The 8 Percent Commission

I have friends struggling with the question of "where" and "with whom" to list their home. They are considering Redfin and an agent that listed a house up the street a few months ago. They told me that they are leaning towards Redfin's flat fee for a listing but, understandably, they are hesitant to depart from the traditional agent route.
Since my friends aren't desperate to sell (financially that is) I advised them to try out the flat fee. Heck, they can always pony up the big bucks for more service later on!
As a recent buyer, I have to say that the notion that a bigger fee would have triggered buyer or seller agent behavior that would have "sold" me a property more quickly is really upsetting. After all, that big pot of money that got divied up, came from my pocket (my lender's pocket actually)...

An 8% commission seems crazy to me. I've been thinking for some time that commissions will head in the opposite direction. I honestly expect that we will see a trend away from commissions altogether and toward a fee-based compensation system. Think about it, there are so many tools available to buyers/sellers today that everyone has access to the same information with little need for agents. Sellers will soon be choosing their agents based on the extra value added services they can provide them. We alraedy see this happening in the financial services industry.

I'm not a buyer or a seller, however 8% seems unreasonably high when houses aren't even selling.. I would think realtors would be glad to get any listing they can and would do anything they could to sell at any price.. These days, everyone I know looks for houses on their own at Ziprealty anyways.. Fewer buyers are using agents, which means the selling agent doesn't have to split the commission. As long as your house is listed on the MLS, I don't see any benefit in paying your realtor a huge commission.. Also, I do feel that along with borrowers and lenders, realtors are also partly responsible for the mortgage crisis we are in now.. For years realtor associations have been saying "buy buy buy!!!".. Well now we are seeing new owners being forclosed upon and mortgage companies going bankrupt. It only seems fair that the realtors who were getting rich in the real estate boom should be feeling some of the pain now also. With discount realtors such as Ziprealty and Assist2Sell, I would never pay my realtor 8%..

Hey, here's an idea... drop the price 8% instead. That's a lot more likely to grab buyers' interest (which is the whole point anyway) than who the selling Realtor is or how much of a smooth talker he/she is.

Restate agents are salespeople, In a difficult market, salespeople have to work harder to earn their money. Sometimes that means getting creative with marketing, whether it be through adverstising or incentives. I don't think that it means that they should get paid more to do the same amount of work. A lot of agents are simply putting their listings on the interenet and then putting their feet on their desk and waiting for the phone to ring. That won't work in this market. Sellers are contantly being asked to lower prices, offer incentives or pay some of the purchasers closing costs. It makes sense to me that the brokers should be doing more right now as well.

6%.... 8 % whatever.. Less qualified buyers and an abundance of sellers.. There are homes in coveted areas that sit on the market for over 9 months because the seller is in denial..... Bottom line, you can do all the marketing & staging you want.. Until prices are cut homes will not move... The average person doesn't read the Wall Street Journal every day to get an precise picture of how bad things are.. And if you think that its not that bad, you need to read up and talk to the big guns ( banks & loaning institutions) Quickest way to sell? Lower the price. Thats the best market strategy in my book..

We are seeing a very tough market and sellers need to see the value in paying a broker commission. It is hard to swallow paying 5% when all the broker does is park your property on the web and continue to tell you to lower the price if the property is not getting any action. I am finding more and more brokers unwilling to take the extra step in this market and be creative and helpful to the seller. There is a glute of brokers on the market and hopefully this market correction will get rid of most of them.

The only I would pay an 8% commission is with a stipulation that if the house doesn’t sell in 30 days the commission falls to 5%. Now that would be an incentive to sell.

Agents are generally a greedy/dumb bunch. They generally do not have a basic grasp of Real Estate law (that includes brokers).

Why pay them to stage your house when you can do it yourself or pay a staging company. Then pocket the savings.

Thank you Jodelle!

I was beginning to wonder whether anyone knew anything about marketing or selling real estate, or anything else for that matter!
I'm sure we all hear the stories about FSBO or flat fee deal that "saved thousands". But what we don't hear about is the NIGHTMARES at the closings and near fisticuffs when things don't go smoothly. And what about the potentially thousands more they could have got had they marketing their property the right way.
Now, keeping in mind that a good agent will try and achieve the selling price that a seller desires, a good marketing program can run in the thousands of dollars before a property is sold. I'm talking time, effort and cost of advertising.

Hire good professionals and they will be good to you.

I would not pay more than 3%. All you really need is to get the listing on MLS with a few digital pictures.

The single most expensive cost in selling a house as a listing brokerage is paying the Boston Globe for weekly print ads that nobody other than the seller reads. It is a burden that all sellers insist on and it allows the Globe to pay people like Binya to continually stir the pot. If sellers honestly feel they can do better explaining to a buyer why they don't deserve credit for overstated inspection issues or if sellers already have a relationship with qualified attorneys and bankers who can independently verify the assets and qualifications of the buyers, then by all means show your house on your own. Sit at home on weekends and take three months off from your job to show the house during the day. Pay the Globe out of pocket for $260 non-descriptive text ads each weekend. Call every brokerage and probe them about potential interested buyers. And when something goes wrong in the process make sure your strongly developed network of professional resources is in place to help smooth over any hurdles between the offer and closing. When the buyer calls you three days before closing and says their bank cannot loan them the money to buy your house, make sure you call that banker you've worked with many times in the past to quickly pull together financing for the buyers. Many many sellers think for some reason the job of an agent is so simple. If it was, how come so many of the most successful business leaders in the world decide to pay full-service brokerage commissions?

What would be the negative in using a service like Redfin. I need to research this service some more...but I like the idea of paying a flat fee.

If a house is listed with Redfin and placed on the MLS - how is that any different from what a traditional agent would offer.

Are traditional agents not willing to "work" with a house that is listed with Redfin?

Real estate attorneys (people who actually went to school) will tell you that the agents cause most of the “NIGHTMARES”.

The broker just wants the commission check. They don’t care if the title or closing documents are correct. They don’t care what happens when you try to sell your house and there is a problem that should have been corrected. They want their money.

8% commission is too rich. They get a lot money from the sellers and yet they know almost nothing (basic) about their client's house. RE Agents make buyers as being stupid -- it's not intentional but it's just the way they do it. For example, as you walk in the house going room-to-room, they would say "this is living room...it has hardwood floor...it's big....it has bay windows" -- hello? I know that!!! Am I that stupid? I would rather have them say "this is living room...it has 14x20 dimension...the hardwood floor was refinished 1 year ago....the bay window is Jeld-Wen and it's 2 years old" -- buyers would be more appreciated these info.

They get big commission and yet they fail the sellers by not studying the basics of the sellers' house.

This is certainly a tough market as many have already said. In the end selling your house comes down to 2 factors:

1. Price
2. Exposure

No one is even going to look at your house if it's overpriced even a little bit. Buyers will avoid it like the plague. I've seen it happen to friends. Exposure is equally important because if you price the house appropriately you need to get that information to the buyers. It's pretty rare that I've seen someone selling their own house who is doing a good job at both of these tasks. A good Realtor is someone who can meet these two needs. Like any profession though there are good and bad practioners and it's important to research who you hire. Hopefully, this downturn will shake out some of the bad ones.

In the end you may as well use a Realtor anyway. Most buyers if they know you are not paying a Realtor will immediately subtract the commission amount from what they're willing to pay anyway. So, in the end if you're lucky you end up with the same amount of money. Personally, I would rather pay a Realtor and not have the hassle of trying to sell my own home.

This is interesting. Home sellers, fixated on 2006 prices, will upgrade kitchens, pay more RE agent commissions, throw in free furniture, cover closing costs.. all in an effort to get their asking price. Isnt it just a lot easier to lower the price to current market conditions? Less hassle? I dont understand people.

GK - you must be a realtor. Or if you know one who actually does any of that, please send along their name, since every broker I have accomplished does none of the things you mention. They shrug shoulders and wring hands and offer no solutions. They blow with the breeze depending on who is talking and seem to forget what side they are on. They just want the deal done and they don't really care abotu the details. My broker has an inordinate amount of trouble simply figuring out how to coordinate document signing by the 2 parties. Problem solving? Ha! Drama and confusion-creating. And she is no different from the last one. We thought he was bad, now we realize it's industry standard.

Although I think a selling agent provides a great benefit, I believe 8% if absurd. I agree with #2 that the real estate sales model is moving towards a fee-based system. Charge sellers based on the amount of work done, including such things as how listed, marketed, showings, etc. The more you want, the more you pay.

On the buyer-side, I think an agent is much less necessary. I am a buyer and I intend to purchase without a buyer-side agent, and plan to have the sale price reduced by the amount allocated to the buyer-side agent (generally 2-3%). I will use an attorney to assist with the offer and purchase agreement.

Beantownie - in Cambridge, at least, traditional brokers will not show your home if you are not listed with one of the big 2 firms. Over 10 years of house hunting and 3 purchases I have been told many times about "problems" with a house I saw online that was with a discount brokerage. Months later when the seller switched firms, suddenly the house was a "great property." Happened more than once with more than one broker. Hopefully other communities are not so locked-up. And as someone said above, hopefully the correction will drive a lot of bad brokers out of the business and strengthen the discount players. Not that I can imagine where these people will get jobs outside the warped world of real estate!

It's all about the price.
drop the price by 3% and people will come see your house.
Paying 8% commission is crazy.

It's good to see a good group of people who are ignorant and doesn't understand the big picture of real estate transactions. Most of these people talking probably have never owned or done a real estate transaction. Nobody including myself likes paying a real estate fees but GK is right; GK is only hitting the tip of iceberg regarding issues involving or dealing with buyers and sellers. Some of those people will probably be the ones sued in the future. This is not “Fear mongering statement”. It’s a reality in today’s world.
This idiot above who is only trying to push his company and convince you and state “why pay a real estate commission; sell yourself and pay a flat fee and tie yourself into the MLS”. I got ripped off once and a wasted a lot of time and money. Those companies that charge a flat fee are a joke. If you got a lot of money, time, and good people skills then give it a shot. I recommend; just save your money and get someone who knows what they are doing in real estate.
Again, nobody likes paying a real estate commissions, but with so many intangibles with predatory, slimy and sneaky people, it’s best to have a third party to assist you in your real estate process. Real Estate agents are an easy target, but if you think about it, you could really attack, hundreds of industries who you think over charges. With Gas, Cost of Food, Rent, Cost of Vehicles; all types of insurances, utilities, the truth of the matter is that most real estate agents are not making money. Only a small few make money. It’s all about volume just like every sales job out there. I’m in sales, but I recommended you go out and get your real estate license and sell some homes. I wonder if you will be changing your tune. I wonder how soon you would be asking for that 8% commission. Good Luck!

Ashley,
......and the seller just wants their proceeds...and the buyer just wants the best deal....and the banker just wants the mortgage....and the inspector just wants his bill paid.........and the attorney just wants their fees........
And everybody is out to get you.

Hiring a a RE broker is just like hiring anyone else. And all the education in the world isn't going to make ALL attorneys honest.

Do your homework - get references - hire good people.

We paid our last broker 4% to sell our house. For that, she stole our deposit (she was also the selling broker of the house we wanted to buy), gave all parties different and forged paperwork, and left us in a hotel for several months. We didn't get our money back from the commission of selling, we didn't get back our deposit money, and we didn't get our dream home thanks to her work. She is no longer a broker, but declared bankruptcy, and the court apparently finds nothing wrong with her stealing the money as they declined to press criminal charges. Meanwhile, she spent our money on buying lingerie.

Granted, this is an extreme case. But realtors don't make closings go smoothly -- real estate lawyers do. Get a competent lawyer and sell the house yourself. You just need to price it right.

Real estate agents are for the most part useless after the offer is signed anyway (with the exception of waiting for the fire dept to press a button on the smoke detector to make sure it works). It is the attorneys that do everything and get paid the least. No money for a ton of liability. So sad.

I own a for sale by owner service in Western Mass and am not a real estate agent, however many of the homes listed through us have sold with buyer agent involvement and we know what it takes to sell. My recommendations are:
1) cut out the listing agent altogether - they have too many properties to handle as it is and you are unlikely to light a fire under an agent that is reluctant to spend any money advertising on your behalf
2) get a licensed appraiser to provide you with an appraisal
3) use the appraisal to price BELOW your competition
4) advertise "by owner" (finding the right websites can be tricky)
5) consider placing it on a flat fee MLS service (careful here too
6) consider upping the anti on the buyer broker side only as a last resort

A

Average days on the market in my area is 92 so that's at a minimum 92 days more that the RE agent works over the lawyer. I don't see how the lawyer does more. Try calling your lawyer at 5 am and see if he picks up. A good agent will.

A good agent will tell you what you don't want to hear and that is priceless.

Agents in Mass. are bonded and insured. If they stole your money go after the bond company. If they didn't have the bond and insurance you didn't hire a RE agent--you hired an impostor. How many references did you get for this impostor? Take some responsibility.

FYI Redfin requests you to put your home on lock box so strange agents with strange buyers tromp through your house while you are not there and no Redfin agent is there. Also, they charge $4k ($500 of it upfront) for the listing plus require 2.5%+ buyer agency fee. On a typical condo of $250k the savings is only $2250, only $1000 if you do the reccommended 3%. This is all after you over/under price your home becuase Redfin does not do an onsite analysis of your property. Only a "data driven" CMA, so if you abutt train tracks you're in luck because your property is worth the same as the one two streets over with greenspace across the street.

You get what you pay for and do your own due diligence!

Yes flatfee is definitely a real estate reality, but read the fine print!

CourtSystemSucks,
I have a feeling there's a lot more to the story.....

I wouldn't enter into any RE transaction without a good attorney. And the best RE lawyers I've known have always recommended good RE brokers to work with.

A RE transaction is an emotionally and financially charged environment. (why do you think lawyers gravitate to RE as a specialty?) What I would want is good representation at all points of the process. I feel having a good agent and a good attorney provides just that and can be very beneficial to the point at which they are no longer needed.
(That is typically the point at which they collect their fee. And I'm fine with that.)

I am a Realtor and while I'm all for higher commissions, paying a Realtor an 8% commission rather than 6% is not going to change who buys the house. All properties go into the MLS whch is available online for anyone to see. More than 80% of home buyer start their search on the Internet. To tell a seller that a "media blitz" of advertising is going to change anything is deceptive. Home staging could make a difference in how the buyer views the prospective seller's house, and would possibly get a better price for the seller. But, In a down market the only thing that makes someone buy is PRICE. I'll say it again - PRICE. The buyers out there now are looking for a great deal and won't budge until they get it. The best advice any real estate agent can tell their sellers is to lower the price - anything else is just fluff.

I hate dealing with real estate agents, seems all they see when they look at you is $$ signs, no matter if you're buying or selling. Maybe if they were a little less lecherous and more intelligent overall as a profession (yes, that is sterotyping, sorry but I havent found one yet that I actually liked), they would be able to move your property faster or hook you up with a property sooner.

My hunch is that the notion of increasing the commission to brokers on a blog like this will be tantamount to showing a red cape to a bull. The argument against raising commissions seems to have been three fold. 1) Falling home prices leaves little money “left over” to afford one, 2) Fewer sales will compel competitive brokers to cut their rates out of desperation, and 3) Brokers merely list and search available properties and the internet list/search engines has all but obviated their role. All three assumptions are wrong. However, this article is not the forum for that discussion. The important point is that real estate agents are a dime a dozen but good real estate agents are rare.

The article seemed to be headed in the right direction by suggesting that wise sellers would naturally compete for the best brokers with higher commissions. Instead, it seemed to suggest that paying the same broker more money promises the benefit of better service. Nonsense. Good agents are good regardless of their split. If you can hire one of the rare good ones for 5or 6%, you will have assured that you will compete favorably with all of the other sellers out there. A good broker will be able to support her selling price, she will insist on staging if necessary, advertise appropriately, and she will bring you qualified buyers quickly. It does not surprise me to read that those who “saved” by using discount realtors characterized them as lazy, stupid, and unprofessional. I guess you get what you pay for. Moreover, the claim that insiders snap up all of the good properties before you can get to them also supports the notion that this industry does have experts. These expert insiders are the good realtors.

I¡¦m in sales and reading the above, it makes me laugh when I hear "go to a lawyer and they will sell your home". They are the same as discount brokers. If a lawyer is out there selling your home and doing the things realtors does, then his or she is not a very good or smart lawyer. They are probably a divorce lawyer. ƒº
There are allot of good lawyers; they give a lot of good advice during a real estate transaction but salesmanship, be careful. Do your research.
#22, Ashley is smartest person yet.
#21 Makes sense
#11 Correct
#25 Negative - Gimmick
#24 this attorney needs a hug. It's frustrating when you don't like leaving your office and seeing others appear to make more money then you.
#23 That RE broker sounds like a loser, many bad apples in all professions unfortunately. Come in the computer industry, i know a couple knuckleheads.

A lot of negativity here directed at real estate agents. Like any job there will be people good at it and then there will be lazy people. Do your due diligence and make sure you are hiring a good agent. With flat fee as Dina points out you get what you pay for which is very little.

If you're selling your house and the buyer goes ballistic because during the inspection they see a tiny little crack in the drywall do you think Redfin is going to keep that deal together? I think not.

It seems most people who knock on agents here have no idea how much work an agent does and how much expense they incur doing their job. While there are certainly agents out there who will plop a sign in front of your house, put it on MLS, and then go take a nap the good ones will do far more for you. If you can find one of these gems then you'll get your house sold more quickly and for a better price.

I also forgot to mention that Redfin only has 4 agents for all of Mass and has only actually listed 4 properties since opening last year. The earliest any of the agents have aquired their license was 2000, meaning none of them have extensive foreclosure/REO experience or have experienced a market downturn and the broker just aquired his broker's license in 2006. It's not bad that they have 2-8 years experience but there is no seasoned veteran in their office that has seen it all and can advise.

I sold my home in Framingham last month. Our closing date is the end of June.

*) 7 days on the market.
*) Multiple offers.
*) Initial asking price - Town Assessment.
*) Sale price - only 5k under assessment. Nothing spent on home inspection issues, either.

Why so easy?
1) We priced it right for the market
2) Good neighborhood
3) The home is well maintained (no deferred maintenance)
4) We keep it clean, and it was well staged for sale

You can pay your RE agent 20%. Really, the only thing that matters is keeping your home well maintained, staging it right for sale, and pricing it right.

People still need homes, even in a slow market. But when it comes to selling, you must price it right, price it right, price it right, and dont forget to price it right.

If your home hasnt sold in 90 days, there is a good chance you forgot to price it right.

A home is the single largest asset you own, are you an expert? Go seek the Very Best to help you through the very emotional process and circus of selling. Two different inspections can yield two different sets of 'urgent' problems with your home, expectation of signif. credits for 'shocking' inspection items the buyer has no intention of fixing, financing falling apart late... Demand excellence in your corner - a sharp eye for pricing, knowledge, experience, customer service orientation, respect, ability to calmly pick up the phone to call a solid networks of contacts to clean up messes and restore a solid transaction. Keep your sanity and get the best outcome. When you engage a true expert, you can demand that, and get it. Lillian Montalto in Andover is the national gold standard. on all this.

Wow, thanks a lot, MiloT. I really don't consider myself a member of a "greedy/dumb bunch". I've been trained, and continue to receive monthly training on how to help buyers and sellers in this market. Yes, there are some agents who put their feet on the desk and wait. Then, there are the rest of us who break our backs trying to sell your house, or trying to find you just the right property, negotiate the price, and facilitate all of the rest of the details until closing day. Please don't generalize, you're not helping.

Bob S.
I couldn't agree more. Today's real estate market has made people so scared that they shun conventional wisdom in favor of the flash in the pan.
It makes so much sense! We'll sell it ourselves and save the commission!!
Ladies and gentlemen: It is a dog eat dog world out there. If you haven't done your homework and HIRED a real estate agent, then you will probabaly have a bad experience also. By HIRED, I mean interview them as if they will be working for you. Because they are! Would you hire an employee if they had no skills?
Then why would you call a real estate company and sign a contract with the person that answers the phone? Or sign with your friend's brother's aunt Edna who sells homes 20 miles away?
Ask the right questions an you will find good salespeople. Don't just hire an agent, hire a salesperson. When you hire a good salesperson, you will get results. You will get maximum value. When you pay $350 to list your home on the MLS, or list with a discount broker, they would prefer if your home NEVER SELLS. Why? Becuase they either have no selling commission or a small selling commission coming their way. The longer that home remains in their inventory, the more buyers they can attract. They would prefer to sell those buyers the other homes on the market for which they will get paid a full commission.
You can't expect loyalty if the the person "representing" you has no skins in the game.
And if you are not represented by a good Realtor, a buyer represented by a good Realtor will eat you for breakfast. You only shot will be to find another buyer who thinks they are saving money by not using a buyer's agent. Hey! We can both save the commission!!!

I just sold a home a month ago on my own after listing it for 6 months with an agent. The key for me was lowering the price by about 5%. I must admit that my agent wanted me to lower the price at one point, but I had a number I wanted to stick to if possible and the higher price reflected the commission I would have to pay. My agent was a nice lady and she seemed to try hard but over that 6 month period we had exactly zero visits. So after my contract expired I decided to try on my own. Sites like craigslist and boston.com provided the needed exposure for little money. I had two people interested within a week of listing ... along with the formentioned 5% price reduction. The most agravating part for me was that I knew I would have to pay a buyers agent comission. I found a buyer who made a strong offer (over 98% of asking). However he was a first time buyer and despite the fact that he had no buyers agent he wanted to enlist the services of one to walk him through the process. So I had to pay 2.5% to this agent who did literally nothing. He didn't bring him to my property. It was the easiest cash he probably ever made. Plus he was arrogant. Everytime I think about it, it pisses me off. Anyways, my long winder point is; You don't need an agent. Anyone can have access to MLS. The problem seems to be that buyers agents wont bring their clients to properties where no commissions are offered. Why would they? So if you buyers out there would understand that you don't need an agent, just a good attourney. Oh and one last thing. This was my first home sale. The whole process was a complete rip off. Everybody gets a piece. The fees are ridiculous, but in my eyes the most unnecessary was the agent comission. Quickly followed by the state tax. Maybe if you're dealing with very expensive, complicated real estate investments, an agent may be necessary. For the average buyer/seller in 2008 just do it on your own.

I understand the frustration of many of the people out there and having sold RE in the past know it is not as easy as many think. Yes there are A LOT of uneducated fly by night people out there and are usually the ones willing to work for Flat Fee. I am actually all for flat fee especially up front in this market. Agents spend too much of their own time and money up front for unreasonable sellers. Who wants a listing in this market. Most of the time the sellers don't listen and overprice the home sits out there for however many months and doesn't sell. The relationship gets tarnished when you tell them the truth and then the seller pulls the listing and you NEVER recover your advertising, staffing time or your own time. Flat fee would work better for agents, but the big question does it for you the consumer. The answer is absolutely not the flat fee agencies could care less about your home and just try to lure you into paying their flat fee and if you move on they get the up front money. Here is a bit of advice Markets are Markets homes sell but depending on price, lower your price to where people will look at your home and you will have an opportunity to sell. By the way if your on the train tracks or major intersection don't call the broker that sold it to you, oh he/she probably cut their commission and saved you a thousand. Good luck and find good brokers the industry does have some of them, and by the way I have been with a software company for 3 years now and trust me the sales people in this industry as bad if not worse the difference is it is corporate money and not your own so everyone does not get so personal about it.

Does it matter 8% or 20%? There are no buyers out there. At this moment, its the price tag what matters. You are better off reducing it by 8%.

A fair system would pay a base commission of perhaps 5% if the house sold at the listing price. If the house sells for less than listing the commission would be lowered on a sliding scale. If the house sells at a premium to the listing price a higher comission would be paide to the broker.

42. Who sets the price? If it were the broker that would make sense it will never work though. Selling Brokers want your house to sell for as much as possible 5% of 200 is less then 5% of 220 right?
A fair system is you pay by the hour including staff as well as your own advertising all as it happens. You pay 4 what you get. Since this is a forum of consumers I think it is good to ask the opinion if that would work better. I agree that the industry needs change. Would you hire a broker where you pay for their time much like a CPA, Lawyer etc...this includes your CMA, Advertising Cost, Staff to put up signs, cost of information work such as data sheets doing listing agreements, P&S review and signature, home inspection as well as negotiating time and closing. I think it is a solution but would consumers do it rather then I'm only paying if my house sells? In the end it is really up to the seller if they want to sell at what the market dictates.

Fee for service?
Take and post a few digital pictures...$5
Post the listing in MLS....$350
Helping to pull sellers' and buyers' heads out of their ....priceless.

One problem in a market where home prices are falling is that many sellers are initially reluctant to recognize that the prices they list at are way above the current market-clearing prices. This also has a negative externality because it leads other would-be sellers to list their homes at excessive prices. This sequence delays the inevitable - the pricing of homes at prices low enough to clear the market when only that will draw in sufficient new buyers. Perhaps one way to alter this is to have a law or regulation require a contractual provision that the negotiated and agreed-upon percentage commission rate (whatever the percentage is in each particular case) be multiplied by the listing price, not the usually lower selling price. This ought to lead sellers to be more realistic in determining their initial listing prices.

I really do not understand the logic of consumers when it comes to real estate transactions. Consumers do not mind paying insurance brokers, stock brokers, or mortgage brokers but when it comes to real estate it is so different. Remember folks that the real estate commission is usually split 4 ways (selling agent, selling office, buyers agent, and buyers office) which ends up being minimal to all involved when marketing costs are deducted. In todays market a 3% commission and "mls access" is not going to get any property to move. Lenders are generally paying 6% for foreclosures...that may be why these properties generally sell if they have any valuable features. I think the way to go in this marketplace is to pay a decent commission and cover all your basis in the listing contract and make the agent work for there commission or pull the contract and move to a new agent (assuming this clause is in the listing contract). There is really a little magic with selling real estate in this marketplace....be reasonable with the price, be aware of the competitive properties on the market in the same price range and be creative with a marketing plan and it Will sell in a reasonable time period.

8%.....ARE YOU KIDDING ME???? Give me the British system please!!!! In the UK they pay by the hour for these unqualified, low level real estate sales jobs.

As someone who worked in real estate, it is outrageous that this guy has a tier based service. There really are so many terrible agents out there who don't do anything, but for the few who do, people like this ruin it.

As far as I'm concerned, if you get a quality agent, the 6% being paid out is more than made up for in what they get as a closing price and how quick your property is sold. The trouble comes from not doing research and taking on any schmo to be your agent.

I paid $99 for a flat fee MLS service after speaking to the local RE fool who sold me my condo unit in Arlington. They wanted me to LIST the home for 2% less than I SOLD it for on my own. Saved the 6% commission, and the additional 2%.

If you have the time, I highly recommend Flat Fee MLS services.

As per usual, the general public has no idea how the real estate market works. It is both the buyer and seller who pay the commission, not one or the other. If you believe that, I dare you to tell a homeowner that the buyer is paying the commission, they will kick you out of their home.

It may come as a shock to you folks but people need to be 'sold' into a home as well. They need to be encouraged to purchase and they need to know that they are doing the right thing for themselves and/or their family. A good realtor is both an advisor and a salesperson and a tremendous amount of skill and experience is needed to do both professionally and for the best service of their clients.

I don't blame people for trying to sell their home themselves but most of the time you will eventually find out why we have agents and the real estate market.

FACT: People need to be 'sold' in AND out of their homes. Good luck everyone.

Agents should only get 2%.. They are way overpaid for what they do.

A better option to move these units is to offer the buyers a buy down option where the seller pays for below market interest rates. The realtor collects their regular commission without lowering the sales price, the seller's net cost goes down because they paid points for the buyer and the buyer gets to write the points off on their taxes in the first year!

Charging an 8% commission to do the job listing agents are hired to do at 4,5 or 6% is INSANE! Another sad case of traditional agents taking advantage of uneducated sellers (and home-buyers).% based agents are already incentivised to get sellers the highest price (your house sells for more they get paid more) but increasing to 8% by showcasing services he should already be giving the seller?! My head hurts.

Any buyers out there trying to avoid a scam like this try a firm structured like this:
buyer exclusive
flat fee no matter if you are buying $200,000 house of $2,000,000 house
full service
rebates to buyers for the difference of their commission (their cooperating commission - flat fee = your rebate)
tech driven: full transparent listing information on the site`
salaried agents - hallelujah!!!

(8% !!! ... i'm still laughing and crying at the same time)

Your listing agent is supposed to be an expert at:
PRICING
STAGING
MARKETING
SALES
KNOW THE PRODUCTS: THE NEIGHBORHOOD AND THE HOUSE

The reality is, what this guy is doing is a pretty well practiced business tactic (wall street, automotive, etc) : when the service or product is desperately needed (houses aren't selling) take advantage of the market and increase your price and declare yourself an expert or "the best." The problem: this is a very sensitive issue ... people are facing a serious economic downward spiral. They are losing tons of money, roofs over their heads and facing foreclosure, and he decides to get himself a little PR on a highly viewed media outlet ... He was bound to get slammed.

My post above was referring to a buyer agency, Territory Real Estate ... similar to other posts regarding alternative firms such as Redfin and Zip realty

One word of warning with agents. Your agent is in a position to recommend different professionals (R/E Attorneys, Home Inspectors, and Pest Control etc.) to help you out. For example, I know of a couple of agents on the North Shore who don’t use a specific pest control company because a bad home inspection killed a sale. They also steer clients away from certain attorneys who they believe are too difficult.

These professionals make their livelihood from these recommendations, and can be leery of annoying the agent. Take their recommendations with a grain of salt.

Claiming that real estate agents are worth a fixed percentage of a wildly variable amount is absurd. Selling a $180,000 house in 1998 and selling that same house for $450,000 today are the same amount of work. Why should the commission have gone from $10,800 to $27,000? Have salaries in other jobs tripled in the past 10 years?

An 8% commission seems to on the high side for most properties. However, there are instances where an 8% commission may be warranted. For example, in preparing to market a high end custom home, marketing the home to brokers and agents who sell these homes, preparing the sales brochures, video presentation for television, and so on. I sold my newer, custom built Florida home which was on the water, with a deep water dock, a full acre, and many custom features including complete fiber optic wiring for security and entertainment systems. The agent was one of the top agents in the country and he sold it inside of two weeks for $50,000 over the listed price in a good real estate market for a six percent commission. He and his team earned the 6%.

Agree 100%, tying the price of brokerage service to the value of a home is inappropriate because it has no relation to the cost or value of the service.

FLAT FEE!!!

Those agents who try to convince unexperienced sellers/buyers their work is worth 8% commission simply shows how many RE agents/brokers are unqualified and purely money driven. They care more commission much more than care about what they really can provide.

Give me a break. What did they provided in exchange to that more than 20K commission? They are over worked? LOL. What job gets paid this much for about 100 hours (may be much less) labor? Except they sit in a open house mostly passing their own business cards and showing their other listings to visiting buyers. They are working for themselves, not for sellers/buyers. Even you paid them.

It is true there are good Realtors. However, how many of them? 20%? 10% or 5% of them will pick up a call at 5am in the morning, or will be able to dedicate to her/his job? I contacted several RE agents, I can bet, 50% of them can not even calculate they commission to a near number without a calculator.

All realors want is money. I would prefer work with flat fee agent. At least they won't push me to finish a deal.

What a crock. First of all, 6% isn't standard, as this completely misleading article will have you believe, 4%-5% is, and no one in their right mind would pay 8% to sell their home. First of all, most agents don't do anything but put a few ads on craigslist, post to the MLS and maybe take out an open house ad in the globe. To say that an agent will work harder at an 8% rate than a 6% rate is totally ridiculous, and if I ever found that to be the case, I would immediately fire the agent. Remember, if houses aren't selling then the agents don't make a dime. In a slow housing market, the competition is hotter amongst agents to 'get the listing' and the trend will be lower commissions, not higher commissions. A couple of people on here mentioned that an 8% commission might be appropriate for a high end property where more expensive marketing effors might be required....also not true. A higher priced property obviously yields a higher commission for the real estate agent...that's their motivation. If you want to make a high commission from listing a high end home, then you better present a strong marketing plan or the owner will go on to the next agent lining up in their driveway to take the listing. You have to spend money to make money. There is nothing wrong with hiring an honest and dedicated agent to assist you, but watch out for the crooks and realize that although it may be a buyer's market, when it comes to selecting a real estate agent, it is a seller's market, not an agent's market.

David: If you look here: http://www.mass.gov/legis/laws/mgl/112-87tt.htm
you'll see the amount of bond is $5,000. That goes nowhere when the broker has been sued MULTIPLE TIMES and the amount she stole is over $25,000. We did our research--we had used her many times before without a problem and she was selling other houses at the same time. Apparently she started screwing people long before the Board of Registration finally took away her license. We were unlucky enough that our business arrived as all her debts started catching up with her. If the Board had taken action more quickly or shown that there was action pending on her, we would have not used her.

There is a long line of people waiting from money for her, and we are at the end of the line. There was no way we could have stopped what happened -- we had a very good real estate lawyer working with us, and had the seller also had a lawyer, there would have been no problem because the lawyers would have worked out a closing date between them, instead of us having to rely on information from the agent as to what the sellers wanted.

Apparently you’ve never dealt with sociopathic realtors who look you straight in the eye and lie to you. I wouldn’t wish this on anyone else, not even you, but thanks for trying to make us feel worse about everything!

8%? No way... not if I find a house online and simply ask for access for a viewing. I prefer to do the research myself at town hall considering agencies tend to miss key pieces about a property or home. I say 3-4% at most, in todays market. They all made their money, its time to enact some prudence.

Within the city of Boston, a seller will almost always pay 5%. It is very infrequent to see 6%. I worked as a buyer's agent on one deal that paid 6%, last year, (meaning I got 3%) and I was very surprised (and pleased!). It was the only time I've ever seen it.

In certain neighborhoods, 4% commission is more widespread - parts of Dorchester, for example.

This is a ridiculous thread of conversation and fuss. No one is ever forced to use a Realtor or real estate agent. No one is forced to pay 8%, 6% or any percent to a Realtor or agent. There are so many professionals out there that if YOU CHOOSE to use an agent and you don't like what one has to offer - find another! Do you not understand that the power is really in your own hands?

Also agent bashing is not the answer to the problem that most people have with agents. I agree that the field may be a little to simple to enter but this has more to do with State requirements and policing then it does anything else. There are a lot of honest hardworking agents who really do have your better interest in mind and they really do care that you are treated well and happy at the end of your transaction and most of them do this for an average of 30,000 - 40,000 per year after expenses.

And as far as answering the phone at 5am is concerned - I want to know how many other people here are required to do this for their jobs? How many people are required to answer their phone in the middle of a meal and let their it go cold so that they can tend to the whim of their boss? Or get a call at 10:00pm on a Tuesday night while your children are sleeping and your trying to settle in to bed from a client who leaves you a message that simply says "ANSWER YOUR PHONE!"

Working closely and intimately with a large variety of people who are emotionally invested in a specific outcome is not an easy thing, it takes a great deal of grace and communication skill - not everyone is cut out for this and these are not things that you can easily learn in a class environment.

Here is my bottom line - Don't judge people under a blanket assumption. Take responsibility for the fact that as the owner of a property or the owner of funds to buy a property that you are ultimately in control. If you do CHOOSE to use an agent, do your homework, interview agents till you find one that works on your terms and that you feel comfortable with. Don't place expectations upon people that are unrealistic and unfair and don’t choose an agent if you are just going to be negative and abusive through the process because then you might very well get bad service and it will be because you have crippled the relationship with your own bad behavior. Finally, If you have a problem with the level of education and policing your state allows with respect to Realtors and agents then lobby for better controls.

Wow, never in my life have I heard such garbage from a bunch of people wanting something for nothing. If you people had bad transactions, it's because you, the buyer or seller, failed to interview your agents properly. Why do you all begrudge a realtor? It's a job that is fraught with ungrateful, greedy buyers and sellers that make the process that much more difficult! I mean HELLO, don't you ask questions and follow-up on anything? If it's such an easy job, how come your transaction went bad? You know what to do right? I mean, it's an easy job right? A smooth transaction is because of all the parties, agents, lawyers, etc.