All Forum Posts by: Preston C.

@Steve K.

Thanks for the response Steve, that definitely makes sense and you make a great point. I guess it would be somewhat client dependent. I was thinking more of negotiating only with clients that are hesitant to use an agent because of the commission or that would otherwise sell FSBO. I know some friends of some relatives that listed their 800k farm with an agent over 1% difference in commission and that seemed to be the only factor. They had other properties they ended up listing with another agent for 6% that were at a lower price point. Really I'd just like the flexibility for when commission does seem to be the hold up.

My initial thoughts were if I could provide more value and do so for less than the competition, I could end up with more business. But I think you're probably right that most clients won't be worried about the price if the additional value is there. That's why I come here for different perspectives.

As far as the brokerage, my current brokerage doesn't offer much more support than the one I plan on moving to. I haven't got a single lead since I've been there and don't use the office space. I do understand that the brokerages that take higher splits do typically offer more for agents, but in my case it doesn't seem to be worth it.

@Billy Daniel

I plan on switching to a brokerage that has a 100% commission model. With them, I'd actually be making more than I do now even if I charged lower commissions, especially if it meant gaining a few new listings. It isn't really rocket science selling real estate, and having been around other industries, it's significantly less work for the money made, and still very lucrative at 5% or even less for multi million dollar properties. I don't lower my quality of service for listings under 50k, so I definitely wouldn't need to lower quality of service for a 500k house at 5%. I'm not talking lowering commission for every deal, but if it means getting a few sellers a year to go with me over someone that doesn't negotiate at all, I'll gladly take it.

@Steve K.

This seems to be a very market dependent question. My local market pretty much sticks to 6%, but in some smaller markets that I also work in, many are doing 5% with seemingly the same results.

I guess that makes sense in a higher end market where values may be more consistent. Where I'm at we get a lot of homes under the $100k range, but there are the occasional farm and land that can be very lucrative with many going for half a million to the $1 million + range. I'm not necessarily wanting to become a "discount broker". I would likely stay at 6% on the average home price, but I think there are sellers with higher end properties that would go with another agent over 1% if it meant a few thousand dollars.

Everyone seems to think a lower commission means lower service,. That makes sense if you're talking typical discount brokers vs traditional, but I guess I'm thinking more of a mix between the 2. I would only consider lowering it if the sale price means a significantly higher commission. I don't plan to lower the service I provide at all. Ive just personally seen agents who don't provide a great service and have very tacky, unprofessional listings, and doing so at 6%. Basically, you don't always get what you pay for because nearly every agent is doing the 6% their broker requires of them. The highest commission split in my local market is 80/20, and most are around 60 or 70% splits, so I don't blame them for sticking with 6%.

@Cameron Tope

I do think you're right about commissions coming down, similar to other industries. If it costs agents less now to sell and do business, prices should come down in my opinion. You don't really have to spend much, if anything at all to get listings exposure anymore with everything online and mostly free.

I don't offer subpar work for lower end houses or lots, so I definitely don't need to for offering a lower commission on the higher end listings.

It's just so odd to me that agents think commissions need to be flat %, and not based on the amount of work. It's just as easy to install a light bulb in a 50k house as it is a 500k house. But in the case of selling the house, the 500k house is typically easier to sell.

@Marcus Auerbach

Thanks for the feedback. It's interesting to see different perspectives on this. My thoughts are if a buyer is really interested in the property, they'll find another way to see it if an agent doesn't want to show them or wants them to pay for their commission. In my area, it seems that most agents still split commission 50/50 even if it's 5%. A recent land listing I saw was offering 2% to buyers agents and it was under contract within a couple weeks at one of the highest prices I've seen for land. So I think other agents in the area are already beginning to lower commission, but it is out of town brokerages doing this typically. The split to the buyers agent doesn't seem to affect the sale price or time to sell from what I've seen. It helps that the market has been red hot for sellers.

Some sellers may not care much about an extra percent or two, but I do know if a couple local sellers from before I got licensed that went with another agent only because they offered to do it for 5% while another local brokerage won't go below 6%.

I believe I can offer the same or better service and results for less and there is still a lot of money in it, especially if it gets me a few more listings. I think one reason many are so firm on the 6% is because their brokers are taking such a huge split.

@Cameron Tope

I agree, which is sort of why I thought it would be a good idea to be one of the first to really start lowering commissions. There is a 100% commission brokerage I plan to switch to, and I would make more at 4 or 5% than I do now at 6%. I know other agents in the area may not like it, but I've noticed a few already going down to 5%, or offering 2.5% to buyers agents. 60k for a $1m property that sells in a week seems insane to me. I would gladly take that listing for 4-5% or even less. Other businesses compete on price, so it doesn't seem right for real estate agents to fix prices.

I saw a $2m land listing the other day and the listing agent didn't even go on the property to take pictures, and it was listed very poorly considering the commission on it is $120k. I've only been in real estate a year, but have been shocked at what people pay for such subpar work.

@Theresa Harris

Thanks Theresa and Bruce! Sorry I am just now seeing these replies. If the inspections business takes off, real estate may end up being the more part time job. I've only been an agent for a year, but think I could take on a lot more work as an agent and still have time to do inspections throughout the week. I haven't heard of anyone doing this, but know several brokers or agents that are appraisers too. I was initially more interested in appraisals, but the training/education is much more extensive and it's not something I can do as soon. I don't see how it would be much different, as long as you don't appraise/inspect your own transactions as an agent.

My thoughts were that it could help me as an agent as well, knowing how to educate buyers and sellers about potential issues with homes and what to look out for. Just as appraisers may be able to better educate clients on their homes value

I know this probably varies based on location, but I was curious if any Realtors had tried competing on commission percentage. Or at least used lower commissions to incentivize sellers to use you.

When I got my license (KS and MO) I remember learning that you can't fix commissions and it is supposed to be negotiable, yet every local brokerage I know has a fixed 6% commission. Very few go below that and may do 5% but it's rare. My current broker won't typically allow less than 6% for listings, so I was thinking about switching to a brokerage that allows flexibility in commission so on higher end listings I could offer a better deal to sellers. It seems crazy to me how normal it is in the industry to do a flat 6% commission whether it's a 50k lot or a $1 million listing. When the majority of the time the cheaper listings are more work.

@Scott M. I just mean I've searched the topic on the forums. I'm in a small town so I'm not sure there's even a lawyer that specializes in real estate. I'll have to check around and see who others use.

I've tried to search this on the forums and most of the posts seem pretty outdated. I've been a landlord for 4 years now, but recently bought a couple new properties. I've always used templates online for my leases, but have found that they're sometimes too broad on certain things. (Currently using one from eforms.com) It actually doesn't seem that bad, just needs some things added to it.

I'm sure there are better state specific templates out there, and I understand I should probably have it checked by a lawyer as I've read in several other posts. Just looking for suggestions on what other self managing landlords are using.