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jJim McLaughlin

wrote:

SNIP HAPPENS

I'd prefer to deal with only the listing agent. Why? Because they
have a 6% commission coming. With no other broker involved, if I make
a low offer, as part of the final negotiation, it's not unusual for
the listing agent to be willing to cut their commission to make the
deal happen. They can get 4 or 5% and still be better off than if
they had to hand 3% to another broker. Or they can get 3% and be no
worse off. What would they rather do? Kick in $5K in commission
cut that doesn't really cost them anything and have the deal done, or
work 6 more months trying to sell it, perhaps without success?

If you get a buyer's agent, they are typically going to be paid out of
that 6%, getting 3% They do have a fiduciary responsibility to
represent your interests. But, does that mean that you should tell
them the highest you will pay for a house they've found? I think
not. Unless you pay them by the hour, which I've never seen, they
still have an incentive to get the deal done and over with, don't they?

Commission rates in the RE world, and the splits, are almost as opaque
as what goes on at a car dealership.

Around here (Portland, OR) the "common" residential commission charged
a seller is 7%. Everybroker save one charges that rate. Of course, its
not price fixing.
Yeah, right.

In the typical transaction, the listing agent and the selling agent are
not the same.
The listing agent and the selling agent frequently work for different
brokers.

In the typical transaction around here, the listing agent's broker gets
3 1/2% and
the selling agent's broker gets 3 1/2 %. The listing agent gets
whatever part of that
3 1/2 % that is in the employment contract between the broker and agent.
Usually
only 1% of the sale price, leaig the broker the "long piece" or 2 1/2 %
of the sale
price. A really reallysuccessful agent can sometimes get half of that 3
1/2 %, or 1.75%, which is .0175 of the sales price. Same split on the
selling agent / selling broker side of the transaction.

Around here, agents pay "desk rent" to broker to have an office and
phone / secretarial
support. Brokers will pay or ads for houses, sometimes to be reimbursed
through
sale proceeds.

Brokers around here take a few extra state licensing exams, have to have
larger
surety bonds, and as a practical matter have to have the capitol to
outfit big offices
and pay onging operating (electric, phone lines, office rent) expenses.

The money is in being a broker.