Selling family home now: how much for commission?

April 12, 2024 2:09 PM

We are selling the family home and using a family friend as the broker. He is asking for 6% commission. In light of the current lawsuit, do I ask him to come down?

Would I have to first get competing offers from other brokers? Do I suggest we are considering FSBO? I also have to navigate the relationship, a bit. My elderly mom will most likely suggest we just give him what he is asking. Thank you!

posted by cgs to Work & Money (11 answers total)

I don’t know where you are but this sounds like a lot to me and nowhere near the “friends and family” rate I would expect and definitely shop around.
posted by St. Peepsburg at 2:15 PM on April 12 [13 favorites]

6% is the market rate for the commission the seller pays to their agent in most parts of the US. It gets split 50/50 with the buyer's agent on the backend. I haven't seen much evidence yet that this has changed since the recent ruling.

If you're willing to pay the market rate, then choosing a family friend to keep the peace may be the expedient thing to do. You can around half that if you go with Redfin or Zillow, however.
posted by caek at 2:29 PM on April 12 [5 favorites]

I'll preface this by saying I have only ever purchased one piece of property in my whole life.

In Chicago, a very affordable city but still a city with fairly high service pricing for the general US.

My single family home purchase had a total agent commission of 4.5%. Seller's agent took 2.2% and buyer's agent took 2.3%. Neither of these agents were friends of anyone involved.

I actually went and got the key and opened up my safe box to double check the paperwork because 6% sounded so unreasonable to me for my (again, extremely limited) experience.
posted by phunniemee at 2:32 PM on April 12 [5 favorites]

I have followed this story because we are considering both buying and selling property. I thought I heard that this won't go into effect into July of this year, but I can't recall the source.

My realtor is also a friend of the family, and to sell she offered us a rate of 5%. We accepted but have not yet put the property on the market. This will be the 3rd property we sell, and have always before paid 6%, but we have been in our current home for more than 20 years, so before discount realtors were common.
posted by citygirl at 2:58 PM on April 12

I would also suggest that if you are considering FSBO that you ask yourself if the house is of the sort that will, at least partially, "sell itself". The first house we bought was in the early 80's in an upper class town but the oldest (run down) section, for $30K. We did the whole "This Old House" sweat equity and when we were ready to move to a bigger nicer home we listed it with a broker who sold it 15 minutes after we signed the listing contract (she called a husband/wife lawyer couple who wanted to rent it out... i.e., real estate brokers have contacts!) It sold for $65K 7 years after we bought it.

When my mother passed away in 2007 in Philadelphia we listed her home with a broker but when the sign went up someone who lived in the neighborhood called the broker and a sale followed soon after.

All that said, I have never done FSBO so I don't know what the pros/cons of that are. I just think (?) it probably varies with the condition of the home, the market, interest rates (?), etc.
posted by forthright at 3:00 PM on April 12

It would pretty easy talk to a couple of other brokers and find out what the going rate is in your area. You can also check out some of the low service/low commission options and then talk with the realator/friend to see if they are willing to offer you a better rate. That will also give you a feeling for how other agents are thinking about your home and whether you trust that this person is the best option. I think experience really matters a lot for real estate agents - I don't know if this friend is a serious, full-time agent or someone who does it on a part-time basis or is just starting out. I won't say never choose someone less experienced but you need to have a good reason to do so.

In my experience, there is a great deal of paperwork and inspections that need to be coordinated in the sale of a house. If neither person has an agent, then the probability of problems goes way up and you don't want to get sued two years later because you forgot to include a mandatory notice in with the sales documents. So, personally, I have always opted to work with an agent.

In terms of how to find an agent if you can't get trusted referrals, I would look on zillow at the second that lists agents by the number of homes that they have sold in the that general neighborhood. (NOT the paid agent listings) Look at the top sellers, read their blurbs, pick out 4-6 that sound promising and then make some calls. You will learn a lot and there is no obligation for you in doing those initial conversations. Then have a similar conversation with the family friend and see how the answers compare and then do a gut check on who you think you can trust.
posted by metahawk at 3:51 PM on April 12 [1 favorite]

Not to sound especially Machiavellian, but there are two types of family friends: the kind that you have a longstanding relationship with who are willing to give you a special deal, or the kind that did a favor for you - or, perhaps, your elderly mom - and may expect preferential treatment in return. This is probably a case where you have to suss out the specific relationship between your mom and this broker to determine a next step.

We got a "friends and family" deal on our first home purchase - we were already renting the house - where the Realtor, who we had a long relationship with, charged a flat fee (around 2%) to the seller, did not have to show or list the house, did the legwork of the signings, the coordination with the title company, and got the seller to pay the closing costs. That's more what I would expect things to look like from a true family friend.
posted by I EAT TAPAS at 3:58 PM on April 12 [3 favorites]

As to people saying 6% is high (meaning before the lawsuit), it's not, it was about average. But average means some places are higher and some are lower, so some people lived in areas that were lower, or they were lucky. This article from realtor.com mentions 6%. This story from CNN is about the lawsuit and is called "The 6% commission... is gone...."
posted by Meldanthral at 4:02 PM on April 12 [3 favorites]

Just chiming in to say that I've sold 2 houses in Pacific NW and the commission was 6% on the first one. On the 2nd, my agent gave me a friends discount of .5%.
posted by hydra77 at 4:31 PM on April 12 [1 favorite]

Keep in mind used house salespeople (aka realtors) often act as a cartel and realtors for the buyers will not show FSBO houses to their clients.
posted by MisantropicPainforest at 12:07 PM on April 13

Just ask. I wish I'd asked when I sold my house. They can say no, but maybe they'll give you a break.
posted by theora55 at 7:26 PM on April 13