Question for residential real estate brokers

We’re deep in a house search and have been using one agent for a major real estate brokerage firm for a while. He’s probably spent a half day a week and maybe even a full day with us for the past 4 months. We’re looking at around a million dollar price tag and the “standard” buyer agent commision is 3%.

Recently, we’ve also found a couple of places on our own that are for sale by owner. It may be that one of these FSBO is the right fit.

I don’t want to burn my agent but money is money. The agent has been helpful, given good advice, and probably helped tipped us away from a poor choice. The agent has definately “earned” some commision. What I mean is that we would be willing to make some kind of cash side settlement to the agent if we use a FSBO option.

Q: For an agent working at one of the big chains, what would their take usually be for a 3% sales commission?

Second Q: any suggestions on an equitable way to take care of my agent in such a situation?

I would appreciate an objective agent opinion. thanks in advance.

Do you have no contract with your agent? I know that seller’s agents are usually entitled to their commission regardless of whether the agent or the owner (or the hair stylist) found the buyer. if I were a buyer’s agent, I would procure such a contract as well, and the issue would be moot: you’d owe your agent 3%, period. If there is no contract, and your agent has been providing full service anyway, I’d say you still owe him 3%, period.

The contract is question #1, though.

An agent showed my wife and I an FSBO home during our search. What he wound up doing was making an offer to the owners to be their selling agent as well as our agent. He did this in part by showing them that they were idiots (having listed the house in MLS in the wrong county with the wrong number of bedrooms, for example).

So our agent got 6% out of that deal. (Well, technically the broker got 6% and our agent got whatever the agent’s cut of that is).

State rules vary on whether this kind of thing is possible, but it does illustrate that you should go ahead and talk with your agent about what happens if you want an FSBO property.

My question is what does the buyer’s agent generally net from his company on a 3% commission?

I don’t have a contract with this agent.

It’s pretty certain you do have one. Maybe not a written one, but remember that contracts can be oral or even implied. If you approach a real estate broker asking whose job it is to find a buyer or seller for a house, and you ask him to do exactly that, and the broker goes on doing exactly that, then it is very likely that a court will find that there has been a contract or a quasi-contract. I’m surprised your broker embarked on his quest without having you sign anything, but maybe that was just a (very rare) instance of carelessness on his part.

Of course, another question is providing evidence of that contract.

There’s no contract if the amount is over $500 (statute of frauds) and it is not written.

@ OP: Typically, in a residential real estate deal, the seller pays the commissions to both the buying and selling broker, they come out of the proceeds of the sale. Individual agents get anywhere from 0.5% to 1% out of the 3% broker’s commission.

If you have found a FSBO you like, you are under no obligation to compensate the agent that has been assisting you. Hell, he didn’t go look at FSBO’s for you, which he could have done. Most seller’s selling under FSBO, are doing so because they don’t want to pay the 6% commission. You in turn should be getting some savings on the purchase of the house as well, at least 3%.

If you think you are going to be generous to your agent and comp him a 1% fee for helping you with the house hunt. The agent’s going to be required to turn that fee over to the firm he works for then get his cut.

Wilbo, appreciate the thoughts? Are you an agent?

And if I were to compensate “my” agent, it would be an envelope with a cash honorarium.

I would really appreciate an agent’s answer in this kind of situation (as opposed to a WAG). And is my possible solution of a cash honorarium be the right way to deal with the situation or do you you have an alternative way.

In New York City, the split of the commission between the brokerage and the salesperson is individually negotiated for each salesperson, and usually revised annually. Common splits are 50%/50% or 60%/40% (with 60% going to the salesperson), though I’ve heard of splits as much as 70%/30%. Generally, the bigger the salesperson’s sales volume, the more favorable the split to him or her. There may be other fees, charges or payments going to or from the brokerage depending on the individual deal. In addition, the salesperson may have to pay for his or her assistants and other expenses out of his or her portion of the split.

Former real estate agent, here.
Check to see if you have a written contract. The Realtor ™ standard contract had a clause that says if you buy a house within X amount of time of having taken on an agent, and even dismissing him later, you are on the hook for the full commission.

For the kind of cash you are referencing, methinks he’ll grab a lawyer right quick like.

So, first thing to do is check the contract, if you have one.

Best wishes,


No. Not an agent. But have several friends that are, and bought and sold about 7 homes in my lifetime to date.

dude, where in the hell did you go to law school?

The $500 number is for sale of goods.

Fer chrissakes, if you’re not a lawyer, please don’t act as if you know what you’re talking about. You already made an egregious misstatement today in the “finding a lawyer” thread in GQ. Now you’re making another one.

If you are a lawyer…!

As far as compensating your agent I would talk to him about ways he can be compensated. Often the FSBO owners are happy to pay 1/2 a commission or some sort of fee to not have to deal with the legal paperwork involved with closing. Here we will often do a one party listing, we list the house for the one buyer only, at an amount the buyer agent usually gets. Most FSBO’s are reasonable about this.

The cut an agent gets can be anything up to 100%. Some Realtors get to keep the whole amount but they pay huge monthly fees to their office. 50%-80% is fairly typical.

I missed the edit.

You really want a Realtor to work with you on this, he knows the laws for inspections and repairs and your legal recourses to bad situations that can arise and without knowledgeable help you can really get in a bad situation. If you’re going to pay him either way let him help you. Call him.

The nature of commission work is that sometimes you get an easy sell, sometimes a hard sell and sometimes no sell at all. So the guy put in maybe 20 hours work for you but never found a house you wanted, right? You don’t owe him money for his failure to do a job, even if he is a nice guy. Unless you have a contract that says so.

If it’s any consolation, when I bought my last house the agent invested a total of less than 1 hour into the process yet she was paid her full commission. She didn’t offer any refunds because she didn’t do much work, nor should she have. Her job was to make the deal and that she did.

Maybe I’m just a cold-hearted bastard, but if I go to a Ford dealer, even if the salesman is incredibly helpful, I don’t really think I owe him anything if I end up buying a Honda. That’s what commission is all about, right? No sale no pay, and you charge enough commission that the sales you do make cover the time you spend on sales that don’t work out.

I mean, look at it this way: he’s worked on your case for a half day a week over 4 months, which means 1/30 of a full year’s work, right? If he gets 3% of a million dollar sale, that’s $30,000. So if everyone he works with pays him in full at that rate he’s making $900,000 a year. Now, you may feel that the 3% rate is far too low to be able to cover the times he doesn’t make a sale, and think that expecting him to scrape by on only $870,000 is cruel and unusual. If so, go right ahead and cut him a check for whatever you want.

But myself I wouldn’t lose a whole lot of sleep over a real estate agent missing a commission on a sale they didn’t make happen.

I see my math is off above. Looks like he put in maybe 50-100 hours on your behalf. All the more reason why I don’t think he should get a commission.

As Zulema says, if you want to hire a realtor to help with a FSBO then do so.

Not to mention that the exceptions to the Statute of Frauds may vary state from state.

Yep, absolutely.

The salesman who works on commission is motivated to complete a sale by any means possible. Sure, some will use underhanded tactics, but most agents are motivated to determine the best deal for you based on what you want and what you can afford. (Compare that with asking a Best Buy employee about iPod accessories – 'nuff said.)

That’s also why many lawyers work on contingency – the potential payout motivates them to do the best work they can to win your case.

Seems to me, that if a salesman fails to convince you to buy through or from him, then he failed to earn his commission. Certainly not a moral failure, but commission is about pushing the salesman harder because he has concrete money on the line right now rather than just a potential negative performance evaluation in the future for failing to hit some percentage target set by management.