Thread: Negotiate Real Estate Commission Question

Well 5% is usual percentage for the team or the broker fixed the 6% to 5 percent and say that 5% is what you can only give to him/her, if he/she didn't accept it just say take it or leave it, I'm sure he/she will accept it.

Originally Posted by newhomeseller

Hi,

I'm about to list my house for sale in Savannah, GA. The agent wrote a contract and it states the following:
3% if home sold as a short sale
5% if sold by selling team
6% if sold by cooperating broker

Question: Can I negotiate any of these terms or are these pretty good terms? Also, why is it 6% to the broker vs. 5% to selling team?

You can negotiate all of those terms. But if you really want to depends on how much the sale will be for. If it is a million dollar property then 6% is too high. If it is a $50,000 sale then 6% is fair.

The cooperating broker won't get 6%. That amount gets divided between the 2 sides. Your main concern should be how much the cooperating broker will be getting. Make sure the cooperating broker will be getting at least half of the commission and get it in writing. In this market I am giving more to the cooperating broker than I am keeping to try and bring in the buyers.

Well let me give a little more detail. I bought the home for 231k back in 06..I owe 227 mainly because we rolled the VA fee into the loan. The house is now worth about 188k, but with the bigger homes in the area going for lower prices, that price is steadily going down.

I also have about 50k in savings and zero debt, but I'd rather do a short sale since my husband is unemployed and I'm laid off for a month and possibly could be laid off for good later this year. Again, we are both trying to find jobs in another state. So I'm hoping to only pay the 3% commission. However, I'm not sure how the mortgage company will view my savings and zero debt with the short sale.

Anyways, do you think I should still negotiate the 6% for the broker? What about the 5% for the team? Is that fair? I'm trying to save as much money as possible, especially since I have a newborn and insurance costs will eat us alive if I lose my job.

I don't understand why it is only 3% on a short sale. There still has to be a cooperating broker and they have to get paid. Is this extra on top of the other commission?

Hello-

Short sale contracts should always be written with a "subject to" clause in the contract. This "subject to" is subject to the acceptance of your mortgage holder.

You could write a 10% commission into the Agreement To Sell contract - but the lender will ultimately decide if it will accept the short sale and what commission it will pay.

When I write a short sale contract as the listing broker - it always contains the "subject to" clause- and I also include that info on the MLS data written for cooperating brokers. This way they will be aware that while I'm willing to co-broke say a 6% commission - they know the commission will ultimately be a 50/50 split of whatever the bank is willing to pay. If your listing broker has any experience with short sales - they should know this.

Furthermore - as to your savings - your mortgage holder may seek a deficiency judgement against you. This would still leave you on the hook for the difference between the outstanding principle balance and the amount the mortgagee accepted in the short sale. However - they generally let you know this BEFORE they accept the short contract.

So the bottom line is this - you and your listing broker can write anything into the listing contract you want - but it's the mortgage holder in the end that calls the shots on a short sale deal.

Good Luck-
Glenn

Originally Posted by newhomeseller

Well let me give a little more detail. I bought the home for 231k back in 06..I owe 227 mainly because we rolled the VA fee into the loan. The house is now worth about 188k, but with the bigger homes in the area going for lower prices, that price is steadily going down.

I also have about 50k in savings and zero debt, but I'd rather do a short sale since my husband is unemployed and I'm laid off for a month and possibly could be laid off for good later this year. Again, we are both trying to find jobs in another state. So I'm hoping to only pay the 3% commission. However, I'm not sure how the mortgage company will view my savings and zero debt with the short sale.

Anyways, do you think I should still negotiate the 6% for the broker? What about the 5% for the team? Is that fair? I'm trying to save as much money as possible, especially since I have a newborn and insurance costs will eat us alive if I lose my job.

DId you ever think that it may be an advantage to offer higher commissions? Isn't the market you describe a market where sellers are competitive to sell their property? If everything is subject to competition, then everythning should be considered, price, terms, showing condition, easy access, and COMMISSION.

If YOU were a straight commissioned salesperson and one property offered a higher commission than another, which property would you show your buyer first?

Everything is negotiable.

6% is if some agent from another brokerage sells the home. So your realtor will give 3% to them.

5% is if the listing agent/team sells the house. In other words, they get both sides of the commission, they're saving you 1%. This is relatively rare - 10% of the time or less, in my experience. Maybe higher if you're listing with a team who makes most of the sales in your area.

These rates are pretty typical. You could dicker on them... but guess what... if you negotiate them down to 5% from 6%, and they have other 6% listings, your home won't get marketed.

You're right about the short sale. If you have $50K savings your lender is gonna want you to use that to make up the shortage if you sell the home. Not likely they'll allow a short sale.