Should 6% Still Be Charged to Sellers?

Question

As a real estate agent, I have seen a push in full-service reduced listings for homeowners and investors looking to sell homes. For example, this would be decreasing the standard 6% fee to sellers to around 4%.

What are your thoughts? Should agents decrease buyer/seller agent commission percentages OR should they remain the same?

What are your thoughts? Should agents decrease buyer/seller agent commission percentages OR should they remain the same?

Kevin Sobilo · Answer

Account Closed, it isn't a one size fits all industry. Fast food restaurant chains are growing as well but does that mean nobody should open any other kind of restaurant. There is a call for different levels of service.

Decide what kind of service you want to provide and then market to that. Make it your identity. It might be catering to real estate investors for example because many agents don't understand the numbers or challenges. They don't know what a cap rate is or what a 1031 exchange is.

If you want to provide full service and charge a 6% commission identify those "points of difference" and emphasize those when you prospect for new clients so that they know the value you will bring. It isn't always about just the sale price. There is a lot more to representation than just the end price although obviously that is important.

Nicholas Johnson · Answer

Did the agent add a lot of value for the homeowner and get an above market price?  If so, maybe 6% is just fine.  Did they just achieve an average or below market price that someone could have gotten themselves with a cheaper discount or flat fee broker?  If so, then maybe even 4% is too much.  The problem with talking about 4% or 6% is that it just focuses on the costs and doesn't have any notion of what value was added.  That answer is different for each realtor and also each listing that they take.

In my mind, rather than 4 or 6%, a better way to pay a realtor would be to tie their pay to an incentive model where they receive a small, modest fee  to cover basic costs plus 20% of each additional dollar they sell the home for above a pre-negotiated price.  In other words, pay the agent for the value they add and reward them for getting you top dollar, but you shouldn't pay much for an at or below market price result.  This is how most sales professionals are compensated, it should be the same for real estate agents.  You need to incentivize people for the results you want them to achieve, and focusing on this will yield more money for the seller than focusing on whether it should be 4 or 6%.  It will also be better for agents too as they can focus on the value they bring rather than just how much they are costing the homeowner.

V.G Jason · Answer

These processes and the whole closing costs are yearning for a disruption. It'll come.

90% agents are straight trash.

Gustavo Delgado · Answer

you can negotiate commissions. your fee can be 6%, 10% or 4% whatever. The seller will have to decide on what works for them AND get the service and results they expect. This potential new way will be good. You will see a lot of "agents" leave because the easy money is gone. NAR is going to lose members as a result and they may too as well disappear at least lose a lot of sway and power.

Alecia Loveless · Answer

@Americas Miller My agent is worth every bit of 6%. If a co-broke is for less than 6% I am fully expected to make up his extra 1/2-1% at closing out of my pocket and I do so gladly for all the value he brings to me.

Let’s just put it this way. If you’re listing property as a realtor in my opinion you should usually stick to your local area and actually do your job. In my market now we’re seeing a lot of realtors from 2 hours away listing stuff and then doing no work and either wondering why their listings don’t sell or collecting 3% commission while the local agent gets a 1% split and did all the work.

Erik Estrada · Answer

Commissions are supposed to be negotiable. There is no set standard. So if an agent wants to make less, so be it.

What value do you bring to a homeowner? If you go above and beyond, have connections, are well known, and know how to get point A to B you can charge whatever you want.

Eliott Elias · Answer

Decreasing commissions will weed out a lot of good realtors. If you can provide the same level of service for a 4% commission by all means, you should do it. I see it as less of an incentive for realtors to work as hard.

Should 6% Still Be Charged to Sellers?

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