AboutJohn Expertise I have studied Real Estate for over 7 years and my wife is a Realtor with Century 21. Need help with buying, selling, Landlord-Tenant, foreclosing, loans, or more? I can help you or show you where you can find the help. Wife has a web site with a lot of info on it for almost anyone.
Experience Over 7 years studying and wife is Realtor.
Education/Credentials Over 7 years studying and wife is Realtor.
Expert: John Date: 12/27/2007 Subject: realtor commission question
Question QUESTION: I am currently two months into a six month contract with a realtor. Recently my sister has come to me and expressed interest in buying my house. The commission due to the realtor is 6%. I asked my realtor if we could work something out. He said they normally drop it down 1%. I told him that I thought dropping it in half was fair. He had his broker call me and said they would go down 2%. I am standing firm at 3%. They have yet to get back to me. People have suggested that I try and get out of the contract. I really do not want to go down that road, but I feel I might have to. I want to be fair to everyone. What do you suggest I do?
ANSWER: So if I understand you correct, you do not want the agent to make any money yet want to be fair?
You entered into a legal agreement and can not cancel it.
The 4% offer is very low. You would be crazy not to take it.
The agent only gets half of the commission. So if you want a 3%, ( listing agent that is also the buyers agent )the agent would only get 1.5% and after paying for the ins. more like 1% commission. Then the agent has to pay all taxes, so there goes 35% of that 1% commission.
Thats not a lot for the work that agent has and will do.
I do not understand why you want to cut the commission to start with.
They can refuse to low the commission and you will still have to sell when they bring a ready and able buyer.
Just pay the agree commission if you really want to be fair.
but if the buyers agent is different from the sellers agent ( two Realtors ) the 3% is split in half, 1.5% and 1.5%. Then that is slit in half. The agent only gets .75% then. The minus ins. more like .50& then theres taxes.
That is less then .50% the agent would make on a 3%.
And you want to be fair?
I am not being rude here, just setting the facts right.
John
---------- FOLLOW-UP ----------
QUESTION: I think you misunderstand my position. I can bring the buyer to them. Thus they would receive the whole 3%. They would not have to split it with another realtor. Basically they would be splitting the 6% with me. If I kept the commission at 6%, and another realtor brought in a buyer then my realtor would make 3% anyway, correct? Does this make sense or am I missing something?
Answer No, I am not mis-understanding you. That does clear up the reason why you want to cut it.
But you are not understanding the commission break down.
Ok, lets go with the 3% for them as you just said.
The Realtor / agent splits that 3% with there broker 50/50.
So the agent is down down to 1.5% commission right off the bat here.
That 1.5% is then reduce to around 1% after omission is paid for.
Then the Realtor have to pay taxes ( set aside for )and that is like 35% of that 1% commission.
So less then 1% of that 3% commission goes to the agent.
Thats like working for free, its not worth it.
I hope you understand this pay out. Realtors to not get as much as people think they do. Trust me, my wife is a Realtor. I see the checks.
If you need more,just ask. But like I said, take the 4%. Because if you don't they may not come down again. They legally do not have to lower at all.
You have a 6 month listing, and they could keep you tied up in it for all 6 months trying to save what? They could bring you a ready and able buyer right now, and you legally could not turn it down. You would have no choice but to accept the offer and pay the full 6% commission. And worst, your sister would lose out on the sale then.
