How much should you pay a real estate agent?

Question

This is in California, where houses cost (believe it or not) like $800K+. A "standard" 6% commission would be $50,000,which seems totally excessive. So what should I offer when negotiating a rate with an agent?

Answer 1

Everything is negotiable.



Bear in mind, a GOOD agent will make the money (and more) back for you. 1% difference in commission is about $8000. If you have a good negotiator working for you, you'll probably easily make more than the $8000 difference.



I offer commission breaks when I know I'm doing more than one 'side'. That is, if you will let me help you find your next place, I'll cut my selling commission to you by 1%. It's just good business.



But interestingly enough, I don't have to discount my commission very often. The reason is because I have a full blown marketing campaign that covers ALL the bases. If you're going to pay for a full commisssion, it should be because you're getting full service. If you're in a very hot market, then find a discounter who will put it in the MLS. DFW Texas isn't white hot like some parts of the country, and it actually takes a little work to get it sold.



So really it comes down to your market.



One other negotiating tip: Don't "offer" an agent. Have them "offer" you. Some of them will likely roll over on you and give you a heavily discounted rate. Beware the ones who discount too much, too fast. If they can't negotiate worth a darn with you, how are they going to do when a buyer's agent like me comes along! :)



Good luck.

Answer 2

Don't pay any attention to that post about getting sued. You use a real estate agent because they assume the liability, and they will get sued, not you. Furthermore, if you are buying, paying is not a problem for you because they Seller pays BOTH of the agents, your cost is the same eitherway. Be careful about lowering the standard commissions or no one will want to work with you. If you are selling, and really want to be fickle, either sell as a FSBO, or research a new company call HelpUSell, they work on an hourly payment instead of percentage base. This can save you money on selling a big ticket house.

Answer 3

I am having the same dilema.. I really think that no more than 5%.. the problem is, that if you offer that little, you will have trouble selling the house because agents won't want to show it because there isn't as much money in it. If you are not faint of heart and feel that you can handle your own sale, I would say sell it yourself. Alternatively, you can become an agent yourself and save the commisions that way, there is nothing ilegal about being your own agent.

Answer 4

Standard here in California is 5 to 6%. Your agent should work for you. Also find out what a lawsuit could cost you if you get sued and you dont use a educated agent.