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From the coffee wars to the commission wars, Consumer Reports has now taken on the issue of agent commissions paid by home sellers, according to a story this week from The Associated Press. The magazine's recommendation: Negotiate for less than 6 percent.
It also details the companies where agents were most willing to negotiate (Re/Max) and how lots of consumers who didn't try to whittle the commission they paid later regretted it.
Here's the AP story:
Don’t be shy about haggling over what you pay your real estate agent.
A study released Monday by Consumer Reports found 71 percent of sellers who negotiated for lower commissions with their brokers were successful. But only 46 percent of sellers surveyed tried.
Those who paid commissions of 3 percent were just as satisfied with their broker’s performance as those who paid 6 percent, the study found.
The lesson? Haggling won’t hurt.
In fact, those who paid higher commissions were more likely to have regrets about the selling experience. Nearly one-third of them said they should have been more aggressive in negotiating a fee.
Sellers were most likely to get lower fees from independent and RE/MAX brokers, said Mark Kotkin, director of survey research at Consumer Reports.
“But they will all negotiate. Just ask for it,” he said. “It’s like buying a car. A lot of people think (the price) is set, but it’s not.”
Independent brokers may be more likely to negotiate fees since they keep their entire commission, while those who work for other brokers typically split commissions with the broker in exchange for marketing and office support.
About half the home sellers surveyed paid less than 6 percent in commission. The study is being published in Consumer Reports’ September issue. The issue also includes tips on which home improvements provide the biggest pay off (Hint: What’s on the outside really does matter).
A new real estate survey says home sellers remain pretty well satisfied with their agent if their home is sold in five months or less. Which is longer than I would have thought but shorter than the six months it took to sell the average home. Results of the survey, by J.D. Power and Associates, say a seller’s satisfaction averages 794 on a scale of 1,000 among those whose homes sold in five months or fewer. But the number declines to 730 if selling the home takes seven months or more.
Other tidbits of interest, according to the survey:
Prospective buyers, on average, see about 13 homes before buying.
Sellers, on the other hand, said their home was shown about 11 times, on average, with about five open houses conducted. Anyone else surprised by the number of open houses? Seems high, though I know that the down market has agents turning more often to open houses to market their listings now than they did a couple years ago.
Almost half of customers found their agents by talking to family or friends. About 28 percent used the Internet and 23 percent used an agent they’d previously hired.
J.D. Power also ranked real estate companies according to customer satisfaction and gave top honors on the buy side to Keller Williams and to Prudential for sellers. Go here for the buyer ratings and seller ratings.
So why is it that while so many other professionals charge an hourly rate, real estate agents take a commission? Think about the other types of professionals you might hire to do something for you or your home: accountant, attorney, mechanic. They charge by the hour, which translates to paying for the work done rather than paying a percentage of a sale that can happen in days or months.
All have to maintain their own businesses and do some share of advertising, networking and marketing their services. Real estate agents, however, do take on the additional burden of marketing each property they try to sell.
I’m not looking to make this into another discussion on whether or not real estate agents deserve the money they make. But I am interested in your thoughts on how they get paid and whether as consumers you like the idea of hourly rates vs. commission. And, agents, have you considered switching to an hourly rate. If you haven’t, why not?
And one more question: Knowing that agents are required to be licensed and keep current on classes and many bring various levels of expertise, what would be a fair hourly rate for a good agent?
After writing about lawyers getting rated at a new Seattle-based Web site, I found Homethinking – a site that lets you give one to five stars to your real estate agent. (You can, of course, also shop for a house.)
Stars are given in numerous categories, including neighborhood knowledge, understanding of a property’s weaknesses and ability to answer a seller’s questions. And you can add your verbatim opinion, such as this one for a one-star agent in Franklin, Mass.: “Said negative things about other agents. His Bad!!”
One immediate concern: You can post anonymously, which seems unfair when it comes to slamming anyone, particularly someone trying to run a business.
What do you think? I couldn’t find any Tacoma agents rated, so you could be the first …
Searching for a real estate agent? Agentopolis provides listings, though with some limitations.
Beyond just the basic info, the site wants reader-generated ratings for each agent, with room given to post reviews. That could get interesting. I wonder how agents feel about having their profiles out there, available for any person with an Internet connection to give them a thumbs up or down.
But be warned: If you’re trying to find a real estate agent, not all are there. I searched for three agents who I know have been in the biz awhile and none were listed at Agentopolis. I also tried to find an agent in Gig Harbor, Tacoma or Lakewood that deals in luxury properties and came up with nothing.
