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Real Estate Commission...Sellers, It's Not Always What You Think

By Sue Argue

Home Stager with Staged First Impressions

May 20, 2007 10:43 AM

I walked into a small real estate office in rural Ireland while I was vacationing recently. After some discussion about the real estate market in the area, I asked, "How much do you receive for a real estate commission here, if you don't mind my asking?" "We get 1 and a half percent." I was floored, mouth dropped. "That's ALL?"

Then she started to explain that she gets 1 and a half percent as the seller's agent; the buyer's agent gets 1 and a half percent, and the broker gets 2 percent for advertising and administration costs.

A light bulb went on. I had never heard an agent come out and say what his/her portion was, only the total commission. And I wondered if most home sellers in New Hampshire understood that their agent often has to share the total real estate commission.

As a home staging business owner in New Hampshire, why do I care if home sellers understand the structure of a commission ?

Because home sellers ask me, "Why shouldn't my realtor pay for home staging? Why should I pay for marketing the house? I'm paying XX thousands to him for that!!"

No, that whole commission doesn't always go to the one listing agent. And Realtors can't be expected to pay for home staging.

Staged First Impressions would like homeowners to understand the process of selling their property so that they feel as comfortable and informed as possible.

*the exact breakdown of real estate costs varies...ask your Realtor if you have questions.

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Cyndee Haydon

Charles Rutenberg Realty - Clearwater, FL

727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes

Sue I really enjoyed your post - it ties into a theme I've been exploring in my posts about communicating the value - most people don't know what goes into it and a lot of that is OUR fault. thanks for the thought provoking post.

May 20, 2007 07:18 PM

Sue Argue

Staged First Impressions - Hampton, NH

NH Home Stager

Joan, I agree with you there.

May 20, 2007 11:29 PM

Sue Argue

Staged First Impressions - Hampton, NH

NH Home Stager

Cyndee, I think it's easy to assume what the average consumer knows. At the listing presentation, it's hard for a seller to digest all of the information at once.

May 20, 2007 11:32 PM

Steven Shewell

Primary Residential Mortgage, Inc. - Ephrata, PA

The Mortgage Maverick

It's always tough because agents don't understand the messages they communicate to the public with their advertising. For example, many, many agents proudly tout that they are a multi-million dollar producer. Does this mean that they make millions each year? If so, maybe they can afford to pay for the staging, etc. to get a home sold.

However, we in the business all know what multi-million means. Now, if only agents would communicate it better to the public you might not be faced with this situation as much.

May 20, 2007 11:42 PM

Karen Otto

Home Star Staging - Plano, TX

Plano Home Staging, Dallas Home Staging, www.homes

Very informative post Sue and how cool is it that you stopped in at a real estate office in Ireland to have the light bulb go on! I don't understand why the topic of money and commissions is so touchy for all involved, it is a necessary part of the business and the general public doesn't always understand the breakdown. This can put to rest the perception that Realtors make the total 6% commission. Again, it is through education that everyone can benefit and understand why they are "investing" in the sale of their home.

May 21, 2007 12:41 AM

Gene Allen

Fathom Realty - Cary, NC

Realty Consultant for Cary Real Estate

Keep in mind a lot of this thought process by the consumer is the result of the way real estate agents project themselves to the public. Our public sees all real estate agents as rich and in the money.

May 21, 2007 01:50 AM

Sue Argue

Staged First Impressions - Hampton, NH

NH Home Stager

Steven, wow, you're exactly right! And perhaps if you are a million dollar producer you are too busy to sell my little nest? Good comment.

May 21, 2007 09:11 AM

Sue Argue

Staged First Impressions - Hampton, NH

NH Home Stager

Karen, my 83 yr old mum was with me and she needed some breaks...so I wandered off on my own a bit.

Well, I think people get protective of disclosing their salary, no matter what profession they're in. It's a private matter. But agents should let the seller know that they don't receive ALL of that commission money.

Talking about money can be awkward, yes?

May 21, 2007 09:16 AM

Sue Argue

Staged First Impressions - Hampton, NH

NH Home Stager

Gene, it's a challenge, isn't it? You would think that having the cool expensive car and drop-dead clothes, McMansion etc would foster an image of success and confidence, but sometimes it backfires. People do get resentful of all that money!

George Tallabas here at AR wrote a blog about "changing his attire", essentially dressing down, with a sharp increase in customers. That blog has had over a thousand readers! I suspect you are right, Gene. People perceive the high salary, and they steer away from it with disgust.

A balancing act for realtors.

May 21, 2007 09:23 AM

Karen Otto

Home Star Staging - Plano, TX

Plano Home Staging, Dallas Home Staging, www.homes

Yes money talk is awkward, but knowing the breakdown of the commission is what I was after here - that helps the general public get a better understanding of what is really being made and by who. There truly is a perception that the listing realtor makes all or most of the commission.

Joan Mirantz said it best,
"A breakdown of"who gets what" should always be part of a thorough Listing Presentation...if it isn't an Agent is doing hi/herself a disservice!" This was something I learned today through Joan's comment on your blog. Education, education, education- gotta love it!

May 21, 2007 09:27 AM

Rebecca Savitski

BSR Real Estate Group - Cary, NC

NC Real Estate Listings

I like disclosing the commission breakdown.

May 24, 2007 08:24 AM

Jeff R. Geoghan

Coldwell Banker Realty - Lancaster, PA

REALTOR, Marketing Manager

Very clever way of presenting the commission. I've been tempted in the past to break it down for the seller, but have not elected to disclose my own % for fear it would create a new problem.

May 24, 2007 08:55 AM

Sue Argue

Staged First Impressions - Hampton, NH

NH Home Stager

Rebecca in Creedmoor , NC

Thanks for commenting, it's great to hear input to see what other folks are doing.

May 24, 2007 09:09 AM

Sue Argue

Staged First Impressions - Hampton, NH

NH Home Stager

Hello Jeff from Lancaster, Penn.

I think people like to know the inside scoop when doing business; they feel that you are being up front and honest.

May 24, 2007 09:12 AM

Rick Beal

Coldwell Banker Residential Brokerage - Portland, ME

I like to remind people, "you know how I get paid, right?" I might start adding, "and it gets split 4 ways, before taxes, health insurance and both ends of FICA/Medicare."

May 25, 2007 05:49 PM

Sue Argue

Staged First Impressions - Hampton, NH

NH Home Stager

Rick,

Sometimes people honestly don't know the breakdown, no one has ever spelled it out before. Older folks may not have sold a home for decades, and everything is new.

Portland, ME, we are practically neighbors!

May 26, 2007 06:53 AM

Dan Weis

Comey & Shepherd Realtors - Cincinnati, OH

Cincy Real Estate Advisor

Hi Sue,

Great post!

I recently changed my Seller's Net Proceeds Form, where I break down all of the seller's expenses when we receive an offer. Instead of having just one line for real estate commission, I added a listing company line and a selling company line.

That way the seller has a better understanding that all of the money isn't going to one place...me!

Aug 14, 2007 06:47 AM

Sue Argue

Staged First Impressions - Hampton, NH

NH Home Stager

Dan,

I think it's important that sellers understand the commission. There are wonderful marketing tools out there called home staging and staged photography. Realtors cannot be expected to pay for all of the marketing out of their 2% or whatever it is.

If it's a well-priced million dollar home with a one year listing contract, that's one thing...

Aug 14, 2007 10:52 AM

Patty Carroll

Vancouver, WA

Great post, we are looking into adding this to our listing presentation as well. We are so used to doing so many behind the scenes things that the seller doesn't know about to make the home sell smoothly, that we think with a breakdown they can see why they made the right choise and used a Realtor.

Sep 21, 2008 03:38 AM

1~Judi Barrett

Integrity Real Estate Services 116 SE AVE N, Idabel, OK 74745 - Idabel, OK

BS Ed, Integrity Real Estate Services -IDABEL OK

Sue,

I ran across this older post of yours... I used to get a magazine that was about the way the real estate business operates in different countries etc... it's very interesting!

Mar 03, 2010 12:34 PM