The 6% Real Estate Commission is Doomed

[tvguy]

Yes, 100%. My house has the incurable defect of being a split foyer with 2 beds up and two down. No one with small children will want that layout so he has been trying out different wording in the listing hoping to get new views.

He has also spent time interviewing other relators who have shown the house to see what potential purchasers are saying to see if there is something we can fix.

I wonder if people who are hoping for an hourly rate think that realtors will be charging $20 and hour. I expect to see something more like $125/hr plus expenses and fees. And don't forget, realtors are not actually making the 2.5 or 3% commission. They usually make 1% and the broker makes 2% to cover office expenses and such.

A former co-worker (in TV news) was surprised that various experts were saying in 2022 that people were looking for homes with smaller yards, and every comment on his house that was for sale was, the yard was too small!

 

[barkley]

Yes, 100%. My house has the incurable defect of being a split foyer with 2 beds up and two down. No one with small children will want that layout so he has been trying out different wording in the listing hoping to get new views.

He has also spent time interviewing other relators who have shown the house to see what potential purchasers are saying to see if there is something we can fix.

I wonder if people who are hoping for an hourly rate think that realtors will be charging $20 and hour. I expect to see something more like $125/hr plus expenses and fees. And don't forget, realtors are not actually making the 2.5 or 3% commission. They usually make 1% and the broker makes 2% to cover office expenses and such.

i totaly get someone with younger kids not wanting this layout but with older ones it can be great. a friend grew up in house this style and her parents loved their teens being on a different level b/c it was both an ability to escape their noise and allow them a noise free bedroom/homework zone (from the main floor/kitchen...). i could see this being appealing to a younger homeowner who wants to get roommates b/c it affords some greater privacy. i could also see this as a benefit to multi-generational families b/c in the case of audlt child w/kid(s) they could be in the bedroom on the same floor with the kid(s), and with the case of an older parent(s) moving in they could have some privacy being on a separate floor but if the time came that they needed (like young children) closer proximity to someone they could move to the other floor.

when we sold our former home i made a push with the realtor to try a very out of the box marketing technique. he was vocal that he thought it was not going to be worthwhile but agreed to at least try it-it ended up directly responsible for the sale of the house. if it's not cost prohibative then unique marketing is worth a try.

 

[MillauFr]

A former co-worker (in TV news) was surprised that various experts were saying in 2022 that people were looking for homes with smaller yards, and every comment on his house that was for sale was, the yard was too small!

Yards have to be small here, where land costs $10 to $20m an acre. No one can afford a large yard.

 

[Cannot_Wait_4Disney]

Yes, 100%. My house has the incurable defect of being a split foyer with 2 beds up and two down. No one with small children will want that layout so he has been trying out different wording in the listing hoping to get new views.

He has also spent time interviewing other relators who have shown the house to see what potential purchasers are saying to see if there is something we can fix.

I wonder if people who are hoping for an hourly rate think that realtors will be charging $20 and hour. I expect to see something more like $125/hr plus expenses and fees. And don't forget, realtors are not actually making the 2.5 or 3% commission. They usually make 1% and the broker makes 2% to cover office expenses and such.

I would think that only the families with a lot of younger kids wouldn't do 2 and 2. In any case, think about who might like your house most and write your stuff accordingly. Market to your strengths but don't try to hide weaknesses. I always say you want the right buyers to come out and look. Buyers who the house is not right for, you don't.

 

[china mom]

I would think that only the families with a lot of younger kids wouldn't do 2 and 2. In any case, think about who might like your house most and write your stuff accordingly. Market to your strengths but don't try to hide weaknesses. I always say you want the right buyers to come out and look. Buyers who the house is not right for, you don't.

I think the house is a good fit for anyone with older kids/teens but as to marketing for the strengths, I can't convince my realtor to use my marketing slogan to emphasize the pool and very private back yard. I want to go with "Swim Naked!" in our ad

 

[_19disnA]

The situation for every potential buyer is probably different. Older 'empty nest' couple, recently married no children, someone with small children, someone with older children, someone who has an elderly relative living with them, etc. You really have NO idea who will eventually make an offer. I would worry less about WHO might be looking for the specific configuration your home has and setting a reasonable price that encourages offers.

You can't change the basic configuration, but you CAN make it more appealing if the house is well-maintained and offered at a reasonable price. A well-maintained, competitively priced house will appeal to a LOT of potential buyers.

When we were looking for a new home a few years ago, too many seem to set a price that is way above market hoping to make a big profit. Once a home sits for 60+ days, most everyone assumes it is over-priced and stops looking at it. If the yard is poorly maintained, then you also wonder what else you CAN'T see might also be an issue. Remove clutter from the inside of your home to make it more appealing as people are walking through.

 

[china mom]

The situation for every potential buyer is probably different. Older 'empty nest' couple, recently married no children, someone with small children, someone with older children, someone who has an elderly relative living with them, etc. You really have NO idea who will eventually make an offer. I would worry less about WHO might be looking for the specific configuration your home has and setting a reasonable price that encourages offers.

You can't change the basic configuration, but you CAN make it more appealing if the house is well-maintained and offered at a reasonable price. A well-maintained, competitively priced house will appeal to a LOT of potential buyers.

When we were looking for a new home a few years ago, too many seem to set a price that is way above market hoping to make a big profit. Once a home sits for 60+ days, most everyone assumes it is over-priced and stops looking at it. If the yard is poorly maintained, then you also wonder what else you CAN'T see might also be an issue. Remove clutter from the inside of your home to make it more appealing as people are walking through.

I agree 100%. I am not dwelling on the incurable defect(s) (layout, location and such). My realtor, whom I love dearly, set the price too high initially. I knew it but let him. We had a $25K price reduction almost right away. That put us right at market rate. We lowered by another $25 and it is below market for our lot size, square footage and such but that means nothing if no one is making an offer.

The house is vacant which does not help at all. Prospective buyers have more trouble picturing how rooms will be used when the house is empty.

I am trying to decide if certain upgrades would be worth it. I put in new countertops last year but for renters, I went with laminate. I am trying to decide if it would be worth the cost to upgrade to quartz (which would necessitate changing out the sink to undermount). The paint is a in good shape but is a satin, which is great for cleaning up after renters but a flat would make the house show better but I don't think it is worth the expense to repaint.

I am at 55 DOM

 

[_19disnA]

The house is vacant which does not help at all. Prospective buyers have more trouble picturing how rooms will be used when the house is empty.

My first impression of a vacant house for sale is likely the asking price was too high and the current owners had to move before finding a buyer. Everyone has their own idea of how the room should be arranged with furniture/tables/etc., so I don't think that really matters.

When selling our prior home, we chose a realtor who was NOT big on that whole staging thing and agreed with us that no changes were needed to put it on the market. I think it is important to choose a realtor who has similar views to yours regarding how to best prepare the house to put on the market and agree on price setting. I think we spoke with 4-5 realtors before deciding who to work with. One already had a selling price established before ever setting foot in the house. That made NO sense to me as the age/condition of big ticket items like the roof, HVAC, windows or appliances matter in setting a price. Also the general condition and how well maintained it was is part of how you set your price. Realtors have access to information on what homes in your area have recently sold for and that is always a good starting point to make sure your asking price is reasonable and in line with market conditions for that area.

I would NOT put a lot of money into changing/updating things (assuming the house is in good shape and well-maintained) since the eventual buyer may come in and immediately decide they want to make various changes. At the point our house was sold, I really didn't care what the new owners might want to change/update. I don't think painting rooms with a flat vs satin finish will make any difference in how well the house shows/sells. Most buyers know that they can easily paint a room a different color/sheen for minimal cost and there are much bigger things to look for when deciding if a home is what they are looking for.

 

[china mom]

My first impression of a vacant house for sale is likely the asking price was too high and the current owners had to move before finding a buyer. Everyone has their own idea of how the room should be arranged with furniture/tables/etc., so I don't think that really matters.

When selling our prior home, we chose a realtor who was NOT big on that whole staging thing and agreed with us that no changes were needed to put it on the market. I think it is important to choose a realtor who has similar views to yours regarding how to best prepare the house to put on the market and agree on price setting. I think we spoke with 4-5 realtors before deciding who to work with. One already had a selling price established before ever setting foot in the house. That made NO sense to me as the age/condition of big ticket items like the roof, HVAC, windows or appliances matter in setting a price. Also the general condition and how well maintained it was is part of how you set your price. Realtors have access to information on what homes in your area have recently sold for and that is always a good starting point to make sure your asking price is reasonable and in line with market conditions for that area.

I would NOT put a lot of money into changing/updating things (assuming the house is in good shape and well-maintained) since the eventual buyer may come in and immediately decide they want to make various changes. At the point our house was sold, I really didn't care what the new owners might want to change/update. I don't think painting rooms with a flat vs satin finish will make any difference in how well the house shows/sells. Most buyers know that they can easily paint a room a different color/sheen for minimal cost and there are much bigger things to look for when deciding if a home is what they are looking for.

And to bring the discussion bac to the original topic... we are paying realtors for all they work they put in to market the house in the best possible way. My realtor and I have been a team since the early 80's and have been through several purchase/sales together and I don't begrudge his commission. Empty houses just don't show as well as furnished ones. You can see every flaw that might otherwise not been noticed because the buyer is distracted by the decor/furnishings. People, like you mentioned, may assume desperation or that the house has been sitting too long due to being overpriced. And, frankly, many buyers are just not sophisticated enough to be able to picture themselves in an unfurnished house.

So, my realtor may have to spend a little more effort tweaking the marketing to overcome this. I am glad that he is not being compensated by the hour.

My realtor and I do see eye to eye on staging. In this case, we had to correct one deficiency - dog smell (renters had a dog) and we both agreed that was a big one. Happy to announce that the smell is gone after two shampooings and some airing out. But there is not really anything else we can do other than paint and countertop - and, at this point, I don't see a ROI on wither of those.

 

[Moliphino]

And to bring the discussion bac to the original topic... we are paying realtors for all they work they put in to market the house in the best possible way. My realtor and I have been a team since the early 80's and have been through several purchase/sales together and I don't begrudge his commission. Empty houses just don't show as well as furnished ones. You can see every flaw that might otherwise not been noticed because the buyer is distracted by the decor/furnishings. People, like you mentioned, may assume desperation or that the house has been sitting too long due to being overpriced. And, frankly, many buyers are just not sophisticated enough to be able to picture themselves in an unfurnished house.

So, my realtor may have to spend a little more effort tweaking the marketing to overcome this. I am glad that he is not being compensated by the hour.

My realtor and I do see eye to eye on staging. In this case, we had to correct one deficiency - dog smell (renters had a dog) and we both agreed that was a big one. Happy to announce that the smell is gone after two shampooings and some airing out. But there is not really anything else we can do other than paint and countertop - and, at this point, I don't see a ROI on wither of those.

You can do like the realtor for the house I bought and photoshop some furniture into the listing photos. It was not very convincing or done to correct scale.

 

[_19disnA]

Or plan ahead and take listing photos BEFORE moving out. IF the house is empty since it was a rental property, seems like the realtor could arrange for some minimal level of furniture to be brought in for staging of the listing photos and make the house more presentable when people visit in person.

 

[cvjw]

Younger son signed a contract to buy a townhome today, after the new rules went into effect. Seller is still paying all his buyer agent fees. Seems to be up to the seller whether they pay the buyer fees now. Townhome had 4 offers in 24 hours and they are still paying the fees.

 

[china mom]

Younger son signed a contract to buy a townhome today, after the new rules went into effect. Seller is still paying all his buyer agent fees. Seems to be up to the seller whether they pay the buyer fees now. Townhome had 4 offers in 24 hours and they are still paying the fees.

That seems to be where this is headed. The lawsuit caused the change where you can't advertise the buyer agent commission but it will likely end up as part of the negotiation.

Prior to the lawsuit, I sell a house for $100,000, I expect to pay 5% commission so I would net $95K

After lawsuit, I list the house for $100,00. Accept an offer for $97,500, giving my buyer a discount so they can pay their agent 2.5%, pay my agent 2.5%, and net $95K Same result.

Or, I pay my agent 2.5% and agree in the contract terms to pay the buyer agent 2.5%. Same, same.

 

[Deanna Lamz]

That seems to be where this is headed. The lawsuit caused the change where you can't advertise the buyer agent commission but it will likely end up as part of the negotiation.

Prior to the lawsuit, I sell a house for $100,000, I expect to pay 5% commission so I would net $95K

After lawsuit, I list the house for $100,00. Accept an offer for $97,500, giving my buyer a discount so they can pay their agent 2.5%, pay my agent 2.5%, and net $95K Same result.

Or, I pay my agent 2.5% and agree in the contract terms to pay the buyer agent 2.5%. Same, same.

It might be the most useless and inefficient law I've seen in a while.

The shift complicates transactions by forcing agents to haggle over fees, potentially leading to lower earnings and less consistency in pay, not to mention it burdens the buyers with unexpected costs, making it harder for them to afford representation. As an agent myself, I'm NOT looking forward to that. Brokerages will also have to adjust their own commission structures, potentially increasing fees or reducing agent splits to cover those additional regulatory costs. For agents struggling with these changes, this company offers guidance and practical tips to help them adapt.

 

[gmi3804]

It might be the most useless and inefficient law I've seen in a while.

The shift complicates transactions by forcing agents to haggle over fees, potentially leading to lower earnings and less consistency in pay, not to mention it burdens the buyers with unexpected costs, making it harder for them to afford representation. As an agent myself, I'm NOT looking forward to that. Brokerages will also have to adjust their own commission structures, potentially increasing fees or reducing agent splits to cover those additional regulatory costs.

I actually don't mind it. This is a conversation we should have been having with our clients before all of this anyway, and I've always gotten signed Buyer Agency Agreements (including expected compensation) before putting anyone in my car. It weeds out the non-serious buyers. I'd rather lay on the sofa eating cashews and watching Judge Judy than chauffeuring looky-lous over hill and dale.

 

[tvguy]

I actually don't mind it. This is a conversation we should have been having with our clients before all of this anyway, and I've always gotten signed Buyer Agency Agreements (including expected compensation) before putting anyone in my car. It weeds out the non-serious buyers. I'd rather lay on the sofa eating cashews and watching Judge Judy than chauffeuring looky-lous over hill and dale.

Looky-lous are kind of the hazard of any commissioned sales job. And have heard a couple Real Estate Agents warn that more than once they wrote off someone as a looky lou, to have them turn into a client, and a great source of referrals.

 

[gmi3804]

Looky-lous are kind of the hazard of any commissioned sales job. And have heard a couple Real Estate Agents warn that more than once they wrote off someone as a looky lou, to have them turn into a client, and a great source of referrals.

I won't claim that that never happens. But unfortunately it's impossible to know if they're actually going to turn into clients. More often than not, they don't. I stack the deck in my favor. My time and personal life is way more important to me.

 

[tvguy]

I won't claim that that never happens. But unfortunately it's impossible to know if they're actually going to turn into clients. More often than not, they don't. I stack the deck in my favor. My time and personal life is way more important to me.

You are doing better than most of the Real Estate agents I know. They all seem to have side gigs.

 

[gmi3804]

You are doing better than most of the Real Estate agents I know. They all seem to have side gigs.

Semi/mostly retired these days, but even back then I weeded a lot out. It didn't take long to realize that the illusion of being busy doesn't pay the bills. Closed transactions do. I fortunately have a nice referral base by now, so even if I don't take the client I can refer them to another agent.

 

[barkley]

I won't claim that that never happens. But unfortunately it's impossible to know if they're actually going to turn into clients. More often than not, they don't. I stack the deck in my favor. My time and personal life is way more important to me.

what kind of 'looky-lous' are you speaking of? are these people that can't be satisfied with anything you show them or are truly just looking with no real intent to purchase? i ask b/c it's been almost 20 years since we purchased a home but back then and in the prior two home purchases we did we could not even get a realtor to start showing us anything until we provided proof of prequalification for a mortgage which intailed enough gathering of verifications and doing paperwork on our part with financial institutions that we would not have undertaken it without a genuine desire to locate a house.

i remember with the last home we sold that the experienced realtors did NOT want to do open houses b/c of looky-lous which largly consisted of neighboring homeowners (from the same developer/builder) to scope out upgrades and renovations others had done.