As a luxury/waterfront oriented Realtor in Miami, I see lots of things that make me scratch my head each day, but I know it is not just here in South Florida. Luckily the weather is usually good and I get to see views like the one below on a daily basis- so at least that helps.
Let's talk about commissions for a second. On the listing side in my area, it is generally 6% (3% to buyer's agent/ 3% to listing agent)- nothing new here... Or is there?
Some brokerages allow for discounting commission while others do not. I know personally that my brokerage (Brown Harris Stevens) does not allow for discounted commissions and neither did my previous broker ONE Sotheby's.
HERE IS WHAT DRIVES ME CRAZY
For the brokerage's that do allow their agents to list a property at less than 6% commission, I see a ton of agent's offering the reduced split ONLY ON THE BUYER"S AGENT SIDE. So they will effectively meet with a seller, tell them something like this:
"Hey, I'm not like the other brokers out there who charge an arm and a leg... I'll sell your property for 5% commission instead of 6% and you'll save money and get exactly what you want."
The seller has no idea about what is going to happen next and thinks to themselves, well... I'm saving money which is a good thing- so lets sign today!
Then what does the listing agent do? They keep their full 3% and then offer a measly 1.5%-2.5% commission to the buyer's agent and pass it by the seller without blinking an eye.
My question is this... Is this greed, Laziness or just bad business?
WHAT'S THE BIG DEAL?
It depends how you look at it... I am not the type of agent to "selectively" show buyer's properties based solely on commission, but is it really fair for the listing agent to take 3% and leave the buyer's agent with less than what is commonly expected? And I know there are a lot of agents that will not show properties offering any less than 3% commission (and I understand why!)
WE'RE IN THIS TOGETHER...RIGHT?
I am ok if listing agent takes 2.5% and offers buyer's agent the same- because some seller's just don't budge. but to take the listing and put it on the market and keep a full listing commission at the expense of the buyer's agent is mind boggling! If my buyer really likes a property, I'll take a hit if you take a hit- but why should I take a bullet while you make a clean getaway? I thought we were in this together!
Now that the market has cooled off- I still see this happening (more now than ever) and I really feel like seller's are getting screwed by their agents. And I see this in some of the top areas from North Bay Road, Sunny Isles, Bal Harbour, Miami Beach and just about everywhere in between.
My approach as a listing agent is this: NEVER MESS WITH THE BUYER'S AGENT COMMISSION...
I don't care if the listing is $250k or $5M- you NEED the buyer's agents to sell the home, don't alienate them because your seller is tight with their money... Either communicate to the seller where the 6% goes and demonstrate your value- and if you can't do that- then YOU, AS THE (LISTING AGENT) DESERVES TO TAKE THE HIT on the commission.
Nothing is worse than busting your hump and doing the lion's share of the work with a buyer, only to see the HUD prior to closing and notice that Listing agent sat back and cashed in at my expense.
I am curious to hear from other listing agents in other markets to see their thoughts and experience with this in today's market... Am I crazy or am I calling this correctly?
William McClain, MBA
www.williambmcclain.com Luxury Real Estate Specialist
BROWN HARRIS STEVENS
New York | The Hamptons | Palm Beach | Miami
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William McClain is Real Estate Professional specializing in marketing and selling of luxury waterfront homes and condos in some of the most exclusive communities throughout South Florida. These areas include Miami Beach, Aventura, South Beach, Sunny Isles, Coral Gables, Brickell and Downtown Miami.