Realtor on realtor tricks.

last year

So the commission on real estate transactions is always negotiable, and if you ever frequent the Buying and Selling a Home Forum a lot of people think it should be about 1% each because "Realtors don't Do anything anymore".

Anyway it tends to be about 6% with each agent getting 3%; 5% on some higher priced properties. But a number conventional brokerages are now at 5%, with each agent getting 2.5%. (There are all sorts of online national kinds of things that are more or less FSBO except for some minimal support too).

Anyway there is an independent agent here who in her listings says "Buyer's agent compensation 2.5%". So that sounds like the overall commission should be 5%, split, right?

But no . . . it turns out she is still negotiating overall commission at 6%, but she is taking 3.5%, because the natural assumption is that brokerages are more frequently negotiating 5%, and agents have not been questioning it.

Of course this is not illegal, she could try to split it 5% to 1% if any agent were foolish enough to take 1%.

This was the buyer's agent when I sold my last condo and there was a clause in our agreement that was so carefully constructed to conceal what it meant that it took the legal team at my agents office to figure out it was something that we had Not agreed to in the negotiations.

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Comments (12)

deegw
last year
last modified: last year
I'm not surprised. I suspect it's easier to get away with in a large market. My experience in smaller markets is that good realtors value relationships. I remember working with a top broker and there was one house she suggested we didn't visit because of the listing realtor's reputation.
palimpsest
Original Author
last year
Well, I would probably not even look at a house she listed, and I know that a lot of agents avoid her agency like the plague. I knew of her reputation before she was the buyer's agent for my last property, and the transaction with me confirmed it.
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pricklypearcactus
last year
I suppose she and her clients can include whatever they want in any counter-offers. But that does seem pretty awful, both to the buyer and especially the buyer's agent to do that. Am I recalling correctly that the offer that the buyer submits specifies the commissions for the agents? So couldn't the buying agent write up an offer that stipulates that both agents receive 3%?
palimpsest
Original Author
last year
No usually the listing agent negotiates the commission with the seller since they are the ones paying it out of the sale. The general assumption is that it is divided equally but I guess now it is smart to specifically ask.
pricklypearcactus
last year
Ah ok, that makes sense. Thanks for clarifying! Is one side of the transaction more or less difficult? It seems like the buying agent has to do a ton of leg-work, but the selling agent has to do quality research, and both potentially have some complex negotiation.
arcy_gw
last year
Back in the day a realtor viewed all homes before brining a client through. Not so anymore. Back in the day the only way to find homes was through a realtor, not so anymore. Ours should have caught a few things that threatened to throw a wrench in our purchase, but didn't. It's been 6% for a very long time and most of that time people have felt they over paid. What I know is Americans are very good and paying bug bucks to entertainment and really crappy about paying for people who provide services like teaching/police/fire fighters....
palimpsest
Original Author
last year
I don't think the actual amount of the commission is relevant. Negotiating a commission and obfuscation of what the total commission is so you get more and the buyers agent gets less without them realizing it is the problem. It's called a lack of transparency
jojoco
last year
Shady realtors will always out themselves. I was a realtor for 10 years and there was one agent who was sketchy as all get up. No realtor wanted to work with him. He filed complaints against tons of realtors trying to get comissions that he thought he was due (usually because his clients went elsewhere). I loved being a realtor, but I got out of it because I loathed too many realtors and their unethical practices.
palimpsest
Original Author
last year
Well, now some agents will make you sign a contract if they show you more than a couple properties. It makes sense because some people will look at 50 properties with an agent and then see one on an open house and then work with the agent at that property and have no idea that maybe they should use the agent that actually spent hours of time on them. And no, I don't agree that those are just the breaks.
nicole___
last year
Good information Pal! I've bookmarked it...
jojoco
last year
Totally agree about contracts, Pal. I used them too. I hoped to be the kind of realtor with loyal clients, and I was, for the most part. But yes, I would send clients to an open house with strict instructions to tell the realtor at the open that they had an agent. The guy I spoke about would meet someone, chat causually with them and then try to grab a commission after they bought with another realtor. He was never the procuring cause in these complaints.
jill302
last year
In California both brokers‘ commission is spelled out on the standard Residential Listing Agreements, so easy to check.

My MIL is listing her property tomorrow. Thankfully, we have an agent that we have used before. She did a great job for us, went beyond in many ways. She has been in the industry for years and has a great reputation. Wish MIL had been willing to sell before now, the market has been definitely slowing a bit in our area.