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Old 04-25-2013, 07:21 AM   #1
red sky
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I am wonderinf if realtor fees have always been the standard 7%/3%? The reason I ask is housing prices have more than doubled in the past 10 years yet the fees haven't corrected. I imagine the work that went into selling a house was the same 10 years ago as it is now. Just curious.
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Old 04-25-2013, 09:46 AM   #2
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Hey,
It has been 7/3 for as long as I can remember and you are right, it hasn't changed with the increase in home prices.
Before the "realtors are all millionaires" crowd comes in... consider the following:
- 7/3 is split - 3.5% and 1.5% is each side the the transaction
- being self employed, put a % of your commission away for taxes
- expenses are much higher than they were years ago.
- competition is much higher than it was years ago. Competition is good for the consumer however it is frustrating seeing a small percentage of realtors doing an awful job. It takes away business from those who are committed + hurts the reputation of realtors as a whole.
- Some may say that technology has made it easier on realtors. I would say the exact opposite. The internet has made it much easier for people to inquire/tire kick. I can spend hours a day working on requests for someone who had no intention of buying/selling. Imagine sitting at work for a entire morning and then finding out at the end of the day you won't be paid for your mornings work. Its a part of my business model to help everyone as I know the person who is not interested today may be in years to come.
- Take into account the buyers I can drive around with for weeks on end who change their mind about buying or the seller who changes his mind about selling (just happened on a property where I brought a near full price offer and upon showing the offer the seller changed his mind. This costs thousands of dollars out of my own pocket that I do not recover by the seller not selling or buyer not buying.

All that said above, it is possible to make a very good living as a realtor and live a great life. The general public only sees the realtors who are making huge money. You need to remind yourself that for every 1 of those there are 10 who are doing nothing.

I can't verify this statement as I do not remember where I saw it however it had to do with realtors having a very high divorce rate. I can be ready to take it easy for the night and receive a call at 9pm. Within 20 minutes I better be up and on my way to see that client/property. If I don't then that potential client will call someone else who will.
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Old 04-25-2013, 09:59 AM   #3
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Never sold a property before so I don't know the answer, but can you negotiate the fees? If they are, how likely are you to accept something like 4/3?
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Old 04-25-2013, 10:22 AM   #4
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Technically yes fees are negotiable....the listing process is a interview for both the realtor and the sellers. Everyone needs to agree and if not then the realtor moves onto a different client or the client moves onto a new realtor.

There are services/realtors who advertise lower commissions. There are companies that will try and sell your home for less than what I pay my photographer alone. At the end of the day it is like anything in life.....for the most part you get what you pay for.
It is against my brokerage/most brokerages rules to advertise commissions. I would be lying if I said that I have never reduced my commissions or offered something of value at the end of the deal.
Some properties are easier to sell/cost me less to sell.
Some buyers are also selling their home with me.

Now keep in mind my commission is 3.5 and 1.5. As I am not going to discount the buyers agents commission your proposal of 4/3 would actually leave me with 0.5/1.5
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Old 04-26-2013, 08:30 AM   #5
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Thanks I appreciate the response.

Sucks that you guys have to pay taxes like the rest of us non Realtor types... Just kidding
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Old 04-26-2013, 09:01 AM   #6
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Just curious -- would anyone ever consider a "weighted" commission, i.e. you have a house that you've valued at $500k:

Commission if the sale price is $450k or less - bare minimum as it's really the price that is generating the sale, not the realtor

Commission if the sale price is between $450k to $480k - slightly below average commission

Commission if the sale price is between $480k to $520k - standard commission

Commission if the sale price is above $520k - standard commission plus a premium (i.e. 50% of anything over $520k)

Would something like that ever work? Or is there too much variability involved (i.e. especially for homes with unique features, as opposed to the cookie cutter home). I guess the hard part would be to figure out what the house is actually worth (in order to set fair benchmarks), but I'm thinking this would really give the realtor some incentive to get the highest price possible.
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Old 04-26-2013, 04:55 PM   #7
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^^ The tax remark was just pointed out as a lot of people run the math in their head and then assume full amount is take home. While its obvious it isnt, I still point it out!

I like the performance driven commissions structure you pointed out and it was actually brought up in the course years ago. I believe the main reason it is not allowed is because there would be some conflicts of interest. Say I have got you 519 and know I could get you more but you dont want to risk losing the deal.
Also, it would now be cheaper for you to accept 519 than 520....etc which would complicate things.
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Old 04-26-2013, 05:03 PM   #8
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Quote:
Originally Posted by Realtor 1 View Post
^^ The tax remark was just pointed out as a lot of people run the math in their head and then assume full amount is take home. While its obvious it isnt, I still point it out!

I like the performance driven commissions structure you pointed out and it was actually brought up in the course years ago. I believe the main reason it is not allowed is because there would be some conflicts of interest. Say I have got you 519 and know I could get you more but you dont want to risk losing the deal.
Also, it would now be cheaper for you to accept 519 than 520....etc which would complicate things.
You mean a conflict of interest between the seller and the seller's realtor? Because in this scenario, it would be anything above $520k that would get the premium (i.e. if the buyer can get $530k for it, seller pockets an extra $5k, and the seller's realtor pockets an extra $5k (less the 1.5% to the purchasers realtor). Seems like a win-win, unless there is something about secret commissions or something that is prohibited...
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Old 04-26-2013, 05:07 PM   #9
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Take the example of 480k. Its cheaper for the seller to take 479,999 than it would be for 480,500 based on a commission incentive.
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Old 04-26-2013, 05:25 PM   #10
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Quote:
Originally Posted by Realtor 1 View Post
Take the example of 480k. Its cheaper for the seller to take 479,999 than it would be for 480,500 based on a commission incentive.
That makes sense. Is it possible to pay a bare minimum commission (i.e. 1%) and compensate by having a incentive based system (i.e. Realtor gets nothing else if it sells for $450k; for every $1,000 over that the realtor gets an increasing percentage of that amount)?
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Old 04-26-2013, 05:35 PM   #11
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I assume most realtors will take a discount on the sales commission to get the buying side, but how "negotiable" are realtors usually? We're looking at selling and rebuying, and given we're looking for a "large" upgrade, the buying commission for the realtor is likely to be much bigger than the sale commission anyways.
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Old 04-26-2013, 05:47 PM   #12
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I cant speak on other realtors behalf and am limited to talk about what I would offer without knowing specifics.
Im sure every realtor is different and while one agent may discount a bit more another might get you more for your place through better marketing.
PM me if you want more information from my side.
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Old 04-26-2013, 05:57 PM   #13
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How about asking it way; would one be severely out of line asking for a steep discount on their selling commission, given you'll be buying through them? And I'm speaking to industry "norms".
I can see a realtor making a small profit @ .75%, and then raking it in on the purchase, but not sure if such is commonplace.
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Old 05-01-2013, 04:16 PM   #14
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Quote:
Originally Posted by Realtor 1 View Post
Take the example of 480k. Its cheaper for the seller to take 479,999 than it would be for 480,500 based on a commission incentive.
I don't think this is how it is being proposed, think of it like tax brackets. The seller would always make more by selling it for $480,500 then $479,999, no matter where the bracket is.
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Old 05-01-2013, 04:47 PM   #15
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Quote:
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How about asking it way; would one be severely out of line asking for a steep discount on their selling commission, given you'll be buying through them? And I'm speaking to industry "norms".
I can see a realtor making a small profit @ .75%, and then raking it in on the purchase, but not sure if such is commonplace.
I don't think asking anything is "out of line", it's your hard earned money and any decent realtor respects that.

Having said that, we also respect what we put into our jobs, the costs of running our businesses and will have our own standards of what we are willing to work for. Everyone is different.

Don't be afraid to ask them detailed questions on their company fees, marketing budgets, expense costs etc. to help understand and justify the numbers too.

One of the things in our industry I find most misunderstood is that "average" commission rates are about the same with most agents, but costs & expenses vary considerably and most clients don't realize that.

An agent who spends $50,000 - $60,000/year in marketing/company fees is often charging you the same as the agent who spends <$10,000 so you have a right to know why & what advantages either may have.

I hold 2 real estate licenses with 2 different companies and my annual fees are about $1200 with one vs $25,000 with the other.
This cost and reasons for them is certainly information I make sure my sellers are aware of when justifying my rates to them.
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Old 05-01-2013, 05:56 PM   #16
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Well put Winsor.
Since going to RE/MAX my fees are much higher however the support is also much higher.
Small differences can be spending close to $100 on high end feature sheets vs printing a MLS spec sheet from home.
Having a quality sign professionally installed vs having a sign leaning a foot from the ground
Having a professional photographer come in vs taking my own pictures
Just recently I went to a professional company booking showings vs doing it myself and not always responding instantly as I may be with another client.

There is more to it but as Winsor said, small things can make the difference between showing numbers/exposure of your property. While you may have an agent charging you 50% of what another is it may also be the difference between selling your property for less or feeling like your agent has no time for you.
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Old 05-10-2013, 10:51 PM   #17
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Quote:
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So would Iginla's agent make $97k in commission, or is it likely its discounted for these huge price properties?
This is an interesting question...
1 day on Market - and a ton of free press!
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Old 05-11-2013, 10:23 AM   #18
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I have no idea what the arrangements were however it was no small time agent on either side of the transaction. Both sides of the deal were from our specific Re/max office which is #1 in the world. Top agents at the top Re/Max office have put in their time and could be considered like any other business worker at the top of their industry.
Its not as if some brand new real estate agent won a draw to get Iggys listing and then made 100k in a days work.
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Old 05-14-2013, 07:12 PM   #19
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I have no idea what the arrangements were however it was no small time agent on either side of the transaction. Both sides of the deal were from our specific Re/max office which is #1 in the world. Top agents at the top Re/Max office have put in their time and could be considered like any other business worker at the top of their industry.
Its not as if some brand new real estate agent won a draw to get Iggys listing and then made 100k in a days work.
i aint fishing for which Realtor sold iggy's house or anything, but more just interested - which office is considered Remax's number 1 in the world? What makes it #1?
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Old 05-14-2013, 08:27 PM   #20
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Quote:
Originally Posted by Kavy View Post
i aint fishing for which Realtor sold iggy's house or anything, but more just interested - which office is considered Remax's number 1 in the world? What makes it #1?
RE/MAX Central

Although dated, you can read a small section from our website below:

A winning combination of knowledge, experience, ambition and good old-fashioned h u man connectivity h as vaulted RE/MAX® Real Estate (Central) to the top of the heap for the 10th consecutive year.

Named the top RE/MAX® office in the world, RE/MAX® Real Estate (Central) ended 2008 with 4,431 closed transactions - and 2009 already promises to surpass that number, with affordability and low interest rates being major factors. To rank best in the world is no small feat in one of the largest real estate systems on the planet.

To put the enormity of this achievement into perspective, consider that there are more than 6,500 RE/MAX® offices with more than 93,000 real estate agents in 78 countries around the world.

This Calgary office, which continues to be one of the strongest, most stable offices in the RE/MAX® network, has outshone them all.
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