The Dirty Little Secret Of Some Real Estate Listing Agents
Posted Jan 17, 2008 @ 1:11 pm, Viewed by 551 Visitors, Read 618 Times.There is a dirty little secret that some New Jersey Real Estate listing agents are keeping. This little secret eventually gets out but usually not until it is to late for the home owner or anyone else to do anything about it.
It all starts with the real estate commission which is negotiated at the time that the home owners sign their listing agreement. What happens is a decision is made as to how that total commission is to be split. The normal practice is to split the commission 50/50 between the listing agent and the buyers agent. Sometimes when the listing agent is trying very hard to bring in a buyer quickly the listing agent will pay out a higher commission to the buyers agent as a incentive to get more showings. Same thing that many car companies do when they offer inducments on certain cars, the number of people looking at that type of car increases and the sales of that car increase.
Now to the dirty little secret: I have noticed this a few times in my carreer but as of late I seems to be occuring more often. In each of the cases it just so happened that the seller was looking over the Hud1 form (The legal form that spells out where all the money from a real estate settlement is going) and asked why the listing agent was getting much more money than the buyers agent. In other words the seller was unaware that there listing agent was paying them self much more than half the commission and the sellers did not even realize that they had agreed to that. To me this seems more than a little shady!!
Why is this a bad thing to have happen? It is not a bad thing to pay a higher real estate commission for performance, but 9 out of 10 times the listing agent for a home is not the selling agent. The listing agent is going to do about the same amount of work if the real estate commission is 50/50 or arranged in some other way. Don't get me wrong, a listing agent should get paid for the services they provide, and many times a 50/50 split is fair, but in my view it is never fair to the home seller or to the sellers agent for the listing agent to be receiving 20% more of the real estate commission than the buyers agent receives, without the home seller being aware of this happening.
James Boyer REALTOR Your Midtown Direct Real Estate Expert. To see home sales statistics for many of the Direct train line towns of New Jersey take a look at the Morris County Real Estate report or the Essex County Real Estate report.
Rate this Post!
Share this Post
Print
Social Bookmarking10 Responses to “The Dirty Little Secret Of Some Real Estate Listing Agents”
Hey James! Look! A shameless self promotion comment on your blog!
Don't your listing forms in NJ spell out the exact percentage (or dollar amount) that is due to both the Buyer and Seller Agent? I would think that the listing agreement would spell this out so there shouldn't be any suprises at close of escrow.
Huh? Shamless promotion? Just curious, what's the difference between the one Nick posted here or the one James did on another agent's Star Ledger article that was mentioned on the forum? I don't understand why it would be called spam to link here, but not somewhere else.. so what am I missing? I guess I have a lot to learn about the etiquette of blogs.
Oops, I meant sellersrq link, not Nicks.. Sorry about that!
I deleted the spam comment - what comment are you talking about Drew (Sorry to Hijack James) - Drew maybe we should take this to PM 
Drew, I did not spam the Star Ledger, I simply answered a few questions and then gave a place for the lady to look where she could see actual home sales for 2007 in the town (Morristown NJ) she was talking about. Unlike what the person who posted here did, which was quote a commission, (Violation of Ethics) and he posted a link to his website and asked people to visit it. On top of that the commission he posted is the rock bottom anyone who really wants to sell their house should offer to a buyers agent. In fact in many of the brokerage offices I have noticed that their are lists of home listings which are called motivated seller lists, and the criteria to get on the list is that the seller is paying a higher buyers agent commission.
As I have explained above, the listing agreement does spell out what commission percentage is total as well as what is being paid out to a buyers agent. In New Jersey the Commission total as well as payout is almost always expressed as a percentage.
Ralph
Dirty little secret? Are you kidding? Well, where do I start with all this.... here in Chicago area that practice has been going on at least 15 years or more, far from being a secret and am very surprised that NJ it is only catching on now. Also here in Chicago it is accepted practice mostly at 5.5% it is 3 and 2.5% if your seller agrees to 5 (2.5 and 2.5%) or 6% (3 and 3) then it is usually even up. So in practice far from little here and very widespread. And dirty are you kidding? Sure most listings are sold by the buyers agent.. but where are the costs? On the listing side of course! It costs money for ads, websites, flyers. virtual tours,,etc. A good listing presentation takes into account a marketing plan and the commission split in a well stated format to the seller.With this current market, far too many listings do not sell on the first go round.... trust me sellers are not worried about the split when there house has been sitting for six months. And when you follow up with your marketing tactics.. mail them the homes book ads.. personalize the home on the website...show that you are working hard, well, the sellers will understand whats fair.We are a small businessmen and have to defend our costs and protect our value every day... remember that on your next listing appointment.
Thanks for the comment Ralph, it is not a new practice here ether, but the dirty part is that the home sellers do not seem to be aware that it is happening, and in the cases I have been aware of the listing agent did not do much of anything special which would have accounted for a large added cost. Over my 4 years in the Real Estate Marketing Business over 60% of the transactions I have done have been on the listing side, and I know that my marketing effort is much more expensive and effective than is the average and still the added cost I incur does not warrant what you are saying Ralph.
REW Blogs User Stats
Currently Online Users:
0
Total Users:
1,755
Entries:
5,193
Unique Views:
2,602,398
Total Views:
2,699,999
Total Comments:
5,256
James Boyer, is a resident of Morris Township in Morris County New Jersey and Specializes in listing and selling homes in Morristown, Morris Township, Madison, Florham Park, Chatham, Summit, Short Hills, Millburn, Maplewood, & South Orange New Jersey and Morris Essex & Union County Real Estate. Read More
View My Listings
Contact Me
RSS Feed- This User's Stats
-
Blog Entries: 171Average Blog Rating: 0Unique Views: 81,771Total Views: 86,320Comments Posted: 203Comments Received: 172
- Friends
-
Top Rated
REW Blogs RSS Feed
The listing agreement does spell it out, but it is done in a way that can be easily glossed over. Also I have noticed that I have to re-direct the home sellers attention much of the time when going over this part of the listing contract. By this point, they have talked about the things they care about and are not listening so close anymore. For a listing agent who intends to charge a higher than average total commission but pay out the average buyer commission, this is a easy thing to get away with. After all Mr or Mrs listing REALTOR did not lie to the home seller, they just did not make sure the home seller knew what was being marked.