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One of the many myths in real estate is that fees are set by local Boards of Realtors or the large real estate firms. Just the opposite is true.... fees are negotiable and we can expect to see many more fee-based services in the future. *
'Co-broke' is the term used to describe a very common practice in the business where two agents share credit and commissions in the sale of a home. It is estimated that between 75-80% of homes sold today are done by 'co-brokes'.
Homes are placed in the MLS by "listing agents", some of whom specialize in just listing and depend on the other agents to find the buyers for their homes, cooperating with those agents for the benefit of the seller. The agents who sell the listings are known as 'buyer's agents' or 'sub-agents', or sometimes they are simply non-agents because they do not represent either the buyer or seller in the transaction.
When a listing is placed in the Multiple Listing Service (MLS) a cooperating fee (co-broke fee) is offered to buyer's agents and/or sub-agents and/or non-agents called facilitators. The listing agent and the selling agent generally have to split their fee with the agency so it is not uncommon for the total brokerage fees to be split four ways. The main exception to this model is the so-called 100% firms, like RE/MAX, Keller Williams and Realty Executives. These companies generally charge the agents desk fees instead of splitting commissions.
In regard to whether or not agents are overpaid for their work, some of the perception problems can be traced to promises of making 'big money' as a real estate agent from some of the agent recruitment ads that consumers see. Other reasons include the impact of the Internet on getting the word out and a rate of compensation for agents that is based on a percentage of the home sale price -- a method that some see as penalizing homesellers with 'high-end' homes.
Regardless of the reasons that consumer perception is shifting, agents and brokers have expenses and work long hours to produce a successful sale. Take a look at the list of the work that they do at the bottom of the page. As a 'for sale by owner' seller, you and your real estate attorney will take on these responsibilities.
The basic office structure of the majority of practitioners in the industry:
Licensed real estate agents and brokers, members of the trade organization the National Association of REALTORS and members of Multiple Listing Services (MLS), work as independent contractors in an agency. They subscribe to a Code of Ethics and work in a cooperative fashion to promote home sales and help buyers find new homes.
The agency is headed by a broker, licensed by the state to conduct business. Sales associates can be agents or brokers. Although brokers can open their own office, many choose to work as agents under another broker's license.
Typical Hours Spent to Sell A Home
First Visit 1.0 hrs.
Comparative Market Analysis 2.0 hrs.
Listing Appointment 3.0 hrs
Hold Office Tour 1.0 hrs.
Hold Broker's Tour 3.0 hrs.
Install Sign & Lockbox .5 hrs.
Write Newspaper Ads 1.0 hrs.
Preparation of Graphics 2.0 hrs.
Deliver Graphics .5 hrs.
Preparation of "Just Listed" Cards 4.0 hrs.
Hold Open House 16.0 hrs.
Weekly Communications 8.0 hrs.
Scheduling Appointments 16.0 hrs.
Follow-up on Showings 8.0 hrs.
Negotiations 6-12.0 hrs.
Pending Follow-up 6-12.0 hrs.
Meeting with Inspector 3.0 hrs.
Meeting with Appraiser 1.0 hrs.
Review Settlement Papers 1.0 hrs.
Closing 1.0 hrs.
* Real Estate Confronts Reality, Dooley, Swanpoel & Abelson, 1997
Consumers want to "shop for real estate in their jammies" but "they still are going to want to do some tire kicking before they buy." The solution is, of course, to give consumers a fee-based service which allows them to select the services they need directly from the convenience of their homes. Let them pay only for what they use, and you will have a good chance of keeping them."
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