Am I stuck with Buyers Agent Now?

That’s a mischaracterization of what I said.

I don’t think I mischaracterized anything. I think your post implies that the contract terms are “the rules” 100% of the time. Especially with this:

…as if it were gospel. Apologies if it seemed otherwise.

The listing agreement is stacked against the seller. A smart seller should ensure the listing agreement specifies the commission is 6% only if the buyer has an agent. If the buyer is unrepresented then the listing agreement should have it’s commission drop to solely 3% for the listing agent. The extra 3% is specifically reserved for the buyers agent, but there should be no reason that 3% defaults to the listing agent because the buyer is unrepresented. Listing agents will argue an unrepresented buyer is more work, and it may be but it certainly doesn’t justify an extra 3%

I completely agree, and that was the point I was trying to make. While the vast majority of the public thinks a listing contract specifies a 3%/3% breakdown of the commission, with half to each agent, no contract I have ever heard of makes that distinction. I don’t do nearly as much real estate work as many on this site, so maybe it is more common than I believe.

The distinction between a contract total of 6% vs 3%/3% is, in my opinion, a pretty important detail. I was just trying to raise awareness because 99% of the public doesn’t understand the difference. The way the standard paperwork in the industry stands now, it gives the listing agent huge leverage to grab the full 6%, even though I agree that they don’t deserve it.

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While a 3%/3% split is common, it’s not universal and varies by locality.

When I was in Albany, New York several years back, it was common for the split to be 1.5% / 4.5% in favor of the listing (yes, the listing) agent.

So imagine being the poor schlep carting around buyer’s agents all day, only to get 1/3 of the commission of the listing agent who probably put in 1/10 of the work and money.

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It’s important to understand that most brokers will accept that important change to the listing agreement. I’ve sold $450k to $2.5M properties (as owner) and always demanded 3% only for the listing broker.

it happens man, sharky world out there

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FTFY

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In case anyone wanted stats, the last I checked (maybe 2009?), of NAR’s 1.5M members, less than half had a college degree and a very high percentage made less than $15K per year. It doesn’t inspire much confidence to get THEIR advice on the largest purchase of most people’s lifetime.

My view is: rely on your agent for transaction processing, perhaps some neighborhood insight, and very occasionally (only from the top 1% of agents) for negotiating strategies. Pricing should be developed and controlled by you. I would never tell an agent my reserve price when buying.

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I think the far more entertaining question would be, is your “buyers agent” stuck with you now?

  1. Cast a ridiculously wide net for houses you are “interested” in. Include both well above and well, well below your price range. The farther apart geographically that they are, the better.
  2. Have her drive you all around to look at them. Bring something to keep you occupied.
  3. ???
  4. Profit (or at least not get sued)

I actually found myself in a situation similar to OP’s once. Thankfully, my realtor, as incompetent as he was, knew enough to willingly release me from the contract I had signed.

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@DrDeals Perfect.

I would pick a house that’s at least a good hour drive in one direction. Set up for just before rush hour so the drive back would be horrific. Wait about 20 minutes after the scheduled time, call and apologize that you couldn’t make it because your favorite rerun of “Keeping Up with the Kardashians” just came on.

This would be more fun than calling the broker IMO.

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I think it’s important to clarify the distinction between an agent and that agent’s brokerage or agency. In many states, numerous agents work for one broker. You must have a broker’s license to be a broker and open your own brokerage and have agents work for you. Unless your agent is also his/er own broker, then your agent doesn’t actually get the 3% (e.g.) listing fee. The listing brokerage gets that 3%, and the listing agent that works in that brokerage (and who sold your house) gets some percentage of the 3% as agreed upon between the broker and that specific agent. The best agents command a higher percentage from their broker. Typically an agent might get around 50% of the brokerage’s portion of the commission. That is of course untaxed, so they must pay taxes on that, as well as pay for any marketing materials for your home, pay the sign guy to put up signs (if the agent doesn’t do that themselves to save money), gas, etc.

Similarly, the buyers agent also only gets some portion of the buyer’s 3% (e.g.) commission.

So, consider a transaction between two parties, each with an agent working for a broker. Say the house sells for $400,000 with a 6% commission. Listing and selling brokerage each get $12K. Listing agent and buying agent each get say 50% of that, or $6K. Taxes make that say $3,600. That’s great if the house sold in short order. It’s not great if the house takes months to sell, requires lots of marketing, flyers, advertising, etc., or the sellers demand that it be listed for a ridiculous price or refuse to reduce it when the market is telling them it’s not worth what they listed for, if the buyers want to be driven around to a zillion houses before making a decision, etc.

For expensive properties, a 6% commission is absolutely a lot of money for a typical sale. but bear in mind the median sales price in USA is $189K.

Taxes make $6k into 3600? That’s 40% taxes. The top tax bracket for $418k+ is only 39.6%. You also list expenses coming off of post tax in the example, which is also not how things work.

As has been covered, the majority of agents aren’t highly skilled OR highly trained, and shouldn’t be much more above minimum wage because they’re NOT highly skilled or highly trained. But lets assume here somehow they’re warranted a professional’s salary. An Engineer with a degree and 10 years’ experience might have a salary of $80k in an average cost of living area. We’re pretending all real estate agents are equivalent in quality to engineers now, along with all the other exagerations… $3600 is 4.5% of $80k. That’s around 90 hours, at highly skilled labor rates. At more reasonable rates for someone with equal skill of the average realtor, it’s 250+ hours. That’s before backing out the nonsense “tax” assumptions you put as if agents are the only ones paying income tax and they’re somehow paying more income taxes than any other people, who are all also paid on a pre-tax basis (exception as xerty pointed out is not everyone pays SE taxes directly).

Are you contending that they put in over 250 hours of actual work into an average $400k property purchase or sale? That’s over 6 weeks of full-time work… The numbers are still nonsensical if you lower the house to $190k (median is irrelevant here, though… Average would be what’s relevant. Which is probably $350k+)

I also don’t know where you got that 189k median number. The median number was already $248k and average was $314k back in 2007, and prices have already more than recovered from the slight drop in 2008/2009, and are higher today than 10 years ago.
https://www.census.gov/const/uspriceann.pdf

Zillow says the current average completed sale price is $225,262.

New homes are even higher
May this year had a median sale price of $345,800 and an average sale price of $406,400, according to the Commerce Department. Over 150% of the $189k you referred to. Buyer’s agent commission is often even higher than 3% for new homes, and can be 5%+.
https://www.reuters.com/article/us-usa-economy-housing/u-s-new-home-sales-jump-median-price-surges-to-record-high-idUSKBN19E1LW

As an anecdotal data point, when I purchased I did use a Broker/Realtor and he was highly experienced and useful and not representative of an average realtor. He was his own broker and closings in the 100+ per year. My purchase price was under $200k, he was more than happy with $3000 of that. He also showed up at the home inspection (many don’t) and sat through 1hr+ at closing after another 1hr for the final inspection just before closing. He probably put in 5hrs total “with me” and another 5 or so hours doing the minimal contracting/documentation (I say minimal because it IS standard and straightforward fill-in-the-blank forms that ALL realtors are required to use for ALL transactions in my state. Non realtors aren’t required to use those forms, but Realtor(r)s are required by the association. And unlike most people I read through every single line in the contract… and over-research everything. He did put in entries without mistakes I’d seen from other realtors and I liked his suggestions/negotiations.). We did a repairs request/negotiation and a somewhat nonstandard contract amendment that reduced total commissions at settlement to 4.5% instead of 6%, reduced his commission at closing to 1.5% and also reduced the sales price 1.5%. This was required because I was purchasing with a negative cost mortgage and a “rebate” at closing would not have worked because the negative cost mortgage already covered all added costs and most of my prepaids/escrow. He then also had expenses for his vehicle – A convertible – let’s round the vehicle expenses up and round up the mileage to 120 miles for the 3 actual trips he made, at $1.00/mile due to his overpriced vehicle = $120 in incremental expenses. Sure, there are also other overhead expenses not covered here, but also not that large due to 100+ per year transactions they’re split across. So, add another $100 for overhead. $220 expenses out of $3000 = $2780. $2780/10 hours = $278 an hour at 50% of regular commission (1.5%) on a house that’s less than 2/3 of the current average sale price. Not too shabby. He likely was in top tax bracket, so he probably paid 20% (deductions reduce the 39% significantly, SE is also “deducted”) plus SE, for ~35%. Really irrelevant though for comparing labor rates, as EVERYONE pays income taxes.

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15% SE tax on top of 25% federal gets you to 40% marginal pretty quickly, if you count that. Otherwise you’d need to be doing pretty well even in a high tax state to hit 40% just on income tax.

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