Special offer

Commissions are negotiable. Period.

By
Real Estate Agent with Jameson Sotheby's International Realty

Many times, over the years, in online Q&A's with the public about real estate, a consumer will ask the question of we Realtors "What's the standard commission in my area?"

Typically, good agents will jump in and state: "There is no 'standard', real estate commissions are negotiable"... and go on to expound on the virtues of finding a good Realtor, and not allowing the commission to be your sole criteria in selecting a Realtor. We can go into more of that, but that's a different post than this one.

Almost without fail, at some point or another on that thread, we go down the rabbit-hole with some agent who will say... "standard commissions in our area are 6%, but I'll do it for 5%, call me!!" (it's always followed by "call me"!) or "everyone in our area charges 5%".  A few of us will try to explain to them that even the discussion of commission amounts, in public (and social media IS public) is a violation of Sherman anti-trust laws, and we inevitably get into a heated discussion over whether indeed that's true or not.  In some of those conversations, I've been told by agents who've been in the business for a long time (so, what I'm saying there is ... not just some random "newbie")... that I don't know what I'm talking about...(which, in fairness is sometimes the truth) that we're just talkin' in generalities... and there's nothing wrong with that.

One agent went so far as to tell me that he'd been playing in the Sherman Anti-trust sandbox for 32 years, and he knew it better than I did...so basically "shut-yer-pie-hole".

Well, in a recent "thread that wouldn't die", we had that same deja-vu-vu conversation.  But this time, one of the Trulia non-Realtor-regulars decided that he would test it, and sent a copy of the thread off to a Washington advocacy group.  They, in turn, turned it over to the Department of Justice, who contacted him by phone, confirmed that it was an illegal discussion, and asked a lot of pointed questions... (including the url for the conversation) and have been monitoring.

I imagine there will be handful of interesting phone calls to managing brokers.  What you say on a social media website, especially as a professional Realtor, is there forever (and ever and ever)... make sure that what you say is correct, and legal.

Now, I don't know anyone personally, nor have I heard of anyone personally, who's been brought before the D.O.J. on Anti-trust charges... but you don't want to be the first.... do you?

Posted by

 ALAN MAY, Realtor®   
Specializing in Evanston Real Estate and North Shore Real Estate

Jameson Sotheby's International Realty, 2934 Central Street, Evanston, IL 60201
Office: 847.869.7300      Cell: 847.924.3313      Email: Almay@aol.com

Evanston Real Estate & North Shore Real Estate
Licensed in Illinois

   

Comments(105)

Travis "the SOLD man" Parker; Broker/Owner
Travis Realty - Enterprise, AL
email: Travis@theSOLDman.me / cell: 334-494-7846

I don't give other Agents numbers or what so-called "standard" rate is, but I do tell the potential Client that I am MORE EXPENSIVE than the others. So, this stops cut-rate lookers up front. Then, if they want to discuss rates, at the END of the Presentation, I'll give them their options.

Sep 11, 2015 12:02 AM
Alan May

I do like the "I'm Nordstrom's, not Target" speech... it does set an expectation.

Sep 11, 2015 01:02 AM
Richard Robibero, e-Pro, ABR, SRS
Panorama R.E. Limited - Toronto, ON
Selling Your Home as if it were My Own!

As part of my listing presentation I explain to them that commission isn't standard and then I show them what sellers are offering co-operating brokers.

I never discuss commission in advertising or social media. Super tacky and cheesy in my opinion.

Sep 11, 2015 01:04 AM
Alan May

Tacky or Cheesy, it's more about what's allowed and what's not.

Sep 11, 2015 01:25 AM
Theresa Akin
CORPUS CHRISTI REALTY GROUP - Corpus Christi, TX

I try to make this part of the listing or buyer rep agreement a very short conversation but backed up with figures of them making out like a fat rat.

Sep 11, 2015 01:45 AM
Alan May

commissions are, of course, always allowed to discuss with buyers and sellers...

Sep 11, 2015 03:17 AM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Haven Express @ Keller Williams Arizona Realty

Professional Services Fee has a distinctly good ring to it - however - whether we call it that, or call it commission, the DOJ will be equally attentive to improper "price fixing" discussions.

Sep 11, 2015 07:20 AM
Alan May

or even a discussion with a hint of collusion.

Sep 11, 2015 07:23 AM
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

Alan, what we say on these blogs and comments have the potential to float around forever so yes do not say something you want to come back and bite you.

Sep 11, 2015 07:21 AM
Alan May

and it can bite hard.

Sep 11, 2015 07:23 AM
Troy Erickson AZ Realtor (602) 295-6807
HomeSmart - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Alan - I avoid discussing rates like the plague, especially on social media.

Sep 11, 2015 09:29 AM
Alan May

the plague is a tough conversation to have.

Sep 11, 2015 09:57 AM
Janice Zaltman
United Realty Group - Boca Raton, FL
Energy Efficient And Eco-Friendly Homes in Florida

Great post. You are so right. What is posted in social media is there forever and could potentially haunt you in the future. So never talk about commissions or politics.

Sep 12, 2015 12:31 AM
Alan May

it's out there forever.

Sep 12, 2015 06:18 AM
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

Thanks for the infomation!  This is a touchy subject.  I would never discuss commission policies online--it always comes up verbally with a seller though!

Sep 12, 2015 04:26 AM
Alan May

and with a seller, it's okay.  but online or in person... not among other Realtors.

Sep 12, 2015 06:18 AM
Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

When sellers ask the big C question, I tell them agents can charge anything they want and I've seen them as high as 10%. That usually ends the discussion.

Sep 12, 2015 07:52 AM
Alan May

well, that really should end the discussion.

Sep 12, 2015 12:19 PM
Ben Yost - 303-587-4297
First Time Home Buyer, Mortgage Rates, Pre-Approval - Denver, CO
FHA, VA, Conventional - Mortgage Loans in De

Great Post- about time someone said how it really works!

Sep 12, 2015 08:43 AM
Alan May

Oh, it's been said before... but there weren't anyone in the forest to hear it.

Sep 12, 2015 12:19 PM
James (Jim) Lawson, DBA
DomainRealty.com LLC - Bonita Springs, FL
Broker Associate, RSPS, BPOR, HI & PE

Thanks for bringing up this interesting topic Alan.

I don't believe there is such a thing as a standard commission when it comes to real estate. It's negotiable as it should be for capitalism to work. 

Examine any significant number of listing agreements and you might be surprised by the commission variances when it comes to percentages.  Doesn't matter if it's sales or rentals.

Sep 12, 2015 11:29 AM
Alan May

<<I don't believe there is such a thing as a standard commission when it comes to real estate.>>


and that's the key, isn't it?

Sep 12, 2015 12:22 PM
Praful Thakkar
LAER Realty Partners - Burlington, MA
Metro Boston Homes For Sale

Alan May I can relate serives from Realtors(r) to any other service/item available in market. And if Staples can give 110% price match guarantee, some real estate agents would not mind doing it either - be it newbie or seasoned!

I have read posts about 'letting go' the client because of the commission - however, sometimes we have to 'let go' something else to earn business.

The title says it all - PERIOD!

No if, no but. That's it!

Sep 12, 2015 02:01 PM
Alan May

There's a businesss model out there for just about everyone.

Sep 12, 2015 11:08 PM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

Of course, they are. But if the agent is not able to negotiate his and selling agent commissions and takes whatever it is offered, why one want even to hire this agent?

Sep 12, 2015 03:56 PM
Alan May

because for some consumers, that's what's important.

Sep 12, 2015 11:10 PM
Amy Gutschow
RE/MAX - Sheboygan, WI
Professional Real Estate

interesting points. 

Sep 13, 2015 01:32 PM
Alan May

I thought so, too.

Sep 13, 2015 10:34 PM
Chip Morgan
Long Realty - Dove Mountain, Marana AZ - Tucson, AZ
LSS, LSE, LMS

Too many times agents are afraid to say, "I have decided the way I want to do business is by charging X%"  This is our business and we ca charge whatever we want as long as our DB approves... but why would we discount our comission anyway?

I like the phrase "No I wont discount my comission because of what I bring to the table and the value of the service I provide.  I will also be just as aggressive around the negotiations for the price of your home.  I would be willing to do a reduced commison of X% if I were to bring the buyer as well and repeset both sies of the transaction."

Sep 14, 2015 08:20 AM
Alan May

Your confidence is showing, Chip.  You "liked" your own comment.

Sep 14, 2015 08:25 AM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Haven Express @ Keller Williams Arizona Realty

The time for the "discount" versus "traditional" commission has come and gone.  The new words I see from consumer posts all over the web are "reasonable" and "exorbitant". 

Sep 14, 2015 08:52 AM
Alan May

either way, Tony... the time for "discussing" actual live commission numbers online is long gone.

Sep 14, 2015 09:28 AM
Thomas F. Scanlon
Borgida & Company P. C., CPA's - Manchester, CT
CPA, CFP

Alan May - Well done. They are negotiable. When my last house wasn't moving I called the realtor and  requested she rip up the contract. Then I asked her to increase the commission from 6% to 7%, which she gladly did. The house was gone two days later.

Cheers,

Tom

Sep 14, 2015 10:32 AM
Alan May

Interesting... so I presume you added 1% to the buyer's-side commission...

Sep 14, 2015 10:41 AM
James Hoff
Century 21 Award - Rancho Santa Margarita, CA
Real Agents Work

Alan May ... this is a wonderful post. This is a great segway into other topics too ... like Realtors who take matters into their own hands or make decisions on behalf of a client based on their own opinion and what they THINK the client wants without really discussing it with them.

Too often do agents cross the line. It may be with good intention but this business is serious (as fun as it is) and it requires professional attention and knowledge about what we are doing.

Before I left the corporate world, regular sales training discussed the legalities of how you can and can not talk to clients about MSRP or wholesale pricing (etc) ... one of the biggest concerns that I see in this industry in my time so far is that we have a lot of rules and not a lot of enforcers. We have lots of training opporutnities available but not enough requirements for regular classes or updates on important subjects like the one you wrote about here.

I'm blabbering but great post.

Sep 15, 2015 06:37 AM
Alan May

Let's leave it to the issue at hand, rather than branching out... shall we?

Sep 15, 2015 11:09 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

I came back to re-read this and decided, nuff said.  Negotiable, yes of course. End of discussion

Oct 01, 2015 01:20 PM
Alan May

you'd be surprised how many agents don't believe in "nuff said".

Oct 02, 2015 01:58 AM
Mike Kelly,CRS,CIPS
The MJKelly Team - Santa Rosa, CA
"One of Sonoma County's Natural Resources"

I don't even bring it up in a mixed Realtor setting. It's a broker/company issue.

Oct 19, 2015 10:01 AM
Alan May

That's probably very wise.

Oct 19, 2015 10:14 AM