Commission for REA

What is typical commission for a REA, and does it make a difference if you are selling and buying a home?

TIA :)

Re: Commission for REA

REA varies - when I was selling I heard anywhere from 3 - 6 percent. When you're speaking to a broker (I'm assuming you're selling), find out how s/he breaks that commission down. Does she split it with the other agent down the middle? Something else? Mine split it regardless of who the other party represented (seller's or buyer's broker), which I thought was smart. Not everyone I spoke to did.

The broker I used said he takes between 4-6 and it was my choice. We chose 5 because we wanted to offer other agents an incentive to show our house more. It didn't work though and so when we made our final price reduction, we also dropped the commission to 4 percent. I had a strange situation though, where my house sold after it was taken off the market officially so our agent took 3 percent so we could meet the buyer in the middle. He didn't have to share it with anyone though

Message edited 3/13/2011 11:59:30 AM.

Re: Commission for REA

Commissions do vary -- can be up to 7% on Long Island. I would say between 4-7% is the norm. I would be wary of a listing agent offering to take a listing for 3% or less. Here's why:

When an agent puts the listing on the MLS, that agent is giving other agents at outside companies the opportunity to show and sell that home. To get the other agents to do that, the listing agent offers to share the compensation. On Long Island, it is standard for the "selling agent" (the one who brings the buyer) to get 2%.

If a listing agent takes a listing at 3%, then he either has to offer the selling agent less than 2%, or take only 1% himself. If the listing agent offers less than 2% to the selling agent, fewer agents will show that home, and the seller is being disadvantaged. Why would an agent show a home where they only stand to make 1% when they can show every other similar house on the market and get 2%?

Also, the listing agent will generally not want to take less than the selling agent because it is the listing agent who has to bear all the costs of marketing the listing, and do all the associated work. And they will not recoup those costs or get paid for their work until the house sells.

If a listing agent will take 3% or less, I would find out exactly what they will do to market your home and get it in writing. A full service company does a lot more than post your house on MLS and stick a sign in your yard! As with most things in life, you get what you pay for!

The previous poster's agent did things the right way by explaining that she, as the seller, could choose what % commission he got, but also explaining how the marketing of the home would be affected by going with a lower % (e.g., if she chose 4%, then he would offer out less to other agents than if she chose 5%).

Re: Commission for REA

Thank you very much for the information :)