Do Brokers Deserve Their Fat Commissions?

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The stock market used to be fixed commissions and set pricing years ago as well. Today discount brokers and direct purchase are the norm. Real estate brokers better eat while the trough has something left in it. The new government will soon take away thier fixed rates.

judd of TX 6:35PM July 16, 2009

If you look hard enough you can always find someone who is strongly opinionated one way or the other, however Commissions are negotiable and have been for quite some time. Buyer's and seller's often get concessions from their agents on commission. Do agents deserve 3% (a side)? Deserve seems to be the wrong word. We typically earn what we negotiate. Is it appropriate for an agent to negotiate a higher commission? Of course... It's also permissible for an agent to negotiate a smaller commission. If given the choice of a small paycheck (to put food on my table) or no paycheck (because I was non-negotiable) I'll go with negotiable.
This is a business, just like any other which means you are in competition with others in the marketplace. Some provide first rate service at a higher commission. Some provide little service and give rebates or charge less. Some provide very little service and still charge higher commissions. Are any of these wrong? I don't think so, however in the more transparent society that we live in, you better provide value for the commissions you receive. If you don't, you'll eventually be found out and you'll be out of the business. Sure you may have made some hefty paychecks along the way, but in this new economy it's just as likely that you'll be standing in a soup line if you don't do a good job for your clients.

Glenn Sanford of WA 3:51AM February 03, 2009

As an Insurance Agent, I have been paid on a commission basis for 25 years. Every day / week, I take a hit on my commissions to make a deal work. Although my commission is not negotiable, and I can not rebate, I sell more competitive products at lower commission rates to get the business.
I use real estate agents when I buy or sell property, and I negotiate commissions when I feel the need to. Any RE agent that thinks their commission is a "sacred cow" is dreaming! If you feel that way you need to get out of the business. After all, isn't everything a negotiation?

Jerold Johnson of TN 2:04PM June 18, 2008

As an Insurance Agent, I have been paid on a commission basis for 25 years. Every day / week, I take a hit on my commissions to make a deal work. Although my commission is not negotiable, and I can not rebate, I sell more competitive products at lower commission rates to get the business.
I use real estate agents when I buy or sell property, and I negotiate commissions when I feel the need to. Any RE agent that thinks their commission is a "sacred cow" is dreaming! If you feel that way you need to get out of the business. After all, isn't everything a negotiation?

Jerold Johnson of TN 1:35PM June 18, 2008

Real Estate Agents Commissions are why to high and I have to laugh when I read that they feel they deserve these high Commissions. They picked this profession as their way to make a living and are taking advantage of the people who want to sell or buy a home and if they don't like what the honest people feel about the Commissions they are getting then they need to find another job.
I feel if someone contacts an agent to find them a house, that person should pay the agent a finders fee and the seller should not have to pay this agent a commission especially if the house is for sale by owner. This person hired an agent to work for them therefore they should pay an agent an agreed upon fee for finding them a house.
If a house is for sale by owner the seller should not have to pay any commision because an agent contacted them on behave of their client and the seller should pay no more then a $250.00 fee for paper work which I and many of my friends feel is a reasonable amount.
These agents want between 3 and 4% commission from a seller who has a home for sale by owner and they feel they deserve that type of a commission (that's a big joke) the paper work that they do doesn't justify that kind of money.
These agents should get a job that isn't based on commissions. Sorry if I offend any agents but this is how I feel.

R. Barnett of MI 4:49PM June 11, 2008

Why should i have to pay for all of an agents clients that didn't make it to the closing table?
I am under contract on a property now and feel our agent did extremely well up to this point...i.e. getting folks to look via open houses and the like. Now that we have someone stepping up to the plate our agent seems to be wanting us to bend over and take anything they throw at us. I now feel like he just wants to make the sale. Our buyers have thrown out some very ridiculus requests for a home in our area and of our age(94 years). Our agent seems to think it would be disrespectful to challenge their requests/questions. We feel that our home is not subject to the current market conditions as our house is in a downtown area without significant comparable homes. Our house is in pretty much pristine condition and has received numerous favorable comments from all that have seen it.....agents and lookers alike. How do I get my agent to understand my position? While we would like to get as much for our home as we can we are not just wanting to sell to anyone who comes along. We would like someone to purchase our home who will appreciate it for what it is. the last thing we want is to get a phone call from their attorney the first time a floor board squeaks in the house.

Steve of GA 2:44AM June 05, 2008

The advice was that commissions could be cut in this market. The response from agents is that they work hard so commissions should notbe cut. That is nota responsive answer.
The fact is, if an owner can get the same level of service for a lower price by finding an agent who will cut his fee, that is the price that the market will bear. I don't feel guilt when I accept a rebate from a carmaker, why would I feel guilt in asking an agent to cut their fee? Carmakers work hard too!
In some markets, an owner who demands a reduced fee will have only sub-par agents to choose from. In this market, however, that apparently is not true--there are too many agents for the number of home sales and the competition for a listing is tight, so an owner can receive excellent service for a reduced fee.
That sounds like supply and demand.

Joe of MD 4:05PM May 10, 2008

The whole real estate transaction system is setup to keep the agents, appraisers, brokers, etc. in business. There has to be a better way than wasting thousands of dollars on every real estate tranaction.

Mike of PA 4:31PM April 04, 2008

I am a real estate investor. I have real estate that I have bought both on the residential and commercial side and would like to offer some things to think about from a buyers point of view. First of all I would like to point out that I am a fan of using agents and have for all of my transactions. Most did work hard and I did recieve good service but there are a few concerns about the "commission" aspect of the process. I have 2 properties for sale, one for 250K and one for 1million. My experience has been that the realtor representing the 1mil property did not need to work as hard as the other representing because the market was more defined and there is only so many people looking for that kind of property. The fact that I spent 60K on a commission to sell that property was outragous and a diservice to the realtor that was working hard to sell my other property for much less of a commission. I truly believe the price of the property should not reflect the type of "service" that I get.
Another concern is that 1mil property cost me 6k extra in all the other "costs" for people and services I don't know and or care about. From my perspective is that the commission could be lower if we got rid of all the "fat" in the middle. If we got rid of all those costs and people, realtors would be making more of the commision, because after all they do most of the work to sell the property.
As you can see by the tone of my points, I am for the realtor and all that they do for me as a buyer and seller. But if I may put some of the venting by the realtors into a blunt perspective. I do think that negotiation is a good idea, because it is my money that i am dealing with and my goal is to keep as much of it as possible, and by the way, what I am paying you to do is "negotiate" the best price possible for me. Why shouldn't you be subject to the same rules that you live by in your chosen profession?

matt of AZ 12:55PM March 14, 2008

I've just looked over my last post and it looks like I must not work--after all, I just took a long time to vent in a blog. But, I am at work, work I won't get paid for. At $3.15 a gallon, I've driven my nice, clean car thirty miles to meet with a prospective client at her convenience, on her turf. That client then called and said she'd be late. So, I sat at a wi-fi spot and whipped out the laptop to return correspondence and check email. And waited. And waited. Still no client. The prospect then called and said she needed to reschedule.
So, I'll drive the thirty miles back to my office, having basically "lost" an afternoon of productivity. I'll then drive to a new home subdivision and lock up homes that have been open for the afternoon. Homes I could have been in and speaking to new prospects instead of waiting on a no-show appointment. Tonight I'll work on the stuff that should have been done this afternoon--marketing, writing amendments to contracts and prospecting.
These things happen to everyone in business. But, it's not happening to someone on a salary. If I don't sell, I don't make money. Time and expertise are truly the commodities that I have to sell. You can't sell an airline ticket once the plane is in the air; the opportunity is lost. The same is true in my business.

Lori of GA 5:08PM March 05, 2008