[TOphotog]

I show all listings which fit the buyer's criteria to the buyer (it's all computerized - it spits them all out) - it is my duty to fully inform them of all properties. If my contract with my buyer also states that I am to receive 2.5% for the selling side, the buyer then has to make up any difference between what's being offered and the 2.5% in the contract. How many buyers do you think would want to do that? I show them the listings, but they choose which ones they would like to physically view and possibly negotiate on. None to date have chosen to see the lower commission properties.

On another note: the general public is under the misconception that 2.5/2.5 is off the mark these days. If I can bore you with some stats (current as of 20 minutes ago, not skewed by any other criteria other than area and price range). These stats are only showing the commission being offered to the selling agent, our system doesn't allow me to see how much the listing agent's portion is.

Areas: C01 C02 C03
Price Range:
400-500 9 listings 1 less than 2.5%
500-600 9 listings 1 less than 2.5%
600-700 12 listings 3 less than 2.5%
700-800 11 listings 0 less than 2.5%
800-900 8 listings 0 less than 2.5% 1 at 3.0%
900-1.2M 20 listings 4 less than 2.5%

C01 C02 C03 C04 C05 C06 C07 C08 C09 C10 C11 C12
1M-1.8M 200 listings 4 FSBO - to be negotiated
17 less than 2.5%
169 at 2.5%
10 at 3.0%

1.8-3.0M 132 listings 1 FSBO - to be negotiated
10 less than 2.5%
113 at 2.5%
1 at 2.75%
6 at 3.0%
1 at 4%

3M-14M 115 listings 0 FSBO - to be negotiated
0 less than 2.5%
110 at 2.5%
3 at 3.0%
1 at 3.5%
1 at 4.0%

As you can clearly see, the majority of listings in the central area are at 2.5% and more to the selling agent. Extremely few are selling it themselves through MLS (FSBO), even though that option is available to them. In the $1.8-3.0M range, four of those listings under 2.5% were builders who commonly reduce the rate and want the HST included. In the over $3M range, all are offering 2.5% or more, right up to 4%.
In other words: almost everyone is offering 2.5% or more to the buyer's agent even with all the various commission models available.

 

[interested]

I can tell you that personally I negotiate all my transactions with realtors.

I offer 2% to list and 2.5% to the selling agent. I have discussed this with many agents and all have agreed to it. I feel that 2% to take the listings and to help with the negotiations on properties $500K to 1Mill is a lot already frankly to prepare a listing, deal with showings and the contract. I have not had any need to pay 2.5% to list in the past 5 years. I have been through the process 3x in that period.

By the way, I have used 1 agent to sell a property where I gave 1.5% to list but it was a desirable area and I paid to stage/declutter and update/paint, remove carpet to show hardwood; all of which made the house more desirable. It got 4 offers the day of sale so 1.5% was adequate from both my and the listing agents view. 2.5% to selling agent because I believe the reality is the agent will not show below 2% for sure or 2.5% even as most buyers will not want to pay the additional commission as TOphotog has suggested.

 

[TOphotog]

^interested: Very wise, very shrewd. You are a smart seller.

 

[Finn]

Buyers signing up with an agent should be guaranteed that they are shown all MLS listings that meet their criteria, not the agent's selection based on how much commission is to be made. If at least one agent on this thread suggested only properties affording them a higher earning are offered buying clients, then that flies in the face of the agreement they entered into as a real estate agent and with their buying client. The idea that there are some agents under contract with buyers for the sole purpose of guaranteeing a certain commission rate smacks of greed, and it is not in the best interest of the client.

Yes we can private list our properties outside of an agency, but the trade off is time and money invested on marketing and sales and still being outside the MLS system. I will put my trust in an agent who understands how to target the right buyers, market responsibly and arrange a sale quickly so that time, resources and all our eventual earnings are maximized.

Re the bribes comment, we can discuss ethics all day long, but buyers should beware when being pitched and sellers shouldn't fall for the idea that they'll receive more attention if they pay the agent more. If two neighbours, expecting to receive the same amount of profit, list identically valued homes on the same day at 490K and 500K, who do you think will receive the first offer? Do you think a buyer will be want to pay more so the agent makes more commission? Agents, instead of focusing on the commission rate look at the amount of money to be potentially earned. If an agent works for 2.5% commission and works to sell a properly priced home properly s/he should sell it in 3 weeks with earnings of $6,250 - $12,500. If not worked well, that listing sits for months and time/earnings plummet. Smart agents make sales not play games with buyers and sellers.

We are losing sight here of what actually sells a property. It is not the agent's commission rate, the agent's personality or any other intangible. It's the property and how that property is priced. Even in a bidding war it is the property that inspires that response. I'm an agent in an entirely different industry and I fully realize that it is the intellectual property that I represent that attracts and closes the deal, I offer is knowledge of my industry, how to target the market for my client, make sure documentation is legal, and accept terms that best benefit my client. To the sales agents on here: sales is what your business is, and sales are never a given or an entitlement. Salaries fluctuate and deals are won and lost in the blink of an eye. Sometimes you expend twice the amount of time to make the same amount of money. This is the condition you accepted when you entered into your career. I'm not saying you are not qualified or smart or clever, but the days of anyone in sales thinking they can command a premium pay out are being challenged in the marketplace for good reasons. The very idea that anyone has become accustomed to a certain income and expects that to remain unchallenged is not living in the real world.

I have agents canvassing my neighbourhood on a weekly basis trying to pick up new listings; this indicates that there is a need for fresh properties and that the negotiation of commission rates is discussed. It is up to sellers and buyers to realize they hold the cards because they regulate the listings and therefore, the commissions they agree to pay.

 

[TOphotog]

Finn, the sellers in my stat post above who are in the $1M+ range are not stupid people, yet they're the category which offers more than 2.5% more often compared to the less than $1M category. It's not bribery, it's marketing. You use every tool in the box to market a property. If they see the value of offering a higher commission, so be it. You don't think any agent would be happy to list a $3M property and get paid $60K (2%)? Yet, that's not happening. The higher sellers are offering higher commissions because they know it works. If I stumble upon a listing that my buyer chooses to see and it's offering more than 2.5% - bonus. I don't go looking for it. That would be short-sighted.

As far as a property and the price selling itself, I beg to differ.. and I've been doing this for over 26 years. A good agent knows how to market a property, knows how to get more people through the door and hence, a greater chance of a higher selling price. A bad agent sticks it on MLS and waits for something to happen. I never feel my sales are a given nor an entitlement. I'm very appreciative of my clients' business and trust over the years, and maintain their trust by continually working hard for them.

 

[cdr108]

We are losing sight here of what actually sells a property. It is not the agent's commission rate, the agent's personality or any other intangible. It's the property and how that property is priced. Even in a bidding war it is the property that inspires that response. I'm an agent in an entirely different industry and I fully realize that it is the intellectual property that I represent that attracts and closes the deal, I offer is knowledge of my industry, how to target the market for my client, make sure documentation is legal, and accept terms that best benefit my client. To the sales agents on here: sales is what your business is, and sales are never a given or an entitlement. Salaries fluctuate and deals are won and lost in the blink of an eye. Sometimes you expend twice the amount of time to make the same amount of money. This is the condition you accepted when you entered into your career. I'm not saying you are not qualified or smart or clever, but the days of anyone in sales thinking they can command a premium pay out are being challenged in the marketplace for good reasons. The very idea that anyone has become accustomed to a certain income and expects that to remain unchallenged is not living in the real world.

I have agents canvassing my neighbourhood on a weekly basis trying to pick up new listings; this indicates that there is a need for fresh properties and that the negotiation of commission rates is discussed. It is up to sellers and buyers to realize they hold the cards because they regulate the listings and therefore, the commissions they agree to pay.

what's the saying "location, location, location" - not agent, agent, agent.
obviously the condition of the property is instrumental too, but i have not encountered one r/e agent pay for staging of my properties, painting, renos and upgrades, maintenance, property taxes, mortgage payment, etc to make it look its' best and get the most value.

there's a reason so many realtors want listings ... they get a cut of the property just for having it if it sells.
it's the co-operating agent that brings the buyers and help close the deal, so there's definitely an incentive for them to push a sale.

 

[interested]

Finn, the sellers in my stat post above who are in the $1M+ range are not stupid people, yet they're the category which offers more than 2.5% more often compared to the less than $1M category. It's not bribery, it's marketing. You use every tool in the box to market a property. If they see the value of offering a higher commission, so be it. You don't think any agent would be happy to list a $3M property and get paid $60K (2%)? Yet, that's not happening. The higher sellers are offering higher commissions because they know it works. If I stumble upon a listing that my buyer chooses to see and it's offering more than 2.5% - bonus. I don't go looking for it. That would be short-sighted.

As far as a property and the price selling itself, I beg to differ.. and I've been doing this for over 26 years. A good agent knows how to market a property, knows how to get more people through the door and hence, a greater chance of a higher selling price. A bad agent sticks it on MLS and waits for something to happen. I never feel my sales are a given nor an entitlement. I'm very appreciative of my clients' business and trust over the years, and maintain their trust by continually working hard for them.

May I ask TOphotog...is the reason the 1+ million is offering more than 2.5% not that this is the segment of the market which is slowing in some areas. I know in the suburb where I am properties over $1.5 million have been on the market a long time. Stuff in the $500-800K is still moving like hot cakes.

I have read I believe that the very high end has been moving well in Toronto but these individuals are "well healed". I would think in Toronto the $1-1.5 or maybe 2 million range has more people stretching to be there than perhaps over $2 million. Once can't quite glean the figures from your quoted numbers in the higher range if there is a difference between say $ 1 mill; $1.5 mill and 2 million and then more etc.

Sorry, I just went back and looked a the original post. My bad. You did talk about $3-14 million. I am guessing the amounts are higher there as there is more play in the price. I mean, how does one know if something is worth $10 OR $11 million so an extra 1/2% in commission if it gets traffic can easily be absorbed in a slightly inflated price which is more difficult at $1 million to $1.1million which I think would be far more price sensitive...just my thoughts.

 

[interested]

what's the saying "location, location, location" - not agent, agent, agent.
obviously the condition of the property is instrumental too, but i have not encountered one r/e agent pay for staging of my properties, painting, renos and upgrades, maintenance, property taxes, mortgage payment, etc to make it look its' best and get the most value.

there's a reason so many realtors want listings ... they get a cut of the property just for having it if it sells.
it's the co-operating agent that brings the buyers and help close the deal, so there's definitely an incentive for them to push a sale.

cdr,
I was not suggesting this on my listing. I paid 1.5% commission to the selling agent but I paid for the staging/decluttering, revealing of the hardwood floors but the agent was helpful in getting me people to help with the work at reasonable pricing.
I could not expect that at 1.5%. Now, at 2.5 or 3% on a $1+ million property I have actually heard of agents paying to do some inexpensive work....some painting and minor repairs and even staging for a month to get a better dollar. In fairness to the agents, I don't think that they should spend more than 0.5% or tops 1%(for a 3% commission) because while that will get a higher price, it is the seller who benefits and not the realtor though the property sells.

 

[drewp]

@Hank

I have no problem showing my clients listings that offer lower commissions. I make it very clear when a client signs a buyers agreement that my fee is 2.5%, and they have to cover any outstanding costs. I just showed my client a FSBO listing yesterday, after we drove by and saw an open house sign. I even called the homeowner to ask if we could drop by.

Who said I can't negotiate that fee with the seller if my buyer doesn't want to pay.

 

[interested]

@Hank

I have no problem showing my clients listings that offer lower commissions. I make it very clear when a client signs a buyers agreement that my fee is 2.5%, and they have to cover any outstanding costs. I just showed my client a FSBO listing yesterday, as we drove by and saw an open house sign. I even called the homeowner to ask if we could drop by?

Who said I can't negotiate that fee with the seller if my buyer doesn't want to pay.

I as a seller would be willing to negotiate with the buyer's agent. Why not? Most buyers have a price in mind they are willing to pay. The same is with most sellers...a price they are willing to accept. If the price is above what I wanted and it cost me a bit as a seller to the buyer's agent...why not. I would go for it drewp.

That said, I have also had my agent many years ago to make the deal go take 0,5% off his commission and the buyer's agent take off 0.5%, the buyer come up about 1% more on their offer and me go down 1% off my offer to make the 3% "disappear".

This was done at the time when commissions were pretty much 6% across the board.

Sometimes, if everyone is willing to make a deal happen, everyone wins. No one get exactly what they wanted but in the end everyone had a deal they could live with.

 

[TOphotog]

My take on higher priced listings offering 3% and more is that they are usually owned by very savvy business people, who feel the extra commission is worth it if it directs more traffic to their property. On a $14M property, that's an extra $70,000 or more in commission - that's a nice car. Just because they own an expensive property doesn't mean they're willing to throw money away if they don't have to. They see the value in the inducement.

I see these FSBO advertisements which state "no agents" and I feel for them. They could have sold already just by opening up negotiations. Before I got into this business, I sold my own properties privately, but was always open to agents bringing clients in. Unfortunately, I had an agent who contacted me with a hot client, but that client had already called me directly the night before and the deal was already in the works. He asked if he could finish it and get a commission. A little late....

 

[Hank]

@Hank

I have no problem showing my clients listings that offer lower commissions. I make it very clear when a client signs a buyers agreement that my fee is 2.5%, and they have to cover any outstanding costs. I just showed my client a FSBO listing yesterday, after we drove by and saw an open house sign. I even called the homeowner to ask if we could drop by.

Who said I can't negotiate that fee with the seller if my buyer doesn't want to pay.

Does your contract guarantee that the buyer will buy any house through you for a certain amount of time (or something similar)? I assume that it does, otherwise people could make offers behind your back. I mention that because I know that buyers' agents are usually sold as being "no downside" (since the seller pays the fees), but that only applies where sellers offer the full 2.5%. If a buyer finds a good house themselves on MLS that doesn't offer the full 2.5% to the buyer's agent then the buyer has to pay extra...that seems like a downside to me.

I guess as long as buyers know that upfront, then it's okay...assuming that they are fully aware.

 

[cdr108]

Does your contract guarantee that the buyer will buy any house through you for a certain amount of time (or something similar)? I assume that it does, otherwise people could make offers behind your back. I mention that because I know that buyers' agents are usually sold as being "no downside" (since the seller pays the fees), but that only applies where sellers offer the full 2.5%. If a buyer finds a good house themselves on MLS that doesn't offer the full 2.5% to the buyer's agent then the buyer has to pay extra...that seems like a downside to me.

I guess as long as buyers know that upfront, then it's okay...assuming that they are fully aware.

that's what the buyer's agreement does.
it's promoted as protecting the buyer, but it also binds the buyer to certain obligations, etc

 

[Hank]

that's what the buyer's agreement does.
it's promoted as protecting the buyer, but it also binds the buyer to certain obligations, etc

Yeah I know...I'm basically just wondering how many buyers are told that there's "no downside", not realizing that they have to fork out extra money for some places that they could buy for nothing extra if they just did some searching on mls themselves (frankly, I don't really see much value-add for having a buyer's agent anyway...it's not like it's hard to check mls myself).

 

[Finn]

I have had varying reactions to my initial emails to a half-dozen agents in my quest to list my home for sale. A few right off the bat said that their service is so superior that their commission is 5% just for listing yet they can't tell me what they do that is so special. Everything they mention is normal activity that any other agent offers. One went so far as to say that I have no idea how real estate agents work since I ask to negotiate the commission fee. Even though I've worked in a real estate office and know a bit about the biz. It's not rocket science. One guy that came door to door promoting his services in January has called me five times even though I've told him please don't call me - I will call you when I'm ready. His reply to that was, "Well I thought you wanted to sell your house." Can't imagine who would work with that guy. Meanwhile a few really nice agents have welcomed the chance to see my home and discuss the commission rate, acknowledging that in my area homes sell fast and even 2.5% makes them a pocket full of money for listing, hosting an open house and bringing me offers. A house just down the street from me sold privately with Property Guys and closed within 14 days from their open house. I really want an agent, a fair one, but wondering if selling privately really is a growing trend and one that makes sense when you live in a desirable are of the city.