Can realtors be trusted? What percentage of the sale do they receive?

Typical residential commission is six percent. And they have only their own interest in mind, so plan accordingly.

There is no set price for realtors. Most parts of the country the realtor gets 5,6 or 7% , which actually gets divided up between the listing agent and the realtor who brings the buyer. So, if you agree to 6%, then most likely your listing agent makes 3% and the buyer’s agent make 3%. Some contracts do not identify how much each realtor will get, so make sure your listing agreement specifies.you don’t want your listing agent keeping a higher percentage for himself, in this market enticing the buyers agent is more important.

There is a contract, as I mentioned above, it is called a listing agreement. Besides the percentages, you will want to check if there is a fee for cancelling. So, if you wind up hating the realtor, you can fire him and get out of the contract.

Realtors want to sell your house, and so do you, so you have that in common. Definitely meet with at least two before you decide who to go with. They should provide you with a list of what is currently om the market, what has recently sold, and what price they feel your house should be listed at. They might also give you pointers on what you might be able to easily fix up in the house to sell it.

Ask friends who they might have used, or who they recommend in your area.

Here, the commission is 7%. The seller’s agent splits that with the buyer’s agent. You tend to get better traffic with an agent, and they manage the whole process for you. You do have to sign a listing contract.

^^ what @JLeslie said.

And remember, it’s in the realtor’s best interest to get the best price for the house, and thus, for you. I have bought three houses in three different states and have always been grateful for the help and insights of my realtors. It’s worth their commission to me to have them taking care of things.

I am gonna agree with @Adirondackwannabe. Agents can be good or bad just as in any business. Yes, they want to get your property sold because they do not get a paycheck from it until you do. However, they are willing to accept a lower price for your property than they would for their own because an extra $10,000 for you is not that big a difference for them and if it takes longer to sell the property, their pay check is delayed. Make sure you are comfortable with the agent you use.

I loved my first agent (used to purchase our first house). He was semi-retired and did it for the extra income. I was not happy with my second (used to purchase our second house.) She was obviously too busy for us and the amount we were willing to spend on a house was not (I found out later) in her usual higher range of prices.

They are definitely in it for the money, so they might pressure you into a sale (no sale = no paycheck for them). So keep on your toes, stand your ground.

@john65pennington I was a Realtor, my parents are Realtors been around real estate deals my whole life. Plus having sold my home and bought a new one 3 months ago I can assure you your house will sell for what a buyer is willing to pay for it and that is it! What you pay the broker to do is to show and present your home in the best possible way to get the highest price the market is willing to pay in the shortest amount of time. It took me 2 Real Estate companies and over a year to sell my house for 18 grand less than I paid for it 8 years ago.

Interview at least 3 brokers and get comps from all of them and one broker should come across and knowledgeable and honest about the market situation in your area with the best marketing strategy for selling your moms house. The internet does almost all the work nowadays so do not hesitate to at least ask your broker for a reduced commission. There are a lot of hungry Realtors out there!

Realtors are licensed and have to behave like any other licensed professional.

There is wiggle room in the realtor’s cut or commission, particularly in today’s weak market. Often the realtor can shave a little off his or he commission in order to help the buyer accept a slightly low bid.

Any buyer or seller can easily obtain comparables (what similar homes have sold for recently in the neighborhood). It is public information.

Please get your hands on a copy of “Freakonimics”. There is one chapter that discusses the naturally self-serving behavior of Realtors based upon actual data from many thousands, (millions?) of home sales.
The cost/benefit trade-off for the Realtor is time spent vs commission. An under-priced home will sell quickly. An overpriced home may never sell. The commission is 6% but half of it goes to the agency so the Realtor ultimately gets 3% of the sale. Now let’s say two parties are negotiating over a $200,000 home and the seller wants $10,000 more than the buyer want to pay. The seller’s Realtor will only get an additional 3% of 10,000 ($300) if he/she spends the time and works hard to make the sale go through. It if goes through, the 3% commission is $200,000 or $6,0000. So, if you were in that same position what would you recommend – knowing you can get $6,000 now or maybe lose the sale by spending the time trying to get $6300? It is too easy to encourage the seller to reduce the price or take the lower offer.

Freakonmics looked at the number of days homes were on the market when they were personally owned by Realtors vs when they were owned by customers. The Realtors’ homes remained on the market longer, (I forget if it was 2 weeks or months) presumably receiving a higher price. You should look at the thorough market analyses the researchers performed.

You can fix this by adjusting the agreement so the Realtor gets 3% of the price up to a certain amount and 25% of anything over an agreed upon amount. That will give them more of an incentive to work for you.

I regularly deal with realtors, and I appreciate their work, but if you are willing to invest the time and effort…

…“sellers with a little patience sold their homes for higher prices than those who sold via a Realtor.

“That’s the key finding of a paper by Igal Hendel, a professor of economics at Northwestern University, Aviv Nevo, a professor of marketing at the Kellogg School of Management and a professor of economics at Northwestern, and François Ortalo-Magné, a professor of real estate at the University of Wisconsin School of Business. Their research spans the years 1998 to 2004…”

The Superfluousness of Realtors – Homes sold through Realtors don’t garner a price premium over ones sold by owners

@worriedguy I watched that documentary (haven’t read the book yet. Is it worth the read?

They can probably be trusted as much as any other person. Some people are scandalous, others are not, it has nothing to do with where they work.

I recommend using an agent if you have basic questions about realtors. Only because that means to me you probaly do not buy and sell houses often, and a realtor can help you through the process, but it is not necessary of course. If you advertise the house yourself, you will still want to cooperate with a realtor for the buyers side, because in this market you cannot hold out for a buyer wihtout a realtor. You can offer the buyers realtor whatever you want a perentage a flat fee, whatever. But, I would say offer them what ever seems to be average or better in your market. So, if most realtors are requesting 6% for a listing, probably offer a buyers realtor 3%, if it is a house under $150K maybe go higher. Have a lawyer look over any contract handed in if you are not familar with sales contracts. There will be requirements for you to fix things, there will be contingencies for the buyer to be able to cancel, make sure you feel good about whatever you might be signing. Realtors can expain these things to you, or a lawyer.

Realtors will get your listing into the MLS, which automatically puts it into realtor.com also. They have to pay to upgrade the realtor.com listing, which means showing additional photos and some other enhancements.

They also can put it on lockbox, if you are ok with that, so the house can be shown at anytime. Easy show makes it more likely to be shown. If the house is not convenient for you to check on and no one is living in it, the realtor can do that for you.

Housing generally sells for what the market is willing to pay. It’s true that realtors are more interested in closing a deal than getting you an extra $10k for your house; but, good ones also care about you, long term business relationships, and referrals. Many will treat the sale as if it was their own home, some won’t, like any business deal.

There is a strict code of ethics. Here in California anyway, if nothing else is drilled into our heads it’s “disclose, disclose disclose.” And if in doubt, “disclose.”
How much they get paid is between them and their Broker. A listing agent will usually offer a percentage to the buying agent. Assume the listing agent is charging the seller 6%, then they may offer the buying agent 3%. As a seller, I would ask, because sometimes they only offer 2.5% and other agents may not be as anxious to show your property. (this happened to my mom.)
That 3% goes to the agents Broker. The agent and the broker agree on how the agent will be paid. Some really successful agents will agree to pay the Broker a set fee per month if they can have all the proceeds above that fee. Newer agents might agree to split the commission 50–50 with the broker, and then the agent pays all the costs for multiple listing, advertising, photos, etc.
Being a realtor takes a hefty investment, and if you don’t have the cash to do it it can be a tough road.
Their Broker is responsible to make sure all the agents in the office act ethically.
In California anyway, I would say that Realtors are some of the most trustworthy people around. We are held to such a high standard and can be sued for the littlest thing. We are always a little bit paranoid that we will slip on some small detail and loose our license over it. (Or worse!)
Almost forgot. The law of agency REQUIRES that the agent puts YOUR interests above their own.

From what I understand, one benefit of going through a realtor is not that you get a higher price for the house, but that you don’t have to deal with real estate law. I hear that’s a bear.

As for if realtors can be trusted, it’s a bit like asking if cops can be trusted. ;) Some you can, some you can’t. People are people.

Realtors are just like cops, doctors, dog groomers, lawyers, etc. some are excellent and fair, others are dirty and underhanded. That is why you must shop around. But none of them are doing it for the love of it, they are doing it to make a living, as are the cops, docs, grooms and so on.

We were in the real estate business and I always hated the bad rap. Often when a house didn’t sell it was because the owner would tell us what he thought he should get for his house and often his estimate was based on the price the guy down the block got for his. Of course what is not taken into consideration is that the other house was newly renovated, had 4 bedrooms and 3 baths, said owner has a 40 year old unpainted 2 bedroom. Then the agent gets grief from the seller because his house isn’t selling, gets grief from prospective buyers because the house is overpriced.

It is pretty much a thankless business! You are probably very good at reading people, follow your gut and choose someone who seems trustworthy to you.

I definitely appreciate a realtor’s expertise in real estate law and paperwork. Their research on comps is also invaluable. I think it is the eagerness to make a sale that bothers me. I see, from their side, though, that they hate wishy washy clients who can’t make a decision and waste their time looking at house after house.