My Broker Cautions Me Against A Lower Commission

I think it depends on your apartment and its price point. If it's priced well, shows great, and is a slam-dunk sale, why not?

A "full commission" is $0 if the apartment doesn't sell. A 5% commission is money in the bank if it sells quickly with minimal leg work & hassle.

i'm a broker and i don't think nowadays brokers steer away from 2.5% (5% total).

i would have never taken your listing (unless it's at a very high price point), but you could tell your broker if he is so concerned that he should offer the buy side brokers a full three percent.

In this example, how much is being saved by reducing .5% or 1%, in exchange for the uncertainty and nervousness that is evident in the OP?

you could always start at the standard 6% and lower to 4 or 5% as part of the negotiation process. e.g., if you're in the last stretch of haggling, lower your cost by lowering the commission then.

if your selling agent also finds the buyer, i think there's a case for 4%. but if the buyer's agent is awesome and somehow brings you more than your asking, why not pay the full fee?

"...the broker has cautioned me that a lower commission might entice some buyer's brokers to steer their clients away from my apartment and towards apartments with full commissions."

I think you should get a different broker, because if she really believes that, then she probably won't be working as hard for you. She'll spend more time/energy/resources marketing listings that are paying full commission.

The difference between a 2.5% split and a 3% split MIGHT have some impact on traffic if you're selling a generic unit in a saturated market segment, or a property that is distinctive in some negative way.

In the market I watch most closely - UWS Classic 6+ - there's such a hunger for inventory that you could probably offer a 2% split and still attract plenty of buyers - including those who are represented by brokers.

BTW, jim_hones10 made an excellent point before this thread degenerated into name-calling: if your broker is concerned about the buy-side split being too low, he/she can simply offer a bigger split.

apple711.....Price it Right and it will Sell...forget the broker/agent BS about ALL they do. They do nothing. It's all a racket. It's all about the price. If it's priced RIGHT then a buyer will SEE it and feel compelled to go look at it with or without a broker. Pricing is easy just look at CURRENT comps(listings) and price it ready.....! lower(duh). Real brain surgery here.

Remember now with the internet your apt will be seen by EVERYONE.

apple711...remember that most sellers/buyers deal stopper is the brokers commission ie. house listed @ 500k, latest offer is @ 470k where negotiations have stopped/stalled. Guess what? That's a 6% difference(30k). Most of the time the deal then falls apart. Now if there was no broker sticking his nose into the transaction(demanding 6%)then you would have a done deal.

If you list with a broker then someone HAS TO PAY the brokers commission and that someone is both the buyer/seller. What a racket!

You get what you pay for.........Sometimes.

SteveF, the founder of ForSalebyOwner.com just found it necessary to use a broker at 6% commission to sell his place.

It's hardly the case that "most of the time" brokers cause deals to fall apart.

This is how the brokers scare the sellers into not bargaining for a lower commission and protect the 6% line in the sand.

Fairway, can't imagine why he did. Maybe he got a freebie? In any event, people are still ignorant to the whole process. Especially the buyers who think they are getting a "free service". Wake up call, it's not free buyers it's baked into the price and YOU are paying for it. Word has to spread about the broker racket, has too. Once people wake up, word will spread fast and another industry(ie. newspapers) will succumb to the internet.

He didn't get a "freebie." He paid 6%. The apartment then sold quickly after sitting on the market as a FSBO. That is not a particularly rare story.

http://gawker.com/5827297/for-sale-by-owner-founder-needs-broker-to-sell-his-apartment

If "the broker racket" was going to disappear because of the internet it would have already, although the 6% may erode.

If "the broker racket" was going to disappear because of the internet it would have already, although the 6% may erode.

so u admit it's a racket and no it'll take some time for the process to erode.

Here's the listing: http://streeteasy.com/nyc/sale/565626-condo-121-w-19th-st-chelsea-new-york

A great deal of the economy is pretty much a racket in some way, such as lawyers, most of the health care system and pharmaceuticals, insurance, and what have you. Name an industry without middlemen or salespeople; it's not easy.

Our government is also a racket, by the way.

I think it's certainly possible that commission structures could go down overall, depending on the economy. But I think there will always be brokers in real estate.

Fairway...fair enough. well said. thx

riversider, wrong. easy to find a broker to do a deal at a lower commission rate. but who really wants someone negotiating on their behalf who is willing to give away 17 percent or more of their money?

>but who really wants someone negotiating on their behalf who is willing to give away 17 percent or more of their money?

And you also don't want someone who is intransigent in light of next best alternatives.