Real estate agent fees?

October 14, 2006 1:02 PM

We've been talking to a generally nice/enthusiastic real estate agent for the purposes of selling our home. She's quoted us that approximately 9-10% of the listing price will go to cover her commission, the other agent's commission, and the various closing costs in between. This strikes us as rather high - we were thinking 5-6%. What's the breakdown and truth here?
posted by xmutex to home & garden (14 comments total)

I'm not a homeowner, but I'm under the impression that the buyer's agent commission comes out of the seller's. That is, they would share the (standard) 6%.
posted by rhizome at 1:05 PM on October 14, 2006

My house is currently listed for sale (be warned, the market is totally tanked) and we are paying 6% commission. All the realtors we interviewed gave us that number. All the broker fees and buyer/seller agent commissions come out of that.
posted by hollygoheavy at 1:07 PM on October 14, 2006

Standard is 6% and there's no reason to pay anything more than that.
posted by FlamingBore at 1:22 PM on October 14, 2006

The closing fees would, of course, be separate from that 6%.
posted by FlamingBore at 1:24 PM on October 14, 2006

Traditionally, the Seller pays a 6% commission, which is split two ways -- between her agent and the agent who locates the Buyer for the house. (Sometimes, the Seller's agent finds the Buyer, which means she or he acquires the full 6% with no split).

Closing costs add an additional 2 or 3 percentage points.

You should ask your agent, "What part of the 9-10% is your commission?" Even if the answer's "6 percent," you can try bargaining it down to five -- or, if you have the time and inclination, sellin the house through a low-commission online outfit. (There are pluses and minuses to this, however. Extensive research required).
posted by Gordion Knott at 1:25 PM on October 14, 2006

Various other closing costs could include taxes, deed recording charges, title search etc. We had to pay partial Homeowners Assoc fees, escrow for the final utility bill and property taxes. The breakdown for me in Maryland for a sale price of 290,000 was 17400 (or 6%) for the agents commission and 5000 for other expenses. That comes to about 8.5% total.

So, it's not a bad estimate. But before you sign on the dotted line get some more details, especially if you don't want to be surprised by a higher commission.
posted by saffry at 1:25 PM on October 14, 2006

6% to commission
~2% to closing costs.
Ask the agent to give you an "Estimated Seller's net proceeds" sheet breaking it down - it's a standard real estate form from the local board.
posted by growabrain at 1:45 PM on October 14, 2006 [1 favorite]

In the Denver area last year 6% was tops. The commission is negotiable. We sold our house for ~5%, of which half went to the realtor and half to the other realtor who brought in the buyer.
posted by madstop1 at 2:33 PM on October 14, 2006

6% is the "standard," but in this market any agent would be lucky to get it. Negotiate it down, they'll bite.
posted by muddylemon at 2:44 PM on October 14, 2006

Commission is a separate line in the form. Don't agree to any commission higher than 6%. Lower the commission further than 6%, and you're unlikely to get other Realtors to show the house. It's the unfortunate reality.

The "Estimated Seller's Net Proceeds" is absolutely a standard form, and you are entitled to one before you sign the listing agreement.

-- thanotopsis' wife, Realtor.
posted by thanotopsis at 3:08 PM on October 14, 2006

Thanks MeFites. Awesome advice.
posted by xmutex at 5:04 PM on October 14, 2006

First off--quick vocabulary clarification: The "buyer's agent" is called the selling agent. The "seller's agent" is called the listing agent. I know, confuses me too.

Ok. The closing costs associated with the sale aren't even set by the the RE agent, so you should consider them separately from the comission. Either contact the company that is handling escrow, or ask your RE to. (Although I know you haven't found a buyer yet, so this isn't really helpful right now.) Most of these fees don't make it iinto the Purchase and Sale Agreement either (the comission will be). They include escrow fees, HOA stuff, title premiums and recording fees, seller's credits to the buyer, etc.

The RE market in Seattle is hot, but cooling off a bit right now. That means that while this was a crazy seller's market a few months ago, now not so much, so expect the listing agent's commission to be a little higher. I know most people here are saying that 6% is standard, but I work at an area escrow company, and that number seems a bit high. Most of the commissions I see are right around 5%. Maybe if the buyer doesn't go through a RE agent you can even negotiate that a few points lower, since the listing agent only sees 3 - 4% of the purchase price anyway, after it's split.

IANAR
posted by folara at 11:30 PM on October 14, 2006

We've been talking to a generally nice/enthusiastic real estate agent

All real estate agents are nice/enthusiastic—they're salesmen, and that's how salesmen have to be. That doesn't mean they're good at what they do, or that they have your interests at heart. Nine to ten percent?? That's tantamount to saying "I get the feeling you're a complete sucker and I think I'll see how much I can take you for." Run in the other direction. There are lots and lots of agents out there, and you should talk to several before deciding who should represent you; learn to differentiate the general line of bullshit from actual knowledge and helpfulness.

Our agent offered 6% and we got it down to 5.5%.
posted by languagehat at 6:25 AM on October 15, 2006

I just sold a house this week and paid 6.5 on the first 100K and 1.5 on the remainder. The buyer's agent (if they had one) fee came out of my agent's commision.

In Calgary you often have to pony up for a real property report but that's only a couple hundred dollars.
posted by Mitheral at 3:39 PM on October 15, 2006