2.25% list side, 2% to the buyer agent, and how the fee conversation went

Closed last month on a house I'd been carrying too long. 5,400 square feet, built 2006, top decile of a secondary metro, my basis was $2.31M plus about $180k of deferred work I finally did before listing.

Listed at $2.85M with a specialist who does maybe nine sides a year, all of them above $2M. Her fee was 2.25% to list. I asked for 2% and she said no and explained where the money goes at that price point, which was mostly video, print, and a private preview event she runs off her own list. I paid the 2.25%.

On the buyer side we published 2%. Two of the four showings came with agents who told my agent up front their buyer agreement said 3% and asked whether we'd cover the gap. We didn't, and one of them came back anyway. The offer we took was $2.72M with the buyer covering the 1% difference to their own agent out of pocket, which their agent clearly did not enjoy.

Gross to me at close was $2.72M, less $61,200 list side, less $54,400 buyer side, less about $38k in transfer costs and title, so roughly $2.566M against $2.49M all in. Thin, and 14 months of carry is why.

The part that nearly broke it was the appraisal. Came in at $2.66M and the lender wouldn't move. Buyer put in the difference rather than renegotiate, and I'm fairly sure the only reason that happened is my agent had already walked their agent through her three comps in writing before the appraiser showed up.

What I'd keep: publishing a buyer-side number and refusing to move off it. It cost me one showing and saved $27,200.

Answer

1stephen_ok9CO2CPRO6

The line I'd underline is that you refused the 3% and one of the two agents came back anyway. That's the whole post-settlement dynamic in one data point. The buyer's fee is now a negotiation between the buyer and their own agent, and when the seller side won't fill the gap, the pressure lands on that relationship rather than on your proceeds.

But I want to push on your counterfactual. You had four showings. If the one who came back hadn't, you'd have been sitting on a $2.85M listing with two dead leads and 14 months of carry already sunk, and at month 16 you'd have paid the 1% happily. Refusing the gap saved $27,200 because a buyer existed who wanted the house enough. With three showings instead of four that's a different post.

The appraisal handling is the part I'd actually pay 2.25% for. Getting written comps in front of the other side before the appraiser arrives is not a service a discount listing produces, and in a top-decile market with thin comparable data it's the difference between a closed deal and a renegotiation. Did she supply anything to the appraiser directly, or only to the buyer's agent?

3 replies

2angela_burkeServicePRO6

Nine sides a year above $2M is roughly $500k of gross commission for one person before splits, which is why she could say no to your 2% ask and mean it. She isn't volume-dependent. The agents who cave on fee are the ones who need your listing to make the month.

2Rena Expert

Your numbers line up with the pattern in the data. Buyer-agent commissions on luxury homes ticked slightly lower after the new commission rules, while commissions at more affordable price points held or rose. You published 2% where the buyer agents' own agreements said 3%, and the gap resolved in your favor. That is the marginal percentage pressure at the high end showing up on a single deal.

The absolute dollars are what keep the niche stable. Your list side at 2.25% was $61,200 on one transaction. An agent doing nine of those is running a business on a volume that would be a failing year in the general market, which is why the fee conversation goes differently at the top. The specialist's value is legible to the client, so the fee attaches to something the client can point at, in your case the preview event and the comp work before the appraisal.

The assumption your outcome rests on is buyer depth. Four showings in a top-decile secondary metro is not deep. You had one buyer who wanted it and enough motivation to fund the 1% themselves, and meridian is right that with one fewer showing your fee discipline reads as a mistake instead of a saving. Fee discipline on the seller side works when the buyer pool has at least one committed party in it.

On the appraisal, whatever an agent provides to an appraiser is governed by rules that vary and by lender policy, so that's a question for your agent and the lender rather than something to generalize from one closing. Confirm in writing what the lender permits before assuming the same approach travels.