General Question

2davidc8's avatar

Why do real estate agents want listings?

Asked by 2davidc8 (4133 points ) March 13th, 2014

Where I live, the customary real estate commission is 6%. Also customarily, this commission is split 50–50 between the seller’s agent/broker and the buyer’s agent/broker (though the seller pays the entire commission).

Now, to earn that 3%, the seller’s agent typically works with the owner to decide what work needs to be done to fix up the property, arranges with vendors to do the work, schedules and oversees the work, arranges access to the property, and handles invoicing. The agent also works to stage the property, if this is called for. Then the agent has to market the property, including photos, videos, open houses, broker tours, and other advertising.

On the other hand, all a buyer’s agent has to do is drive the client around to see houses.

Of course, once an offer is made, I can see that the seller’s agent and the buyer’s agent work is about equal. They both have to negotiate, deal with inspections and contingencies, and see the deal through to closing. But before then, it seems to me that the seller (listing) agent has to work a lot harder.

So, why not just be a buyer’s agent, and avoid taking listings altogether? But in my area, the homes for sale inventory is extremely low and agents are anxious to get listings. Why is that?

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10 Answers

Tropical_Willie's avatar

There doesn’t have to be a listing agent. It would then be a FSBO ==> for sale by owner.
I’ve seen a FSBO house at 40 % higher than last years valuation for the property. The buyer’s agent will not be able to convince the seller that their idea of value is not reasonable.

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Cruiser's avatar

Listings sell and earn the listing agent the commission the seek. Buyers can be tire kickers and require multiple showings before they buy…IF they buy. Plus people who are selling a house need to buy a house and listing agents can often get dual commissions or referral fees from their seller listings. PLUS listings are ads and ads attract other buyers and sellers. The agents who make the big bucks have the most listings…it’s that simple.

JLeslie's avatar

The listing is usually the easier end of real estate. When you work with the buyer you need to drive them around, deal more with personalities, especially if the buyer is a couple, and buyers tend to change what they want as they look.

Buyers sometimes run into an open house and don’t mention they had been working with a realtor and the realtor who spent hours on the computer for them and drove them around 5 days already winds up with nothing.

The buyer’s realtor is the one who writes up the offer (unless you are in a state where lawyers do the work or you happen to have a buyer who prefers to use a lawyer).

You can juggle ten listings, but not ten buyers.

I liked working with buyers, but it definitely is usually more work than the seller’s side.

2davidc8's avatar

@Cruiser @JLeslie Thank you for thoughts.
@JLeslie “Buyers sometimes run into an open house and don’t mention they had been working with a realtor and the realtor who spent hours on the computer for them and drove them around 5 days already winds up with nothing.” Ah yes, but sometimes sellers may decide to take their house off the market, too, and the listing agent winds up with nothing. True, the agent is somewhat protected by the listing period, but the listing could expire without the house being sold.

JLeslie's avatar

@2davidc8 Yes, that can happen. In a hot market that is unlikely, but the US has gone through a slow period. Still, listing is less work typically, and more likely to pay off. Initially, there is computer work to do the comps, and all the paperwork for the listing, photos, and getting it into the computer. Also, putting a sign up if you are allowed (I actually never had a listing that allowed a sign so I never even had to buy signs). Then it’s mostly taking the calls for showings, although some realtors have showing services and they don’t even handle the calls. When I cut my rate on a listing I am cutting my side. If I give a client 5%, I still pay the buyer’s side 3%, I’ve even done it for 4% for family. I’ve cut my rate on the buyer’s side also for friends and family.

2davidc8's avatar

@JLeslie (Listing agent) What about having to work with the owner to fix up/renovate the property? Seems like a lot of work to me, that the buyer’s agent doesn’t have to do.

JLeslie's avatar

@2davidc8 The seller fixes up the property not the realtor, if they are going to bother to fix it up. The properties I worked with were all in decent condition except for a couple. One was a mold mess, I sold it to an investor. It was when real estate was hot.

2davidc8's avatar

@JLeslie
In the San Francisco Bay Area, the realtor oversees repairs/renovations to get the property in decent shape to sell (if that’s what the owner wants). Two years ago, we sold our mom’s condo, and the realtor did all the work to get the repairs done (hiring contractors, arranging for access to the property, keeping the projects on schedule, checking their work, invoicing the owner, communicating with all parties involved, etc.)

Now we are preparing to sell our single family home, and every realtor we’ve interviewed so far is happy to do the same thing. This seems like a lot more work than the buyer’s agent has to do. That’s why I asked the question.

JLeslie's avatar

@2davidc8 I have done some of that for out of town owners, including getting rental places cleaned. But, the majority of the time I didn’t have to oversee much of anything. I certainly don’t give them a “discount” on my fee if I have to deal with a property on my own without the owners around to take care of things. Each deal is different and technically, legally, there is no customary or standard fee. 6% is very common in many parts of the country though.

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