May 3, 2014 - 4:00 am
Q: I sold my house in New Jersey with a 5 percent commission with one of the best Realtors in the country. I know (real estate) commissions are negotiable. In your opinion, what is the acceptable real estate commission? Thank you.
— Gene R.
A: As you point out in your question, real estate commissions, compensation and related fees are negotiable.
There is no such thing as a standard real estate commission. As with most products or services, prices vary. If you don’t agree with the commission proposed by your Realtor, feel free to negotiate or find one whose fees and services match your needs.
As for what is an “acceptable” commission, I’d say that is best determined by a client and an experienced, qualified local Realtor and their broker.
To go beyond that explanation, or to suggest some sort of industry rule or standard would border on violating anti-trust laws.
What I can tell you is that real estate commissions are negotiated between the agent, their broker and the client and can vary due to many factors such as work involved with the listing, the extent of marketing and advertising needed to sell a property at the desired price.
All real estate firms, depending on their business model, set their own fees. So, if you’re shopping for a good Realtor, find out what their fees are from the beginning of your search. Some may have more room for negotiation than others.
You should decide in advance with your agent how to handle these issues. Buyers can pay their agents a negotiated amount, or the difference from what the seller agrees to pay. If you choose, you may also instruct your agent to not show you any properties where you as the buyer would have to compensate some or all of his or her fee. The choice is yours.
Many agents today require the use of a buyers brokerage agreement. This sets out the contractual arrangement between you and your agent. Items addressed in this agreement should include what types of properties your agent is agreeing to show you, the amount of compensation to be paid to the agent, where that compensation is to come from, any additional fees, and the length of time covered by your agreement.
At the Greater Las Vegas Association of Realtor, we support a wide range of business models. GLVAR’s more than 11,000 members and the National Association of Realtors’ more than 1 million members include Realtors who work on a full-service basis, as well as those who consider themselves to be limited-service, fee-for-service, minimum service and discounters.
As always, the best advice may be to do your homework and find the expert who works best for you. Know what services your agent is providing and the fees being charged for providing these services. From there, negotiate where possible and get a contract stating the necessary terms.
For more information on this and related topics, check out the NAR website at www.Realtor.com.
Please keep those real estate questions coming, sending them to me at email@example.com so I can answer them in future columns.
Heidi Kasama is the 2014 president of the Greater Las Vegas Association of Realtor and has been a local Realtor for more than 11 years. GLVAR has more than 11,000 members. For more information, visit www.lasvegasrealtor.com.