Archive for November 10th, 2010

Homes for Sale in St. Augustine: Should My Realtor Take Less Commission to Make a Deal Work?

Wednesday, November 10th, 2010

by Sean Hess (, Broker and Manager for St. Augustine Team Realty (   Join us on Facebook.

Recent sold properties from St. Augustine Team Realty.

Recent sold properties from St. Augustine Team Realty.

Real estate is a unique industry in that we typically charge a commission for our services (versus charging a flat fee for or charging by the hour).  The commission is usually a percentage of the final purchase price.

Real estate is a hard business.  Real estate agents typically aren’t paid any salary or benefits, but make their living solely on commission. 

To find a buyer that is ready, willing and able to purchase a property, a real estate agent typically has to wade through 10 prospects just to get to 3 “solid” prospects to find the single real buyer.  But the agent still has to do all the legwork, phone calls, emails and research to find that one real buyer.

On the listing side, even the best agents typically have to interview three sellers just to get a single listing that has the potential to sell, based on the seller’s criteria.  And once the listing is secured there can be months and months of networking, advertising and marketing to attract a viable sales contract.

So a flat fee won’t work (typically) because the length of the job is uncertain.  A listing or buyer that looks like a “slam dunk” might take months longer and much more in terms of $$$’s and time than it would appear at first.  An trust me, you don’t want us to charge by the hour (like attorneys), becuase it would end up costing much more than commission.

Thus commission is the only viable way for an agent (who I remind you has no salary) to have enough incentive  to front their own money and time on a seller or buyer’s behalf to get a property sold.  If the property doesn’t sell, the agent doesn’t get paid, so it takes a powerful incentive to find quality people who will work as agents day in and day out.  Also, when an agent is successful and closes a deal he or she is immediately “unemployed,” and has to start the process all over again.

That being said, at St. Augustine Team Realty we base the commission we charge based on the difficulty of the job: we don’t have a flat commission rate for all listings.  If its obvious that the home is going to sell faster, we charge what we feell the job will cost, not what we could charge.  At the same time if we know there’s more work involved than the average sale, we will charge appropriately.  And if there’s something a seller might want that’s not part of our normal marketing plan, we’ll give the seller the opportunity to pay for it, and we’ll refund a portion of that cost at closing.

Our sellers (especially our investors) are fine with that.  They feel that the better we do, the better they do.  Because we are working on their behalf, our customers know that if we as agent are appreciated they will get the best service and financial gain.

So should we as Realtors take less commission to make a deal work?  The situation comes up some times when unexpected repairs or fees arise near the end of a transaction.

From a personal standpoint, my name isn’t on the contract.  When the the buyer buys the home and gains equity as the home appreciates I don’t recieve or benefit from that.  And when the seller gets their payoff from selling the home, I don’t enjoy any of their equity gain.  I simply get paid for the job that I was hired to do, and I don’t see a reason to pay for a repair who’s responsibility is already covered in the contract. 

The best insight I’ve found so far I found posted in an online forum.  The Realtor, John Walin, of Libertyville, Illinois, put it succinctly:

“If i do a good job getting the house you sell or buy and a better than competitive price, should I charge you extra? The only time I make a commission concession is if it is a buy & sell or I need to make something right that went wrong. For example, the washer and dryer are supposed to be included at closing and the seller got sneaky and removed items between contract date and closing date. In that instance I gave my buyer half the cost of buying a new washer and dryer. $500 went a long way to make that buyer very happy and received two referrals since. Best $500 I ever spent!”