# realtor commission negotiation question



## kubatron (Jan 17, 2011)

A friend of mine came up with a good idea, want to know if it's "ok" by the real estate board(s).

Say his house sells for $700K. He'll pay his agent 2%.
If she sells for $650-$699,999.99 then he will pay her 1.5%.
If she sells for $600-$649,999.99 then he'll pay her 1%.

Isn't this allowed?


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## andrewf (Mar 1, 2010)

You just need to get an agent to agree to it.


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## andrewf (Mar 1, 2010)

One alternative would be to get an appraisal and offer 1% on the whole amount plus 20% of any excess over the appraised value. I don't mind paying agents if they generate value. Paying them a flat 2.5% regardless of what price they get for you doesn't make sense to me.


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## Jon202 (Apr 14, 2009)

I think that's exactly it, there is no "1" ideal fee calculation but a one that can be agreed upon and performance based would be great.

For years homesellers have been railroaded into believe the straight percentage is the ONLY game in town and no other agent will touch you. CREA/OREA always maintained that compensation was at the discretion to be negotiated between the seller and agent, which we all know was a take it or leave rate.


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## I'm Howard (Oct 13, 2010)

Higher end realty can be more difficult to sell, and although Realtor will take listing, chances are you won't get much marketing.

6% on a $200,000 would pay almost as much, and they could sell ten $200k Homes for evry one $700k home.


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## the-royal-mail (Dec 11, 2009)

Just to clarify, the buyer's agent will still want half, which is typically 2 or 2.5%. That part is not as easily negotiable. So I assume you are only talking about negotiating the half with your selling agent, which would be added to whatever the buying agent takes. Correct?


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## K-133 (Apr 30, 2010)

Here are a couple of issues:

-1- It is ultimately up to the broker, not the agent to discuss commission. Though agents do have a small bit of flexibility.

-2- The buying agent rarely takes a hit. If one is taken, it is usually the selling agent who absorbs it. This is just courtesy among agents.


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## LondonHomes (Dec 29, 2010)

You can negotiate the listing agents percentage down, but the buyers agents have a minimum they expect before it starts to impact the number of visits you home gets.

All of these flat fee commission brokerages may be great for sellers but they do nothing for buyers.


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## Berubeland (Sep 6, 2009)

In Ontario it is my understanding that the agent can accept a flat fee or commission but not both...

Also it's the market rather than the agent who sells the home at a certain price point. The market dictates multiple offer situations althought the agent can work to "make it happen" by underlisting it. 

I used to work for some very rick folks who had multiple homes to sell, my first property management job. They used to get 3 agents to "quote" it with the understanding that the price was based on recent comparables, and there would be no price reductions for the listing period and no signs posted on the lawn. 

The variation in one case was over $100,000... 

Unfortunately in most cases the real estate agent is the "expert" and tells the owner what to do instead of the other way around. Oh and he was a former broker too.


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## Cal (Jun 17, 2009)

LondonHomes said:


> You can negotiate the listing agents percentage down, but the buyers agents have a minimum they expect before it starts to impact the number of visits you home gets.
> 
> All of these flat fee commission brokerages may be great for sellers but they do nothing for buyers.


Agreed, you have to take in to account the buying agents fees.


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## GoldStone (Mar 6, 2011)

LondonHomes said:


> All of these flat fee commission brokerages may be great for sellers but they do nothing for buyers.


Not so.

1. The seller who lists through a flat fee broker has to pay buyer's agent commission. The commission is declared in black and white in the MLS listing. This is no different than listing through a full-service brokerage.

2. Some flat fee brokers offer buyer's rebate service. You choose them as your buyer's agent. Seller pays them commission. They rebate part of it back to you.


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## kubatron (Jan 17, 2011)

Well I don't know about you guys but in the Toronto area the agent my friend approached agreed, and she's a "top seller" with Re/Max in the Yonge/Lawrence area. Which means she's a typical 20+years in the business agent who has obviously embraced the new market and new competition, and is accepting of this structure, in writing.

Pretty cool of her, I must admit.


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## andrewf (Mar 1, 2010)

In my ideal world, the buyers of real estate would pay their agent. If the agent is working for you, you should be the one paying them. It's also a bit strange that buyer agents are paid so much. 2.5% for what, quite often, amounts to a few hours of work is pretty excessive.


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## jamesbe (May 8, 2010)

Anything can be negotiated. We recently sold and scraped the commission on both ends


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## LondonHomes (Dec 29, 2010)

GoldStone said:


> Not so.
> 
> 1. The seller who lists through a flat fee broker has to pay buyer's agent commission. The commission is declared in black and white in the MLS listing. This is no different than listing through a full-service brokerage.
> 
> 2. Some flat fee brokers offer buyer's rebate service. You choose them as your buyer's agent. Seller pays them commission. They rebate part of it back to you.


Once again the flat listing fee does nothing for the buyers.

Lots of full service buyers agents offer some sort of commission rebate in various forms.


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## Four Pillars (Apr 5, 2009)

andrewf said:


> In my ideal world, the buyers of real estate would pay their agent. If the agent is working for you, you should be the one paying them. It's also a bit strange that buyer agents are paid so much. 2.5% for what, quite often, amounts to a few hours of work is pretty excessive.


I completely agree that buyers should pay their own agent.

I suspect however, that buying agents spend more time than selling agent on each client. Lots of clients will look at dozens of houses with their agent before buying.


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## HaroldCrump (Jun 10, 2009)

Buyers _do_ pay their agents - indirectly.
The cost of buyers agent is built into the asking price of the house by the seller.
RE agents have been selling this bull to home buyers for years.

If you completely eliminate agents - both buying and selling - asking prices should drop by approx. 3% - 5%.
Not a huge deal, but it is incorrect to assume that as a home buyer, you are getting RE agent services "for free".


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## andrewf (Mar 1, 2010)

I'd also think paying for agent's time when buying would tend to discourage looky-loos from wasting their time and increase the proportion of serious buyers. 

Harold: you pay the cost of the buying agent, but they're not working for you. They're working for the seller, because that's who is offering their commission. Agents will steer you away from properties that don't offer large commissions, even if they would be better for you.


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## HaroldCrump (Jun 10, 2009)

andrewf said:


> Harold: you pay the cost of the buying agent, but they're not working for you. They're working for the seller, because that's who is offering their commission. Agents will steer you away from properties that don't offer large commissions, even if they would be better for you.


Yes, that too. Good point.


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## marina628 (Dec 14, 2010)

IMO anything is possible with RE commission.I have used same agent for 14 years and have done many deals with her ,usually 2 a year for sure.One property we bought ,the seller agent asked our agent to take .5% cut in commission to do the deal.She did that because she knew with all referral business we send her ,she will get it back in other ways.(anyone need a good agent in GTA? HA)


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## m3s (Apr 3, 2010)

GoldStone said:


> Some flat fee brokers offer buyer's rebate service. You choose them as your buyer's agent. Seller pays them commission. They rebate part of it back to you.


I'm paying a RE agent through work, so the commission is set in the contract and paid by my emploryer. She got an offer on the first day and she was working both sides of the deal. This annoyed me because I don't know what she's telling the buyer and she was hinting of a lower price, which oddly enough ended up as their final price. We came within $2k, and I felt like saying rebate me the $2k and you get $$$$ for 2 days work... It feels like a scam with the RE is paid by my employer, but I know it's done.


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## marina628 (Dec 14, 2010)

Am I the only one here who think Real estate agents work hard for their money?Also they have to pay overhead costs as well and how many of us have had them take us to see dozens of homes before we buy one?
mode3sour you are complaining about having to take a 2k drop in price and only had to endure a 2 days listing and you get your RE fees paid?Maybe you should send the agent a gift as that is not the experience most of us get.


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## financialnoob (Feb 26, 2011)

marina628 said:


> Am I the only one here who think Real estate agents work hard for their money?Also they have to pay overhead costs as well and how many of us have had them take us to see dozens of homes before we buy one?
> mode3sour you are complaining about having to take a 2k drop in price and only had to endure a 2 days listing and you get your RE fees paid?Maybe you should send the agent a gift as that is not the experience most of us get.


Like any industry, there are good and bad agents.

But my main issue is with the compensation structure. If you are selling your place, it isn't in the agent's best interest to get you the best deal possible. 

There was a really good section in the book Freakonomics that covered it quite well. With the way the commission structure is set up, it favours quick sales instead of higher-priced sales. For example, if your house sells for $300,000, your agent may get $4,500 after various splits between agents/firms. If you were to wait a bit and get a better offer, say $310,000, that would be an extra $9,400 for you, but your agent would only get an extra $150. If I were an agent, I'd say screw that. For all the extra work and potentially missing out on a sale, $150 is hardly worth it.

So the most profitable thing for most RE agents is to sell it as quickly as possible, and if that means below market-value, then so be it.


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## m3s (Apr 3, 2010)

marina628 said:


> Am I the only one here who think Real estate agents work hard for their money?Also they have to pay overhead costs as well and how many of us have had them take us to see dozens of homes before we buy one?
> mode3sour you are complaining about having to take a 2k drop in price and only had to endure a 2 days listing and you get your RE fees paid?Maybe you should send the agent a gift as that is not the experience most of us get.


I have to move every 2-3 years to keep my career progressing. If I had to pay RE fees, I would never own a home. The agent asked if I was neg before leaving to right the offer and then said a number 7k below asking, I shrugged yea and the offer came back 10k below saying they would come up to 7k below. Sleazy if you ask me.. If I was her I would have offered a 2% rebate and moved on to the next double-commission whammy. Near a military base these agents make a killing as we normally buy in 1-3 days max. It wasn't just 2K, it was 7k, and the next house I buy will surely be in a pricier market

As mentioned before 5% commission is based on old house prices before the boom. I was simply saying that this agent could have sealed the deal on the second day (1 day to list, and 1 showing, 1 offer)


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## m3s (Apr 3, 2010)

financialnoob said:


> There was a really good section in the book Freakonomics that covered it quite well.


I'm a big fan of Freakonomics and it makes me look at the world differently.

To the agents, $7k to her is simply $350, hardly worth wait any longer for. To me, $7k is a big chunk of the down payment on my next house! This agent doesn't tell me to lower my price, but she does encourage it for sure indirectly.


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## marina628 (Dec 14, 2010)

My brother has been in the military for 32 years so I understand how they work.As a real estate investor generally even if the house is cheap i.e. $170,000 I will offer $155,000 knowing that I want to pay about $162,000 for the house.When I sell i always add $10,000+ on to the list price as everyone wants to bargain ,buyer feels like they got a deal and I get the price I wanted all along.
Maybe on the next house you can make a deal that if they double end the deal they will give the BUYER 1.5- 2% and up the offer.Probably would be sticky for one or both of you if money exchanged between you and agent when military is paying the fee


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## m3s (Apr 3, 2010)

All the houses are the same on my street so it's pretty easy to compare. The RE market here is "stable" and it's not a buyer's/seller's market. The locals here are isolated and the military come and go 1 for 1. I had an appraisal done and he said exactly what I expected, ask price $5k above. I'm asking just $3k more than a same house sold a block away less than a month ago, listed for the same price as another same house on the market. Last year the same house across the street sold for $7k more than I'm asking

I think if the agent is working both sides, they should be expected to rebate at least 1 or 2% they wouldn't have gotten anyways. It's not that much more work to do both sides. It's not really as fair to either parties, but it would be with a discount. I know agents in Ontario near bases always give rebates to military seeing as they are quick hassle free clients, but I don't want to ask for one


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## Four Pillars (Apr 5, 2009)

mode3sour said:


> ...
> 
> I know agents in Ontario near bases always give rebates to military seeing as they are quick hassle free clients, but *I don't want to ask for one*


I'm the same way - but, if you don't ask - you won't receive.


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## marina628 (Dec 14, 2010)

Yes ask and you probably WILL RECEIVE ,you are probably too nice for your own good.My brother is SAME way , my brother was even going to use same lawyer as his ex when they divorced and would have been royally screwed if I didn't step in and find him another lawyer.My RE charges me 1% and only .5% if it is a double ended deal , most agents are same .Are you in Ontario?


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## m3s (Apr 3, 2010)

So with that first counter offer I'd said take it or leave it, knowing the busy season of inbounds is yet to come. They left for "better deals" but came back today a little closer. I hinted to the agent that this is a good deal for her but I'm willing to hold out for another $2000. It was by email so not sure if she got the point, but I have 2 visits coming without buyer's agents so no need for her to show the cards yet


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## andrewf (Mar 1, 2010)

marina628 said:


> Yes ask and you probably WILL RECEIVE ,you are probably too nice for your own good.My brother is SAME way , my brother was even going to use same lawyer as his ex when they divorced and would have been royally screwed if I didn't step in and find him another lawyer.My RE charges me 1% and only .5% if it is a double ended deal , most agents are same .Are you in Ontario?


Could you clarify? When selling, you offered the selling agent only 0.5%? Or are you saying that when buying, they give you everything above that amount from the buyer's agent commission (out of their 2.5-3%)?


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## m3s (Apr 3, 2010)

marina628 said:


> Yes ask and you probably WILL RECEIVE ,you are probably too nice for your own good.My brother is SAME way , my brother was even going to use same lawyer as his ex when they divorced and would have been royally screwed if I didn't step in and find him another lawyer.My RE charges me 1% and only .5% if it is a double ended deal , most agents are same .Are you in Ontario?


I know some agents in Ontario openly disclose a rebate to military members, or at least they used to. The military recently dropped the commission to 4.4%, maybe we'll set a precedent for the rest! Doubt it. Here, some agents actually avoid military RE in spite of this change, but I think they're shooting themselves in the foot.

I'm in QC and my buyer's agent gave a kickpack to the private seller, seeing as I bought on day 2. She also gave me a significant rebate when I referred military clients to her, but she moved away. The new agent, unbeknowst to me, is the spouse of the soon-to-be highest ranked person in the region. She is good though, and I don't mind her getting the commission if she looks after me


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## Sustainable PF (Nov 5, 2010)

Four Pillars said:


> I'm the same way - but, if you don't ask - you won't receive.


We used the same agent to buy and sell. He lowered his sales % w/o us asking. I supposed we could have asked for more. He was making more from helping us buy than he was on our sale. 

His team really did us justice though - we must have gone to see about 40 houses.


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## grimace (Feb 20, 2010)

*Military Move*

Mode3sour

I am not clear on what you want from your agent. To be clear I am retired military and a Real Estate agent. Brookfield (your relocation service) pays 4.1% commission to sell a military house - less than most others - you are already dealing with a reduced commission. As an agent if I reduce the commission you do not get any of it - Brookfield just pays less -so why would a reduction influence your decison as you don't get that money??? Also all the military clients I deal with want their home sold as soon as possible so they can go on their HHT the next location before all the good homes are bought there?? 

Grimace


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