[rossdavidh]

If you're making a purchase/sale of several hundred thousand dollars, having someone with you who has done this many times before is easily worth 5% or so. Is every agent good? Well certainly not. But it's a high-stakes transaction that most people have never done before, or have done only once before, so having a veteran of many such transactions walk you through it is easily worth a few percent of the total cost.

[webdood90]

> easily worth 5%

Easily worth a couple grand, maybe. A percentage like that? No chance in hell.

[bostonsre]

Why haven't commission percentages gone down over time? It seems like a massive margin that should be trimmed down by competition. I would think there would be more than enough room to under cut the standard rates, cover costs and still make a healthy profit. Is there a low supply of realtors that causes them to be in high demand and helps them keep up their commissions or something like that?

[nrmitchi]

The National Association of Realtors controls a huge percentage of real estate transactions, and works to make sure it doesn't drop, to the point where there are multiple open anti-trust lawsuits. For example: https://www.justice.gov/opa/pr/justice-department-files-anti...

Basically, if you don't play the Realtor game and agree to pay those commissions, it's difficult to participate in the market at large.

[wombat-man]

Yeah I mean you're kinda paying to make everything go smoother and ideally their experience in the market will help prevent you from making an expensive mistake. As long as you have a good one, of course.

[bostonsre]

Ah, thanks.. that makes a lot more sense then. Hopefully the justice department stops that BS rent seeking crap.

[exclusiv]

Can you negotiate 5%+ more salary if you know what you're doing? Yes. Yes you can. That's easy.

Half goes to buy side though normally. Although some firms try to "double pop" it and represent both sides. That should definitely be illegal everywhere.

There are a lot of terrible agents though that aren't worth it. It's a low barrier to entry with a very high upside. Not many career opportunities like it.

Buy side can be a ton of work though for the same payday as sell side. Agents and owners offer commission to the agents to make it worth their while.

If there weren't any buy side commissions, you'd get less interest, because no buyers agent would ever refer you to a house they can't make money on. Unless they had a conscious AND they hadn't already spent a bunch of time on you.

But at some point if you want a house that had no buy side commission and you locate it (Zillow or a sold by owner site), you're going to buy it without your buyer's agent.

So it could easily head the way of the hotel industry where the buy side is virtually non-existent.

[jankassens]

I'd love to see the typical breakdown of where those 5% go in a hot market like San Francisco. At a median price of $1.5mil, that's $75k in commission. I never bought a home, but that seems like it should buy a lot of services.

[choppaface]

In a market like SF, or on Million Dollar Listing, I think the argument towards the commission is that the agent will either save you that much through negotiation (or earn you more through inflation) and/or they will get you something that you couldn't get otherwise (e.g. an unlisted property or a celebrity buyer). That said, I imagine the agents' return-on-arbitrage is actually even higher at the top price points, and even harder to quantify because deal details can be obfuscated (e.g. through LLCs etc).

[lawnchair_larry]

Agents don’t negotiate on your behalf. They present all offers.

[tamade]

The typical 5% is split 50/50 between the buyer and seller brokers and paid by the seller. If the agent represents both sides, there's usually a discount, e.g. 4% total. Additional broker incentives, e.g. extra 0.5% to the buyer broker, may increase the commission

[lawnchair_larry]

No, it really isn’t. The price only exists because of the MLS cartel, which is finally starting to crack.