Hi Chip,
I think Realtors are the only industry where we are asked to reduce the amount of how we make a living. I think it is unfair to assume that the commission was 6% in the first place. Often I find houses for my clients where the commission is as little as 1.5%. The selling agent is always subject to what the listing agent took the listing for in the first place then how much they want to split with them.
The other down fall that comes into play is buyers not researching and acknowledging the difference between a well educated agent that knows what their doing compared to any flight by night Realtor.
Finding the house is the beginning. Knowing contracts, timelines, inspections & investigations is a whole other animal.
Just like doctors & lawyers there is Realtors at there that excel at their profession and protect the buyer and their best interest.
Would you walk into a store and ask the clerk to pitch in for your groceries because you don't have enough and she is just standing there anyway?
As a full time educated professional Realtor that makes my living by providing the utmost service for clients I hate when people discard how good I am. With that being said I would always pitch in if I felt it right AND appreciated.

Great anwers from my fellow collegues. In our market homes sell for above list price so I educate my buyers and set the proper expectations upfront. If a client is looking at homes out of their price range I would have a conversation with the client and see how realistic they are being before even showing them the property, falling in love with the property and finding out they cannot afford the property . I would also check with their lender first and ask the client where the extra money would come from such as a gift from a family member. It is not a Realtors responsibility to contribute any of their paycheck towards the purchase of a home. Chips Realtor was more than generous.realtors have expenses just like any business such as taxes, insurance, broker splits, board dues,marketing, gas, vehicle maintenance, time, ..... and the list goes on and on.

Your agent didn't bring you the property because it was out of your price range would be my guess.That tells me that they were doing everything to look after your interests. The fact that the agent offered to reduce her commission at all is generous. They have no control on what that home would sell for or where the offers would be directed. They were willing to give up part of their pay check to help you obtain a home over your price range. Sounds to me like you have a terrific agent. Instead of doubting that agent why not thank them for the exceptional effort.

Why did the agent offer to cut her commission? As a buyer you must think the transaction ends after your offer is accepted, not the case. You stated the agent didn't bring the house to your attention, maybe because it's out of your price range...just a thought. Here is a question for you... Your boss gives you a project at work and a 3 day deadline, but you complete the project in 2. Do you go to your boss and tell him you'll take a pay cut?? No you probably think you deserve a raise!! So maybe you should pat your agent on the back and give her a bonus you only went looking one time and found a property you love.
@Mack McCoy I do it for the $$$. I wish some agents would read your post so they would realize how ridiculous they sound.

It isn't always up to the agent to make this decision. Most agents are required by their Brokers to get a certain percentage of commission and dropping their commission by $10K on a $655K sales price would mean dropping it by 1 1/2%! That's a little much to ask.
Her concession to reduce her commission by $3,100 if you raised your offer by $2,500 was fair.

Thank you John. I'll be honored . An educated , knowledgable and fun father like yourself, must have a very lovely daughter.
Aliso Viejo is a great city and prices are just great too.

We shall Shadi. My oldest daughter and her family live in AV. They love it. In fact she and her ever lovin just had their 4th child and need to start thinking about another bedroom. I'll pass your name along.

We shall Shadi. My oldest daughter and her family live in AV. They love it. In fact she and her ever lovin just had their 4th child and need to start thinking about another bedroom. I'll pass your name along.

This is is turning to a play ground, mostly for our friends like John, Mack and Lance. Not that I have any complains. I just read your comments sometimes and it puts smile on my face.
Have fun with it guys!

246 Answers? Looks like this post became became a battle ground. Chip, are you still around? Tell us how it went :)

@ John - yes it was you and I know you are down there. I was just pointing out the San Francisco has remained very strong and that adds a different component to the mix. And I I wasn't chiming in with Brad's take either.

Lance, I meant SF not SD but then I'm sure you got that. Just wanted to make sure. Glat do see this thread moving a bit beyond. After 244 comments it's about time. But then I told you we'd probably hit 1000 before it's all over. LOL!

Lance, Not sure if you're referring to me or another John. But if it was me you're preaching to the choir. There's not anymore money in SD than there is in SD or Newport Beach and I'm walking talking proof of that. I certainly wasn't chiming in with Brad's take. Like you I feel strongly that with all the doe, rey me in this part of town the sky is the limit for any aggressive entrepreneur who wants it.

@ John & Brad,

I couldn't agree more. Although it's easier to thrive in San Francisco because there is so much money here, finding new ways to capture market share in a changing world is what makes it fun. My business model has been different from the beginning and worked very well. But the idea that somehow this will become fully automated is at best, unlikely. There is too much money on the line to point and click the deals all the way through.

First off, if the agent isn't the listing agent, she or he has no power to change the commission rate, that is the agreement between the listing agent and the person selling the home. If your Agent wishes to reduce her commission then it would go back to the listing agent. The Agent must then be saying that she will give you $3500 of her commission after or at the closing. AS far as reducing the commission more than that, well it seems that you are above your means at this point to begin with and the agent is not buying this home and does not need to fork over any more of the already constructed commission. Totally overlooking the fact that the other offer is better and that they may counter for more if you offer more, but at this point we also have to know if the seller has already accepted the other offer.

Assuming you had told your agent what price range you were comfortable with it is no wonder that your agent did not point out houses above your price range.
Also assuming your agent was co-brokering the sale I find that she was quite generous in offering to reduce her commission by more than you increased your offer.
Regarding it being an "easy sale",having been a broker for over 35 years I have yet to be involved in a single transaction which didn't have a "speed bump"; be it a title,boundary ,inspection,appraisal or financing hurdle.

FIRST of all...I am sorry that your realtor didn't do her job according to your satisfaction. However, I don't think it's fair to ask a realtor to cut their commission (especially that much). Since you asked us to be honest, i think you should be looking at homes below what you are wanting to spend and then you will be able to what you want for the house (even if it means offering more for the house than it's listed to make it work if there are multiple offers)

Thanks for your contribution Brad and I couldn't agree more. The RE tradionalist has in large part become a dinosaur. That's exactly why I recently turned my general contracting biz over to a couple of my kids and got my RE brokers license.

I subscribe to that age old adage "One Man's Ceiling Is Another Man's Floor". Or "One Man's Trash Is Another Man's Treasure". I've seen the mass exodus of housewives, bus drivers, taxi drivers, shoe shine boys and every other opertunist known to man who entered the market when selling homes was easier than getting wet whence walking in a hurricane.

Exit the opportunists and enter the true blue blood entrepreneurs who know how to play the angles. With this mass exodus comes bountiful opportunity for sophisticated and experienced business pros who know how to extract opportunity from the most challenging situations.

There's lots of ways to play the RE market nowadays and there's still a huge pent up demand for RE professionals who can think outside the box and figure out where and how to fill a need that today's RE consumers are looking for solutions to.

Big OOP's! You're absolutely right Lance. Thank's for the H/U albeit I'm sure Mack gets it.

http://online.wsj.com/article/SB1000142405297020391830457724…

An article in the Wall Street Journal today. A lot of you might have to get real jobs.

I think you meant NEVER cease to amaze....

Lance, it is indeed an interesting in human behavior.

Mack, LOL! love your sateristic whit. You cease to amaze me.

no you're not, but that's funny, Mack. And of course any agent who claims not to care about money at all is full of it, but I decided early on that if I took really good care of our clients - definition of which is to tell them what I think regardless of financial impact to me - that the financial part would work out. And it has, big time.

Do I ever work with people who I don't earn money from? Yep. Do people ever disrespect my time? Not often, but to those people I give the, "I can't give you the time you deserve," speech and let them go on to someone else as if they don't understand what we do there can be no happy ending.

I have never had a single client ask me to cut my fee once working with them, because they understand what me and my team bring to the table. On two or three occasions I have had people ask that on the front end - which as I stated earlier is how it should be - and I politely told them my fees are my idea of fair value for work tendered and if fees were their main concern they should probably go with one of the discounters.

@ John - I know it's new faces. Maybe it's just me, but I think earnest new answers at this point are amusing.

approaching 250 answers, who knows when it will stop...

You know, Lance, I think I'm coming around to the other side.

Commercial real estate agents are deal-driven. There's money changing hands, they want to get theirs. But so does everybody else at the table, and nobody's shy about it. "We're doing business here, people! There's money on the table!"

Residential real estate agents have created a sub-species that is not deal-driven. You can read it on their websites, on their posts, or hear them as a fly on the wall in the conference room or in the car. "All I care about is getting the right home for my client," we say, or, "I'm not a sales person, I'm a (consultant, marketing specialist, friend in the business)." "I don't even look at the commission on the MLS printout," we chant, as we embrace homebuyers and homesellers and tell them that we are selfless servants whose only interest in life is you, that person who called in on floor two weeks ago.

With that in mind, I think that we should stop charging commissions altogether. Home buyers should simply offer to pass food to us at the back kitchen window a couple or three times a week for a little while after closing, so we can have the strength to continue our service. Or, perhaps, the field should be relegated to those with spouses who earn a lot of money, like private school teachers in Manhattan.

Because, let's face it. It's not about us, our families, our livelihoods, our mortgage payments and retirement accounts and bills and college funds. We go out in the morning because we are dedicating to serving humanity - or, at least, that segment that can throw two hundred thousand in cash into a deal and take on a three thousand dollar monthly payment.

Actually Lance it's a whole host of new faces. I think it's been a great study in human behavior.and as I've previously stated a great venting platform for frustrated RE professionals and consumers in general.

Am I the only one who thinks that people still seriously answering this question after 200+ answers is hysterical?

It is very clear that many people don't understand how Realtors get paid. As Bill Arseneau mentioned, the commissions are generally split, in many cases by a bunch.

If the overall commission on the home is 7% (which I doubt it is in that price range), the overall commission is $45,850. That commission is then split by the selling firm and buying firm to $22,925. If the buying (your) agent is on a split with her brokerage (more than likely) this is divided again to about 50-75% of the broker's half, for a total between $11,460 and $17,193.

Now you want her to take 50-75% off her income? Bring her total down to $7,000 or so?

Then the agent must pay income tax and run her business etc...

If you are buying a $600,000 home, you are good with money. Would you cut your income by 50-70% to help someone else spend money that exceeds their own budget?

To ask a person to negotiate their fees lower, and negotiate a better deal for YOU is absurd and does not make any sense what-so-ever.

In my opinion $8100-$10000 would be a huge bite for any agent. Let's assume (as we don't know) that the commission offered the selling agent is 2.5%, that would be about $16000. Now be honest, if your boss came to you and asked you to work as hard as normal, but take a 50% pay decrease, would you be excited to do that? I've been in the business 36+ years and have helped buyers and sellers when it's needed, but there is a limit. Since I don't really know the full story, it's hard to give good advice. I guess if I were the agent, and if you wanted to give me part ownership in the house I may consider that big of a cut. Every situation is different.

Hindsight is always 20/20. I am sure that if that agent knew that reducing her commission more it would have secured the deal then she would have done it. She didn't and of course you didn't get your house.

A good agent can really get a feel for what it will take to get you your house. There are numerous ethical ways of getting a "gut" instinct on these things.

My recommendation for you is to find an agent with high volume in 2011 that understands the local market and TRUST THEM!!

@Teresa, thanks, no one want anothers hands in their pockets for money. I think part of the problem lies in that it's widely known what we make on a transaction and us good Realtors make it look so easy that people tend to go after us for a piece of the action. In reality there is so much behind the scenes work people know nothing about, admin, costs, fees, fining that right home based on our knowledge etc. that people don't see.

I wonder if that question posed was to get a rise out of Realtors because it certainly did. But there is a little word called "Usury" which harkens back to biblical days, there is no set fee. But it is a business decision us Realtors have to make as to what we feel like is fair based on service provided. The 6% commission ( 7 in some states) is just a baseline average.

Thanks for your words though in favor of us.

Thumbs up to Teresa albeit it only took 225 comments to draw one positive comment from a non RE professional. . Finally a buyer who appreciates the efforts RE professionals put into their job.

Wow!!! Teresa ! Thank you so much for your kind understanding! Are you sure you are not an Agent yourself?
That is so great to hear this words from a home buyer!

I think you were UNFAIR expecting this agent to give up her commission all together. Do you think that being a realator is easy? And it sounds to me like you are being UNREALISTIC in your idea that and agent give it up for you. lol I think you need a reality check. Did you even think the the could have possibly been against you to begin with ? YOU can't blame the agent because you didn't get the home ...

I my self would never lower my comission even if it cost me the deal . I work hard 7 days a week and have huge expensies as compared to other businesses , like insurance agents for instance . Our dues, fees, gas, office expense , closing gifts , insurance , and it goes on and on makes our profit margin relatively small and they typical consumer sees us driving nice cars , and dressing professional i feel gets the impression thet we have a huge profit margin and in reality that is just not the case and a the contract stage your agents job has really only just begun . I mean really you can go onto Realtor.com and se the same information we do and pick out the house and you guys pretty much had an idea of what you were comfortable with spending , and most clients get an idea of if the property is priced right just by looking at the nearby homes. My question would have beenn Do you want to pass on your dream home for 8500.00 at today's interest rates thats about 35.00 or less more a month and the downpayment would increase at the most 1700.00? So getting the home of your dreams is not worth 1,700.00 out of pocket ? and if the cash was that tight I would probably suggest you speak to your lender about premiuim pricing the loan to remove the origination fee, or refer you to Bank of America for one of their special programs that eliminates your house payment for three months while you get settled...If you want it I can make it happen and fit within your budget

I guess Chip was asking too much when he asked for honesty. In my quick scroll through these 221 answers, about the only one that strikes me as both reasonable and honest is Kevin Mercer's (agent, Louisville, KY). Kevin points out that when a great opportunity comes along for an agent to help make a deal happen, a smart agent will think seriously about cutting his commission, and that regardless of whether the deal ultimately happens or not, that agent probably distinguishes himself to his client like no other agent has previously done. I guess THAT is what scares all the real estate "professionals" out there and explains the overwhelmingly negative reaction of the 221 answers to this point.

@ Jaaon - yes they did. Just don't have time to scroll through everything to point out where.

@ Ron - it's just too tempting. COMMISSIONS ARE NEGOTIABLE

............FREE..............Also, when I logged in ,I go down to notifications, the 640,000 question as there, I deleted it here too, so HOPEFULLY I won't be writing on this thread any more,.............On to more productive activities like contacting FSBOs

To maybe........ stop....these emaiils ....Try clicking the email alert box below the answer question yellow tab, I never did that before, last tinme I unclicked " Email me when answers to this question are posted"..... Cheers........Dave in Connecticut..........

thanks for the information

That's funny. Does your boss put his hand in your pocket and take money from your family for doing a good job? People need to understand that Realtors pay dearly in dues and expenses for our job and we don't have a salary, expense accounts or a level income every month. Your question would be an insult if your employer tried to pull the salary you work for from your pocket. How is it any different with us? We do things that the unlicesed people don't see or account for. We spend countless hours looking for the right match on houses, taxi-ing clients around, negotiating, getting inspections done and working the deal all the through the next 45 days to closing.

As they say, the good ones "make it look easy", don't steal our pay check for making it look easy- IT A'int!!!!!

I see where you are coming from but it is a tough calls and a no win situation you will never know what the winning bid was I have seen bid wars that were bid up by $50K because the home was so desirable. So you may be angry for a situation that would not have worked out in the first place. And next even if your agent reduced her commission an extreme amount that could build a lot of resentment, and you may have landed up in a situation where you get what you pay for.
Lastly I have reduced my commission on several occasions, but it is a slap in the face when there is a huge expectation, and I think it is great your Realtor reduced her commission as much as she did. You really need to give her credit for trying to help. I mean that is like you taking $3,100.00 and giving it away out of your income this month, let alone that may be several months income for her. And even though she has not done much yet, you can never predict how easily a deal will close. Did you pull title on the home yet, had you already had an inspection done, even though you feel it was going to be a slam dunk it may not,and then you are asking her to walk away from a very large amount of money she has worked for, and will continue to earn. When people expect money from agents they perceive that we do not work very hard day in and day out. But in fact we do even if we may only see you for a total of 10 hours through a transaction we may have spent cumulative of three months with the last buyer, and not made a dime. Let alone the really high cost that go into staying licensed, educated, and hanging your license especially if you work with a reputable company. The cost for many agents can be well over $35,000.00 a year whether they sell a home or not. That is like asking a doctor to pull a splinter for free that is sticking half way out even though you are at an office visit, because he did not have to cut it out like the guy that was in a minute before. Again we go through a lot, in the business, and it is not all roses. I say smile, and know she was willing to help, and who knows maybe she will help more on the next home, but she obviously cares she gave it a try.

I have not seen anyone comment on the fact the actual agent does not get to make the call. Technically the money is the brokers and he give the agent their cut. That is how it works in SC anyway. So while you are bashing your Realtor it may never have been his/her call. The Broker would have had to decide that.

Ridiculous...why should Realtors have skin in a Buyers investment. When they sell and realize equity will we be remembered or compensated?. Mad at the Realtor because they couldn't offer enough...ridiculous

If you cant afford to buy the house maby you should stay in your price range. People buying more than they can afford is why the market is messed up.

Well Ron............................LET ER RIP!!! LOL!!

@Michael Berlin.
I would love to buy a home from you. Won't worry if I don't have enough money to buy, the realtor is going to chip in. Are you for real?

If you don't believe your agent has done enough work to earn her commission, then you should have fired her before you decided to have her write the offer. Everyone is right that commissions are negotiable, but that's between the seller and the seller's agent. If the listing is currently advertising a certain percentage to the buyers agent/broker, then they are entitled to the entire amount. You as the buyer should have no say over how much the seller has already agreed to pay your agent. Now if no commission was being offered by the seller, then at that point you would have the option to negotiate a commission payment to your agent out of your own pocket.

I do believe that there are many agents out there that do not work to the extent that would justify the commission we receive, but its your responsibility as the consumer to ensure the agent you decide to work with is worth your business.

If one more Realtor tells Chip that commissions are negotiable, I will scream!

Your agent should earn their commission not just with time involved but experience and know how. Work with someone you respect and trust.

Commissions are always negotiable in every transaction. I look at time put into a transaction and then make a decision if it is worthwhile to give some monies back to a Buyer or Seller. What you need to realize is that from the day that Contract is executed until closing a Buyers Agent can put in numerous hours with inspections, bids for repairs, re-visits to the property, repair negotiations, escrow and title paperwork. A 2.55 commission on a 655K purchase would be approximately $16,000. The Agent's offer of $3,100 seems extremely fair to me. Most educated Buyers today are into finding their properties on the internet and it is helpful to Buyers Agent's but the work that happens behind the scenes is not always seen by the Buyer.