The duties of a real estate agent

Hi Lea & Denny

It would depend on the type of transaction. If an agent is just preparing a offer contract for you to present to a seller (fsbo) then the compensation would be whatever you to feel is beneficial for both parties. In some cases you can ask an agent to prepare an offer for you if your not comfortable doing the contracts. Even an attorney can for this matter. What ever fee you both agree on,it then becomes a fee that is paid to the agent from her broker on what ever agreement they both have. An agent can assisit a fsbo if they wish to have representation but the expense should be the fsbo's responsibility to factor in. If the numbers work for all parties. Then this becomes an exclusive or open listing and the fee can be less than a regular commision because the home will already under contract with you and the fsbo, so there is no expense of mls, advertising and no other agency to split the commision with and so forth. So sometimes the agency commision fee could be less like 3% instead of 6%. Each agency can be different. I like to work with smaller agencies because they tend to be more flexible. An agents basic duties are handling the contracts and negotiations between all parties involved. Providing representation whether it is being present for an inspectin or appraisal. If it is an existing mls listing you are placing offers on then the listing agency in which the seller listed with has already negotiated the commisions in the listing agreement. The agent will be paid from their broker. In my state an agent can only recieve compensation thru the broker in which their license is under. Continued success.........Lubertha

Hi Lubertha, and THANK YOU for taking your time to give us some very helpful information. We always enjoy reading and learning from your posts.

We should have titled this post "What to pay a real estate agent?" We are trying to figure out specifically how Matt's 25:1 and all the details involved for our agent (finding 100 props, putting in 25 offers, paperwork involved for the agent after the offer is accepted) will appeal to the agent (our Star.) After reading your answer you made me think about this in a more precise and clear way that makes sense for the agent and us.

Bottom line is it worth it to us to pay our agent on top of their commission and how much (depending on how much we make off the deal) to make it worth their time. Absolutely!

If we assign a property with FMV of $100,000 for $55,00 (making $5,000) and give the agent an additional $500 he or she ends up with the commission of selling a home valued closer to $100,000.

The agents in our area make 6% commission so $60,000 sale for them would be $3,600 divided with the selling agent and 1/2 going to his or her broker. So our agent would make $900. Was that worth his time spent in the first place? To make sure it is giving him or her an additional $500 is $1,400 ($100 short of selling a home for $100,000.)

We will begin interviewing real estate agents this week.

Thanks again for your help!

Warmest Regards, Lea & Denny

Your welcome. I look forward to your support as well! Much success.....Lubertha

I have an agent that wants to work with me. His fee is 3.5 percent of purchase price at closing. He says he can get me FSBO's, Preforeclosures, and REO's. He will do all offers and negotiating on my behalf. Does this seem reasonable? I live in Wisconsin. Any help will be appreciated. Thanks, Terry

Terry that the beauty of REA commission, you can negotiate with the agent what you're willing to pay him regards to his commission. He can either take the deal or not. Say you buy a $80k house through him from FSBO. His 3.5% commission would be $2800 from that perspective deal. It's your decision what you're willing to pay him if you're wanting to put more of your profit into your pocket. I advise pay him base on his work ethnic. You can also do some of the work that he would do yourself; like writing up your own offers, having an attorney to review them and then having the agent present them to the seller. You can have the agent pull comps for you if you don't want or know how to do that yet yourself until you get comfortable having done a couple offers.

I thought I would clear up the questions regarding realtors commission. I was an agent for almost 6 years. So I thought this would be helpful. You have 2 agents involved in real estate. The listing agent who represents the property for the seller and you have the buyers agent who brings in the buyer. The only person who pays the commission is the seller of the property. It is negotiated to be 6 - 7 percent which is split between the listing and buyers agent. When you are negotiating the commission, it is with the listing agent. Say you are selling and then buying another property from the same agent so they take a 5%. Usually, 2% goes to the listing agent but almost alway the 3% goes to the buyers agent. If that agent has a choice of showing a property that will pay 2% vs 3%, it will always be the 3%. But the buyer will never negotiate what the agent makes unless you are asking them to show you a fsbo.
Hope this helps