When you are a new agent, you are exposed to Sellers making discount demands. Sellers “think”, they shouldn’t have to pay a full-rate because they’re hiring a rookie. While their logic is faulty, it prevails, so new agents might as well prepare for it. And, if 5% is to become the new Listing standard, this approach may become a standard as well.
The 6% listing percentage has been the agent gold standard since the Johnson administration. Or put another way, a standard before the Internet was invented. The real estate industry has been cocooned from change by its handlers for a very long time.
So, perhaps change is due. What we see today are more agents taking listings at 5% with the co-op split being 2% and 3%. Meaning the Buyer’s Agent still gets their usual 3% payout. The only one “discounted” here is the Listing Agent. And since the “cost of sale” is the responsibility of the Listing Agent, the reduction in commission percentage represents a double whammy.
If agents are taking listings at 5%, they can offset some of their expenses by including a Brokerage fee within the Listing. The thinking goes: if the agent is helping the sales process by taking a discount, sellers could demonstrate in kind by at least paying all or part of the agent’s brokerage fee. This strategy isn’t that effective in a franchise Broker split situation. Then again, franchises usually don’t allow for such agent flexibility.
But for all you little “r’s” out there, if you have to, take listings at 5% and bury your brokerage fees in the listing. Atlanta is littered with flat-fee brokerages. Their fees range anyway from $250 to $500. Include their fee within the listing, “upon closing”. Meaning it costs your client nothing until there is a close. Sellers get the fact agents have costs. In truth, Sellers begrudge agents only for their commissions. Hard costs are understood.
Work with your Broker to determine your range for a Brokerage fee. For example, Wynd Realty will only allow a Broker fee equal to $300 dollars plus the anticipated FMLS fee. At Wynd, anything the agent designates in a Listing over $300 is automatically applied to their FMLS fees. Could an agent get all their fees paid? Maybe. Depends on what kind of salesman they are.
When you designate in the Listing a separate Broker and commission fee, it turns up on the HUD/CD as two separate line items. This is another reason you won’t see franchises write listings this way. They aren’t very keen on having their financials exposed to everyone at the closing table.
Always remember, to the consumer, the HUD/CD is nothing more than a list of those who invited themselves in on their sale. Title insurance? You’re kidding? $1,875 to Re/Max? What the hell did they do? $75 dollars to “wire” money? Who’s getting kidnapped?
I realize this savings tip doesn’t represent a huge windfall. Realistically, Broker fees would probably be in the $500-$800 range. Still, having this flexibility gives agents another tool they can use to maximize their position. Working smart is the flexibility an agent gets when affiliating with an Independent Broker.