Realtor Commission Fees

Yep agree with you on attorneys getting 33% but then I have seen a lot more honest real estate agents/brokers than I have attorneys. I didn't expect anyone connected with real estate to respond to my 6% question as it is loaded and they just might get in some serious trouble if they respond - which I would not want. So, I will kick back Aspen with the fall snow falling and fireplace blazing, drink a little beer and decide if I am asking tooooo much for a St. John house. Which cost me toooo much to build when I finally finished. However, the $5K to $10K a week in rentals cuts the hurt a lot.

Certified CPM
Certified PHM

Isn't this all just a matter of the free market? Sellers set a price and buyers decide if they want to buy at that price. Small business, including the service industry, set a price for their goods or services and we, the public decide if the service or product is worth the price requested.

Providers are always free to reduce prices and buyers are free to not buy. I thought this was the way it's supposed to work? Supply and demand.

I agree with you Linda. I have never been a fan of the commission rate and I spent the last 15yrs on the other side of the industry in lending. The last three homes I have purchased have been FSBO and I have made it a point to seek out these listings. A little easier for me since I know the industry enough to buy on my own but I do not recommend it for most people.
With that said in Real Estate up cycles everybody questions the commissions. I have a friend in D.C. that made $650k last year in Real Estate commissions. She is a good friend but I can tell you she knows didly squat about Real Estate. She was just lucky enough to be in a booming area where she could simply list things and have them purchased within 1-2 weeks. She is a little shocked now because things have slowed down and she actually having to set up open houses and do a little work selling.
I have seen enough down cycles to know Realtors put in a lot work to sell a home and come out of pocket a lot to market some listings and themselves. To me what has made the Realtors commission easier to deal with as of late is the reduction in capital gains tax. Once that tax is raised and it will be depending on the outcome of the elections in November, then it gets more expensive to sell your home.
All commission based people know there will be cycles of low hanging fruit and then times where you have to work your butt off. Three years ago before moving here my partner and I closed and funded just shy of $100 million in loans. Most of that business was coming to us and we did not work too hard to get it but at the same time I did not mind spending the commissions. The good thing about a down cycle in Real Estate is it shakes out a lot of the mediocrity that exist on both the selling and the lending side of the process.

are not subject to the free market.

LOL STJ Seller,

Let me guess...
CPM= Certified Project Manager? (I haven't read the PMBOK lately but was in the PMO for a $60M software standardization project a few years ago.LOTS of fun!)
PHM= Public Housing Manager?
Hmmm, are you just tinkering in STJ?

STJ SELLER, Are you nuts? LOL. Why would anyone be in Aspen with that white $h!t on the ground, when you could be in STJ, with beatiful 85* weather and such beatiful water. I have serious doubts about your sanity! LOL!

Dear Blog

While I am not offended by your language; nevertheless, some people like to ski and after doing 102 days in 2004 I am no exception. I would like to add as of today we have 14" on the ground and I can't wait to get the boards out to slide down the mountain!

Sorry to bring up an old thread but can anyone tell me what the current rate of commission is to realtors when selling/buying, and who pays it? 

Same as always typically 6% paid by seller

Odd. The one agency I called last week told me 10%. Granted this is land, but not sure why there would be a difference between land and a home/condo?

Posted by: stxdreaming

Odd. The one agency I called last week told me 10%. Granted this is land, but not sure why there would be a difference between land and a home/condo?

Asking isn't getting!

Land commissions have always been higher. From my experience in both the states and the islands, 10% is the "normal" commission for a land (lot). Lower commissions (5-6%) are usual and customary for houses and condos. For large tracts of land, the commissions are more like those for houses and condos. 

And no, I'm not a real estate agent but have been a banker financing real estate for over 30 years. 

Those percentages are pretty typical.

I'm selling by owner and it if fantastic. I'm able to lower my overall home price to allow for a nice young couple to purchase our home and we will still make the same amount as hiring an agent which would have led to an inflated listing price.

Agents can and do earn their money but sometimes there just isn't need for one.

Anyone know how I can list on the MLS without going through an agent? Google is showing so many companies who will list on the MLS under a For Sale By Owner however the two companies I called said they can't list in the VI. From looking on Zillow there are a bunch of land/homes listed For Sale By Owner. Wondering how they did it?

Posted by: stxdreaming

Anyone know how I can list on the MLS without going through an agent? Google is showing so many companies who will list on the MLS under a For Sale By Owner however the two companies I called said they can't list in the VI. From looking on Zillow there are a bunch of land/homes listed For Sale By Owner. Wondering how they did it?

Zillow takes "for sale by owner" listings - but that is different the MLS. 

You'll need to set up a myzillow account at some point.

https://www.zillow.com/for-sale-by-owner/

Posted by: Jules

As the public has ever-increasing access to listings, it seems that there is less for a realtor to do. In the past, when you were ready to look for a property you called your realtor, who learned about your needs and prepared lists of possibilities. The realtor had to do some work. Now many buyers come to realtors with MLS printouts in hand, simply requesting appointments for viewing. First-time buyers probably need more hand-holding, but people who've bought before probably don't require that much.

These days, prospective buyers have unprecedented access to information on properties that are for sale. A realtor is necessary to arrange a showing, but I'm unclear on what other labors are involved. Filling out an offer form? I suppose the hours can be bad, but it seems like realtors have to do less work these days. I'm sure there are plenty of exceptions, but I believe my opinion to be a reasonable deduction and a fair generalization.

The VI market is different in that it can be hard to do an independent drive-by (speaking as a buyer) because of the lack of street signs and such. Here in the USVI there is probably more work that has to be done by realtors. Realtors may also be essential if you are buying a property from afar.

All in all, though, being a realtor seems like a pretty good gig. Guess that's why there are so many realtors. Too many, I guess-- that makes it harder for any given realtor to make a good living at it.

^^ YES, THIS!  Totally agree.

My personal experience with realtors on STX has been terrible.  I find them to be much lazier and less informed than their stateside counterparts.  On my last house sale, it got to the point where I had to reach out to the buyer directly and he and I worked to get the deal done.  The kicker is that realtors in the VI don't even close the deals like realtors in the states do.  For that, you have to hire an outside attorney.  No wonder there are so many realtors in the islands.  I'm sure there are some good ones in the islands, but I couldn't find any.  Maybe next time will be better.

Posted by: NugBlazer

Posted by: Jules

As the public has ever-increasing access to listings, it seems that there is less for a realtor to do. In the past, when you were ready to look for a property you called your realtor, who learned about your needs and prepared lists of possibilities. The realtor had to do some work. Now many buyers come to realtors with MLS printouts in hand, simply requesting appointments for viewing. First-time buyers probably need more hand-holding, but people who've bought before probably don't require that much.

These days, prospective buyers have unprecedented access to information on properties that are for sale. A realtor is necessary to arrange a showing, but I'm unclear on what other labors are involved. Filling out an offer form? I suppose the hours can be bad, but it seems like realtors have to do less work these days. I'm sure there are plenty of exceptions, but I believe my opinion to be a reasonable deduction and a fair generalization.

The VI market is different in that it can be hard to do an independent drive-by (speaking as a buyer) because of the lack of street signs and such. Here in the USVI there is probably more work that has to be done by realtors. Realtors may also be essential if you are buying a property from afar.

All in all, though, being a realtor seems like a pretty good gig. Guess that's why there are so many realtors. Too many, I guess-- that makes it harder for any given realtor to make a good living at it.

^^ YES, THIS!  Totally agree.

My personal experience with realtors on STX has been terrible.  I find them to be much lazier and less informed than their stateside counterparts.  On my last house sale, it got to the point where I had to reach out to the buyer directly and he and I worked to get the deal done.  The kicker is that realtors in the VI don't even close the deals like realtors in the states do.  For that, you have to hire an outside attorney.  No wonder there are so many realtors in the islands.  I'm sure there are some good ones in the islands, but I couldn't find any.  Maybe next time will be better.

From my experience, VI attorneys do the work a title company would do in big America.  That fee is an add on to the commission stateside as well. 

Lots of people become realtors during sellers market - houses sell themselves. A buyers market sorts out who's a realtor for the long haul. 

There are lots of things for realtors to do depending on the situation.  You may have buyers agents as well as sellers.  They can act as somewhat independent reps for buyer and seller in negotiations and working out conditions.  My last purchase we already knew what property we wanted to look at.  We started off island, already had been working with an agency/buyers agent, told the realtor when we would be back on island so he could arrange the showing.  Owners were also off island.  Worked up the offer and went through the usual back and forth to get agreement.  Once we had a signed deal we left island and the realtor helped with additional legwork.  I arranged for inspection but realtor did final walk through before closing including verifying agreed repairs were completed and making sure everything was still in working order.  Realtor even got WAPA turned on for us.  Of course I didn't have to pay the realtor (directly.)

My wife and I closed on a house on STX last week, first time buyers outside of New England, but we’ve bought and/or built 7 homes over the last 40 years.  While not an expert, it seems to me the St. Croix market is a little unique for several reasons.

1. There is a lot of inventory that been listed for many months, makes buyers nervous.

2. Much of the inventory isn’t well maintained, turning-off buyers.

3.  There are many absentee sellers, making showing property difficult, again problematic.

4. Price adjustments (down) tend to be random and at times large, indicating problems with the market or property.

5. I suspect a significant number of buyers are similar to my wife and I, buying largely remotely.

All of the factors are headwinds for the realtor community and make trust a huge factor in the process.  I’m also sure there are a lot of “tire kickers” on vacation, just curious about real estate but not in anyway serious, but then again how is the agent to truly know.

When I add it all up the commission rates are reasonable, the Internet has really only added complexity as more information isn’t necessarily better information.   It’s hard work looking and I assume selling.  Interestingly, the very lovely home we purchased was only on the market for a short time, providing once again that quality property marketed well, sells quickly, in any market.

Looking forward to becoming part of the STX community.  

hey jaldeborgh, welcome to you and your wife!!

Posted by: jaldeborgh

My wife and I closed on a house on STX last week, first time buyers outside of New England, but we’ve bought and/or built 7 homes over the last 40 years.  While not an expert, it seems to me the St. Croix market is a little unique for several reasons.

1. There is a lot of inventory that been listed for many months, makes buyers nervous.

2. Much of the inventory isn’t well maintained, turning-off buyers.

3.  There are many absentee sellers, making showing property difficult, again problematic.

4. Price adjustments (down) tend to be random and at times large, indicating problems with the market or property.

5. I suspect a significant number of buyers are similar to my wife and I, buying largely remotely.

All of the factors are headwinds for the realtor community and make trust a huge factor in the process.  I’m also sure there are a lot of “tire kickers” on vacation, just curious about real estate but not in anyway serious, but then again how is the agent to truly know.

When I add it all up the commission rates are reasonable, the Internet has really only added complexity as more information isn’t necessarily better information.   It’s hard work looking and I assume selling.  Interestingly, the very lovely home we purchased was only on the market for a short time, providing once again that quality property marketed well, sells quickly, in any market.

Looking forward to becoming part of the STX community.  

The STX (and VI) real estate market is small and eclectic. There is no average home and comps are far and few between. The average time on the market is nearly a year during the best of times - so you cannot compare STX to larger, more active areas of the mainland US. 

Residential real estate can be shabby on STX - it's a factor of absentee owners, renters, seaside tropical weather and hurricanes, unavailability of materials for easy repairs and limited incomes to keep up housing.  

Price adjustments are arbitrary no matter where you are. Since there are so few sales in the VI it's hard to statistically determine a market standard for selling vs list prices. Comps may be influenced by a home selling on the other side of the island. So there could be logic to odd price adjustments (or not LOL). 

As you found - the best determinant as anywhere is location, location, location. Priced right, too. 

BTW the first time a set foot in my STX house was after I owned it. 

Things were certainly different after the refinery closed.  Bargains, Bargains, Bargains.  Now we are back closer to normal.  Seller often our not in a big hurry to sell and want to get their price. They don't want to "give it away"  as I've heard told.  So listings will often sit for months and months.  Sometimes they may drop the price a bit. 

Comps are certainly a challenger for the appraisers.  My last one certainly struggled on the one we bought and the appraisal was for me, not for the bank, to make sure we were not overpaying. 

I see a lot of back on market on the MLS.  Presumably the financing fell through.  Perhaps another victim of the appraisal or just difficult of getting a local mortgage.

I don't know how many remote buyers there are.  I know someone in our condo complex who did without stepping foot in first.  We had a good idea what we were looking for after doing some showings on earlier trips down.  So when we saw what we wanted on the MLS, and had already done  the due diligence for the HOA, made the trip down, and only had to do one showing.  Big difference between condo buying and house buying.

You can try to work without a realtor and save a lot of money)

Posted by: Gator's Mom

Posted by: jaldeborgh

My wife and I closed on a house on STX last week, first time buyers outside of New England, but we’ve bought and/or built 7 homes over the last 40 years.  While not an expert, it seems to me the St. Croix market is a little unique for several reasons.

1. There is a lot of inventory that been listed for many months, makes buyers nervous.

2. Much of the inventory isn’t well maintained, turning-off buyers.

3.  There are many absentee sellers, making showing property difficult, again problematic.

4. Price adjustments (down) tend to be random and at times large, indicating problems with the market or property.

5. I suspect a significant number of buyers are similar to my wife and I, buying largely remotely.

All of the factors are headwinds for the realtor community and make trust a huge factor in the process.  I’m also sure there are a lot of “tire kickers” on vacation, just curious about real estate but not in anyway serious, but then again how is the agent to truly know.

When I add it all up the commission rates are reasonable, the Internet has really only added complexity as more information isn’t necessarily better information.   It’s hard work looking and I assume selling.  Interestingly, the very lovely home we purchased was only on the market for a short time, providing once again that quality property marketed well, sells quickly, in any market.

Looking forward to becoming part of the STX community.  

The STX (and VI) real estate market is small and eclectic. There is no average home and comps are far and few between. The average time on the market is nearly a year during the best of times - so you cannot compare STX to larger, more active areas of the mainland US. 

Residential real estate can be shabby on STX - it's a factor of absentee owners, renters, seaside tropical weather and hurricanes, unavailability of materials for easy repairs and limited incomes to keep up housing.  

Price adjustments are arbitrary no matter where you are. Since there are so few sales in the VI it's hard to statistically determine a market standard for selling vs list prices. Comps may be influenced by a home selling on the other side of the island. So there could be logic to odd price adjustments (or not LOL). 

As you found - the best determinant as anywhere is location, location, location. Priced right, too. 

BTW the first time a set foot in my STX house was after I owned it. 

 

I agree with your key points, the house we purchased was only on the market for 1 week.  It was the classic case of walking in and saying “this is it”.  My wife and I are buying a retirement winter home and as such it was important it be largely turnkey.  Every buyer is different but as a remote buyer, a house in poor condition is realistically a showstopper.  Managing a refurbishment from a distance is too risky.  If we lived on island, and were a little younger, taking on a project might actually be fun.  I do believe in location, location, location but quality also sells.  Location plus quality is the best combination.