FORT LAUDERDALE, Fla. – Sept. 22, 2011 – Someone selling a home is more likely to pay a full real estate commission today than during the housing boom, when discounts ruled and most properties sold quickly.
Commissions have steadily increased in recent years, despite a rash of foreclosures and falling home values that have left sellers with little spare cash to pay a broker.
The average commission nationally at year-end 2010 was (higher than) 2005, according to Real Trends, a publishing and consulting company based in Castle Rock, Colo.
In the housing frenzy of 2000 to 2005, sellers often questioned the value of agents. The number of brokers ballooned, and the competition for listings led some agents to cut commissions.
But when the housing market soured beginning in 2006, agents couldn’t leave the profession fast enough, and it became much harder to sell homes. Agents say sellers have since grown more appreciative of what they do.
“Sellers are very happy to pay the full commissions, even though they’re getting less money for their homes,” said Claire Sheres of Coldwell Banker in south Palm Beach County, Fla.
“They’re not quibbling …” added Scott Agran, head of Boca Raton, Fla.-based Lang Realty. “They’re saying, ‘What can you do to sell my house for the highest price and in the quickest amount of time?’ “
Agents now have to spend more time and money marketing the properties, and their jobs aren’t limited to finding buyers and securing contracts, said Beverly Rothstein of the Christopher White Group in northwest Broward County.
Agents also have to help arrange financing and title insurance to keep the sales moving toward the closing table.
“No one really has given me any grief about commissions,” Rothstein said. “In this market, your best friend is your real estate agent.”
Robin Craig didn’t think she’d need an agent to sell her two-bedroom cottage in Fort Lauderdale’s Victoria Park. So in May she created a website and flyer and stuck a sign in her front yard.
But for Craig, a 43-year-old accountant, negotiating with prospective buyers’ real estate agents was challenging, and so was coordinating the many showings. Three weeks later, with the house still unsold and a deadline looming for her to move to a new job in Atlanta, Craig hired Tim Singer of Coldwell Banker.
She said she’ll happily pay the … commission on the $529,000 listing.
“I underestimated the amount of time that was involved,” she said. “And he’s got market data and experience that I don’t have.”
Agents say they typically avoid showing homes that owners are selling themselves. Some of the sellers are hostile toward agents and have no intention of paying a commission to the buyer’s broker, Singer said.
Jon Holbrook, president of Delray Beach, Fla.-based BuyOwner.com, said he encourages his clients to work with buyers’ agents and come to terms on some sort of compensation, should a sale result.
Still, with dwindling home equity an issue in South Florida and across the country, sellers would be wise to try selling their homes on their own, Holbrook said. Those who don’t end up losing much of their profit to commissions. “It’s painful,” he said.
Many homeowners who bought during the housing boom are “underwater,” owing more than the properties are worth.
Nearly half the homes with mortgages in Broward County – more than 205,000 properties – are underwater, according to a second quarter report Tuesday from CoreLogic, a California research firm. In Palm Beach County, 42 percent of the homes with mortgages, or more than 137,000 properties, are worth less that what’s owed.
Some of these homeowners will pay the real estate commissions out of their own pockets. But many are falling into foreclosure or completing short sales, in which they unload the properties for less than they owe, with the bank’s blessing. In those transactions, the sellers don’t have to worry about the commissions, which are paid by the lenders.
Banks tend to hold down commissions on short sales and foreclosures to minimize their losses, but some agents say lenders are paying the full (amount) so that the agents will actively market the homes.
“These homes aren’t selling by themselves,” said Douglas Rill, a longtime broker at Century 21 America’s Choice in West Palm Beach.
Copyright © 2011 the Sun Sentinel, Fort Lauderdale, Fla., Paul Owers. Distributed by McClatchy-Tribune News Service.