of "fee only" real estate agencies is (hopefully) killing off the traditional percentage based commission business. Hopefully 2 or 3 generations from now that old model will be ancient history (sooner would be better).

goodenoughinvestor
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Re: Lowering real estate agent costs when selling?

Post by goodenoughinvestor » Tue Dec 05, 2017 4:17 pm

The problem with all of this advice is that, by definition, real estate is local. In some areas, FSBO or Redfin are common while in others they aren't. Only take advice from someone who knows your specific area very well. For example, in my town most sellers use an agent. When you see someone selling on their own or through a discount agency it's often assumed that there is something wrong with the house or the sellers are being unrealistic and stubborn in their asking price. They therefore see less traffic than properties that use a seller's agent and end up selling for enough less that the lack of commission doesn't offset it. If I were you I would do some research into the selling and asking prices of local homes like yours and see if you can find a statistically significant difference in final selling (not asking) price depending on how the properties were listed. If not many houses are listed through FSBO or a discount broker I would be very wary about using one.

new2bogle
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Re: Lowering real estate agent costs when selling?

Post by new2bogle » Tue Dec 05, 2017 4:27 pm

Sandtrap wrote:
Tue Dec 05, 2017 11:34 am
miamivice wrote:
Tue Dec 05, 2017 11:31 am
J295 wrote:
Tue Dec 05, 2017 11:17 am
OP .... irrespective of the cost, do you believe you need a real estate agent to effectively sell your home?
Somebody needs to open the door and let them walk through the house.

1% listing agent fee is about $9000. That's fine. 3% buyers agent fee is $27,000, and I think that's too high. Can I just offer 1.5% to the buyer's agent?
You can negotiate with any agent/brokerage. Asking is free. They can decline or counter. Just ask, "is it negotiable"?
There are a lot of agents and brokerages to work with in most areas. They are salesman competing for your business.
How does one offer less to the buyer's agent - put it in the contract? Does the buyer's agent have any say to this as in: if the buyers want the house at the price but the only obstacle is the seller giving limiting buyers agent to a 1% commission.

overthought
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Re: Lowering real estate agent costs when selling?

Post by overthought » Tue Dec 05, 2017 5:57 pm

new2bogle wrote:
Tue Dec 05, 2017 4:27 pm
Sandtrap wrote:
Tue Dec 05, 2017 11:34 am
miamivice wrote:
Tue Dec 05, 2017 11:31 am
J295 wrote:
Tue Dec 05, 2017 11:17 am
OP .... irrespective of the cost, do you believe you need a real estate agent to effectively sell your home?
Somebody needs to open the door and let them walk through the house.

1% listing agent fee is about $9000. That's fine. 3% buyers agent fee is $27,000, and I think that's too high. Can I just offer 1.5% to the buyer's agent?
You can negotiate with any agent/brokerage. Asking is free. They can decline or counter. Just ask, "is it negotiable"?
There are a lot of agents and brokerages to work with in most areas. They are salesman competing for your business.
How does one offer less to the buyer's agent - put it in the contract? Does the buyer's agent have any say to this as in: if the buyers want the house at the price but the only obstacle is the seller giving limiting buyers agent to a 1% commission.
The buyer's agent typically has a contract with the buyer that includes a minimum 2-3% commission to be paid on FSBO properties. Buyer would be on the hook for that if seller doesn't offer to cover it. IIRC, if both buyer and seller use Realtors, buyer agent agrees to take half of the listing commission, even if it was lower than the buyer agent would have taken on the FSBO.

Last time we sold a house, buyers had an interesting option available to them: Some agents would give half the commission to buyers who found the house themselves. Definitely gives the Realtor an incentive to find good stuff for you quickly, if nothing else.

J295
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Re: Lowering real estate agent costs when selling?

Post by J295 » Tue Dec 05, 2017 6:02 pm

In our location, when a seller‘s agent puts the house on MLS it states the percentage payment that will go to the buyers agent. The percentage is determined solely by the listing agent.

shiftleft
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Re: Lowering real estate agent costs when selling?

Post by shiftleft » Tue Dec 05, 2017 6:03 pm

Sold a home recently. Everything is negotiable. You can also negotiate other things into the package if the rate is too high (such as staging). Get competing offers. I would never pay 6% to sell a home. You can get 4%-5% fees for a 400K to 600K home in CA.

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jfn111
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Location: Minnesota

Re: Lowering real estate agent costs when selling?

Post by jfn111 » Tue Dec 05, 2017 8:36 pm

overthought wrote:
Tue Dec 05, 2017 5:57 pm
new2bogle wrote:
Tue Dec 05, 2017 4:27 pm
Sandtrap wrote:
Tue Dec 05, 2017 11:34 am
miamivice wrote:
Tue Dec 05, 2017 11:31 am
J295 wrote:
Tue Dec 05, 2017 11:17 am
OP .... irrespective of the cost, do you believe you need a real estate agent to effectively sell your home?
Somebody needs to open the door and let them walk through the house.

1% listing agent fee is about $9000. That's fine. 3% buyers agent fee is $27,000, and I think that's too high. Can I just offer 1.5% to the buyer's agent?
You can negotiate with any agent/brokerage. Asking is free. They can decline or counter. Just ask, "is it negotiable"?
There are a lot of agents and brokerages to work with in most areas. They are salesman competing for your business.
How does one offer less to the buyer's agent - put it in the contract? Does the buyer's agent have any say to this as in: if the buyers want the house at the price but the only obstacle is the seller giving limiting buyers agent to a 1% commission.
The buyer's agent typically has a contract with the buyer that includes a minimum 2-3% commission to be paid on FSBO properties. Buyer would be on the hook for that if seller doesn't offer to cover it. IIRC, if both buyer and seller use Realtors, buyer agent agrees to take half of the listing commission, even if it was lower than the buyer agent would have taken on the FSBO.

Last time we sold a house, buyers had an interesting option available to them: Some agents would give half the commission to buyers who found the house themselves. Definitely gives the Realtor an incentive to find good stuff for you quickly, if nothing else.
When I make an offer for a Buyer I have a contract with the Buyer that says the Buyer will pay me a set commission. The contract also says the Buyers responsibility will be reduced by the amount the seller is offering.
I usually put 2.7% in my Buyer Rep Agreements so..... someones paying me 2.7% :shock:

overthought
Posts: 161
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Re: Lowering real estate agent costs when selling?

Post by overthought » Tue Dec 05, 2017 9:04 pm

jfn111 wrote:
Tue Dec 05, 2017 8:36 pm
overthought wrote:
Tue Dec 05, 2017 5:57 pm
new2bogle wrote:
Tue Dec 05, 2017 4:27 pm
Sandtrap wrote:
Tue Dec 05, 2017 11:34 am
miamivice wrote:
Tue Dec 05, 2017 11:31 am


Somebody needs to open the door and let them walk through the house.

1% listing agent fee is about $9000. That's fine. 3% buyers agent fee is $27,000, and I think that's too high. Can I just offer 1.5% to the buyer's agent?
You can negotiate with any agent/brokerage. Asking is free. They can decline or counter. Just ask, "is it negotiable"?
There are a lot of agents and brokerages to work with in most areas. They are salesman competing for your business.
How does one offer less to the buyer's agent - put it in the contract? Does the buyer's agent have any say to this as in: if the buyers want the house at the price but the only obstacle is the seller giving limiting buyers agent to a 1% commission.
The buyer's agent typically has a contract with the buyer that includes a minimum 2-3% commission to be paid on FSBO properties. Buyer would be on the hook for that if seller doesn't offer to cover it. IIRC, if both buyer and seller use Realtors, buyer agent agrees to take half of the listing commission, even if it was lower than the buyer agent would have taken on the FSBO.

Last time we sold a house, buyers had an interesting option available to them: Some agents would give half the commission to buyers who found the house themselves. Definitely gives the Realtor an incentive to find good stuff for you quickly, if nothing else.
When I make an offer for a Buyer I have a contract with the Buyer that says the Buyer will pay me a set commission. The contract also says the Buyers responsibility will be reduced by the amount the seller is offering.
I usually put 2.7% in my Buyer Rep Agreements so..... someones paying me 2.7% :shock:
Right, isn't that the same thing as what I said? Except that your contract gives you 2.7% no matter what, where the ones I'd seen accept the listing's commission rate as is if seller agent is another Realtor?

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jfn111
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Location: Minnesota

Re: Lowering real estate agent costs when selling?

Post by jfn111 » Tue Dec 05, 2017 9:21 pm

overthought wrote:
Tue Dec 05, 2017 9:04 pm
jfn111 wrote:
Tue Dec 05, 2017 8:36 pm
overthought wrote:
Tue Dec 05, 2017 5:57 pm
new2bogle wrote:
Tue Dec 05, 2017 4:27 pm
Sandtrap wrote:
Tue Dec 05, 2017 11:34 am

You can negotiate with any agent/brokerage. Asking is free. They can decline or counter. Just ask, "is it negotiable"?
There are a lot of agents and brokerages to work with in most areas. They are salesman competing for your business.
How does one offer less to the buyer's agent - put it in the contract? Does the buyer's agent have any say to this as in: if the buyers want the house at the price but the only obstacle is the seller giving limiting buyers agent to a 1% commission.
The buyer's agent typically has a contract with the buyer that includes a minimum 2-3% commission to be paid on FSBO properties. Buyer would be on the hook for that if seller doesn't offer to cover it. IIRC, if both buyer and seller use Realtors, buyer agent agrees to take half of the listing commission, even if it was lower than the buyer agent would have taken on the FSBO.

Last time we sold a house, buyers had an interesting option available to them: Some agents would give half the commission to buyers who found the house themselves. Definitely gives the Realtor an incentive to find good stuff for you quickly, if nothing else.
When I make an offer for a Buyer I have a contract with the Buyer that says the Buyer will pay me a set commission. The contract also says the Buyers responsibility will be reduced by the amount the seller is offering.
I usually put 2.7% in my Buyer Rep Agreements so..... someones paying me 2.7% :shock:
Right, isn't that the same thing as what I said? Except that your contract gives you 2.7% no matter what, where the ones I'd seen accept the listing's commission rate as is if seller agent is another Realtor?
Yup, I was just confirming what you were saying. :sharebeer

2015
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Re: Lowering real estate agent costs when selling?

Post by 2015 » Tue Dec 05, 2017 9:38 pm

goodenoughinvestor wrote:
Tue Dec 05, 2017 4:17 pm
The problem with all of this advice is that, by definition, real estate is local. In some areas, FSBO or Redfin are common while in others they aren't. Only take advice from someone who knows your specific area very well. For example, in my town most sellers use an agent. When you see someone selling on their own or through a discount agency it's often assumed that there is something wrong with the house or the sellers are being unrealistic and stubborn in their asking price. They therefore see less traffic than properties that use a seller's agent and end up selling for enough less that the lack of commission doesn't offset it. If I were you I would do some research into the selling and asking prices of local homes like yours and see if you can find a statistically significant difference in final selling (not asking) price depending on how the properties were listed. If not many houses are listed through FSBO or a discount broker I would be very wary about using one.
There isn't an agent in all of California that would justify paying anything above a 4% commission given real estate prices, IMO. Given that my city had the 4th highest gains in all of LA County in the last year, agents will be lucky to get 3% out of me when I sell. OTOH, I'm lazy so may go with Redfin or the like at 4% if FSBO seems like too much of a hassle.

Diogenes
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Re: Lowering real estate agent costs when selling?

Post by Diogenes » Tue Dec 05, 2017 11:47 pm

jlcnuke wrote:
Tue Dec 05, 2017 3:55 pm

The proliferation of "fee only" real estate agencies is (hopefully) killing off the traditional percentage based commission business. Hopefully 2 or 3 generations from now that old model will be ancient history (sooner would be better).
It’s one of the few remaining models that was based on a percent of your asset, not the actual work done by the service provider. Hence the reason there are so many realtors. With technology now at the control of the buyer, there is no need for a gatekeeper buyers agent using that model, and there are many options on the sellers side.
I will soon sell a house in the $1.1M range and will use a flat fee listing/showing agent, with a flat fee for a seller’s agent. Perhaps incentives thrown in for the listing if it sells rapidly or for more than a certain price, but no fees based on the value of the home.
Everything is negotiable, as said. Don’t overpay for a service.

malbecman
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Location: CA

Re: Lowering real estate agent costs when selling?

Post by malbecman » Wed Dec 06, 2017 2:18 pm

Hear, hear! :sharebeer
Diogenes wrote:
Tue Dec 05, 2017 11:47 pm
It’s one of the few remaining models that was based on a percent of your asset, not the actual work done by the service provider. Hence the reason there are so many realtors. With technology now at the control of the buyer, there is no need for a gatekeeper buyers agent using that model, and there are many options on the sellers side.
I will soon sell a house in the $1.1M range and will use a flat fee listing/showing agent, with a flat fee for a seller’s agent. Perhaps incentives thrown in for the listing if it sells rapidly or for more than a certain price, but no fees based on the value of the home.
Everything is negotiable, as said. Don’t overpay for a service.

Not Law
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Re: Lowering real estate agent costs when selling?

Post by Not Law » Wed Dec 06, 2017 7:18 pm

I sold a house FSBO. Realtor lived across the street. I told her that I would pay 3% if she brought a buyer. Folks she was working with wanted to see our house. She refused to show it - told them to call us themselves. They did, we sold it to them, and the realtor across the street got nothing. The point is, there is collusion among the realtors to make FSBO's hard on the owners.

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jfn111
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Re: Lowering real estate agent costs when selling?

Post by jfn111 » Wed Dec 06, 2017 9:15 pm

Not Law wrote:
Wed Dec 06, 2017 7:18 pm
I sold a house FSBO. Realtor lived across the street. I told her that I would pay 3% if she brought a buyer. Folks she was working with wanted to see our house. She refused to show it - told them to call us themselves. They did, we sold it to them, and the realtor across the street got nothing. The point is, there is collusion among the realtors to make FSBO's hard on the owners.
Real Estate Agents aren't organized enough to practice collusion. :D
If she turned down a 3% commission then she's just an idiot. As I said earlier in the thread I'll show anything to anyone for 2.7%. :wink:

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