Real Estate Commission

Given your house will not be shown if 3%(2.5% if the listing is a couple of million or more) is not offered to the buyer’s agent, your hands are tied. Not quite ethical, but that is the way Realtors work. You must offer the 3% buyer’s agent commission, but you can negotiate a 1% seller’s agent commission for a total of 4%. When you become the buyer, spend five days or less, depends how quick of study you are, and $500, to become an agent. Now you rebate the 3% buyer’s commission back to yourself at close. Easy money for nighttime reading and a test that shouldn’t take you more than an hour. Oh, you’ll have to pay some 100% broker $59 to work under his or her shingle for the transaction as well. The listing agent, more accurately the listing broker, owns all of the commission, but has agreed to give the buyer’s agent half, usually, so the only way to get that share of the commission is to be an agent or pay another agent to rebate back to you. Otherwise, the selling agent gets all of the 6%.

Imagine if stock brokers were only paid by sellers and the selling broker had to pay the buyer’s brokers to transact. How is this even legal in the real estate World?

I saved $20,000 for maybe twenty hours of my time. Not a bad wage even among all you BSDs and I learned something. Has anybody else become a real estate agent for their personal transactions?

Depends on the state. The National Assn of Realtors is a bunch of idiots, but they lobby to protect themselves. So in some states, the test is hard, or you have to have experience to get licensed. If these hurdles aren’t an issue, absolutely do the work yourself.

I agree that the commissions these guys get are insane. The market where I live right now is so hot that selling a house requires nothing more than listing it on the MLS. I honestly don’t even think you need to post a picture to get an offer these days.

Thanks to online listings, you can put 2.5% on the street and get plenty of showings for a $500k house. A Realtor won’t keep her clients very long if she continually refuses to show them houses they see on

Commercial brokerages is about 10x more egregious. There are usually a handful of brokers that control a market. 90% of the time they get both sides of the commission and they end up taking about 30% of the gross profit on deals with zero risk. To top it off they typically stay on as the broker for a given property. I know some that have ‘earned’ a commission 5 times on the same property. The money that the top guys make in major markets makes me want to vomit. Of course that what makes it so competitive. The back biting within a shop is something to behold.

I always wondered what the salesman at the new home builder show home is eating on a deal. Seems like a pretty relaxed job and in my area, they all drive high end cars.

There’s a company I found that will list your property on the MLS for like $250 and after that its essentially a private, by owner sale. Seems like a good deal. I wish I could be to the buyer, you value your agent’s services so much, you pay him/her 3% out of your pocket. i don’t want to pay them.

Unless you’re clueless about staging or can’t figure out how to pull “solds” off of to price correctly, agents really don’t do anything for you as a seller except get you on the MLS. Open Houses are typically a waste of time (most of the people who show up are your neighbors who just want to see the inside of your house) and you can do it yourself anyway. They do come close to earning their money as buyer’s agent though, particularly if the client wants to see a 100 different houses. Our agent was also able to show us several pocket listings last time we were looking and let us know about houses that would be coming on the market soon.

Two+ more years and nothing has changed. The Internet and innovation collapsed what the public has to pay to buy and sell stock. When is somebody going to figure out a way to profit by completely changing how real estate is bought and sold? Still amazes me that someone is willing to part with 120k when unloading a 2 million dollar property. Just craziness. No connection to work or value added. And the entitlement among the agents is nauseating.

In Canada their is a website you can use ( and for a flat fee ranging from $800-$1200 can list your home for sale (including on the website) and save on commission costs.

I never bought or sold a house, can someone explain this ?

this is a start. i believe a chunk of that $800-$1200 goes to a listing broker though who accepts a flat fee for putting his name down as the listing agent. still have to provide a buyer’s agent commission to sell quickly and for a good price though. it’s difficult to understand why real estate is such a highly regulated market when it is quite simple. i guess it’s like taxi cabs. eventually some bold business will come along and defy regulations until the regulations are destroyed.

I don’t know about Canada, but the National Association of Realtors in the US has a very strong political lobbying arm. They spend a lot of money making sure no one can cut in on their business.

it’s the same here. that said, all rules were made to be broken. zillow/trulia is already set up and ready to disrupt the industry. all they need to do is partner with current realtors to list on mls and access past transaction information (which are the key missing pieces of the puzzle). hell, i’ll go get my real estate license and partner with trulia/zillow right now if it means i get thousands of listings that require no work at $100 a pop. as for the buy side, i’m positive technology will continue to push buyer’s agent commissions down. one day, real estate should look like the financial advisory business. you can do it yourself and take higher than average risk due to your general lack of knowledge, or you can pay an advisor to help it all make sense and bring everything together.

^These “disrupters” have been around for over a decade, yet the average commission has barely budged.

it is still up to the consumers to demand change. if nobody used uber, it wouldn’t have crushed the taxi industry. i recently did a real estate deal, 2% comm to the buyer broker, 1% to the seller broker, but my seller got his full comm on my purchase. if the seller of the house i bought made the same deal, commissions would be 3% across the board. it’s a start. much better than 5-6% across the board. if you demand they bring their commissions down, they will. if not, find someone else. mostly people are too intimidated to discuss commissions with their broker so they won’t. i guess it could come down to someone creating a full service but low commission brokerage, similar to what uber brought to the market, so that consumers are not put in the position to barter as most won’t.

Nobody demanded Uber. Uber innovated and broke the law. And the rest is history, almost. Somebody will do the same in real estate. So much easy money slushing around. And “rents” being paid.

i never said people demanded uber. i said, someone will come around and become the uber of real estate, and provide a service so that consumers will no longer have to demand anything from realtors.

Cant wait for that day. Needs to happen badly in NYC with the rental industry as well, oversupply and renter paid fees dont give the owners much incentive to do anything but call their broker to get things rented.

My last apt in queens I got directly from the owner in queens and I told him if I had to pay a broker fee I couldnt afford the place. He said the market rate is still the market rate and its not like people realistically are going to pay more for your place, when he has used a broker in the past he had to rent it for less so he was still paying.

The whole US real estate process is crazy. I used to work with a bunch of UK expats and they were all amazed at how many random fees, random people involved in the process that seemingly did nothing, etc.

I was on a flight a couple months ago from LA to Houston, sitting first class on United. This is relevant because the woman (also a bit of a cougar) next to me was flying back from her house in Santa Barbara to Houston where she is a commercial real estate broker. If she can afford to commute to and from in first class, plus with all the diamonds and jewelry she had on, maybe there is too much commission in there…

Has anyone ever noticed that having the commission be a percentage of the selling price creates a conflict of interest for the buyer’s agent? They’re supposed to be getting the lowest price for their client, but they get a higher commission for a higher price.