| | AUGUST 20199it is realistic to say their role has changed and should therefore be reflected in the commissions they receive. So people pay six percent?1) Although collusion about real estate commissions is illegal among agents, we have heard many real estate brokerage firms not allowing their brokers to work for less than five percent. 80 percent of the transactions involve two intermediaries: a seller's agent and a buyer's agent, and each of those two share the commission with their firm (50/50 or 60/40). After taxes, there is not a lot left. A buyer can legally list his house directly (it is called FSBO ­ For Sale By Owner) and attract a buyer coming with no broker and can transact directly, saving the six percent.2) In France, if you give an exclusive mandate to a broker to sell a property, the commission charged is lower (1-3 percent) because the likelihood of the agent earning the commission is higher (since there is no other agent). Also, you are not allowed to transact with a buyer represented by another agent. In essence, there is no commission to be `split'. In the U.S. both the buyer and seller are represented by agents in most transactions, brokers must collaborate to close transactions at the same time as they compete for listings. Buyers' agents have an incentive to only show their client's homes whose sellers offer them a standard three percent commission.3) It's common in Europe for percentage commission rates to be based on the sale price. If the property sells for a higher amount, then the commission rate steps-up. Conversely, if the property sells for a price on the lower end, then the real estate commission rate would go down. We think it is fair, but propose that to a broker in NYC! As a consequence, there is no real incentive for the broker to sell your price at the highest price possible; they just want to close a deal. A broker will prefer an apartment which sells quickly at $2 million than working for months (marketing, staging) and getting it done at $2.15 million.4) If you try to negotiate, brokers will probably try to make you feel guilty and tell you that they will work less for a three percent than for a six percent and they can only get you top prices for your property if you pay six percent. The good news is that there are 26,000 other brokers you can try.My bold prediction for 2019-2020 is that real estate commis-sion will get reduced by half, and this is the reason why start-ups like NestApple are thriving. New York's Attorney General Eric Schneiderman issued an open let-ter to encourage brokers to offer NYC broker commission rebates to make the market more fluid. "Such rebating is also pro-compet-itive and good for consumers...I encourage all real estate brokers and salespersons in New York to consider enhancing the choices available to real estate buyers by offering lower commissions (by means of rebates) to some or all of your clients," said Eric. RESIDENTIAL REAL ESTATE PRACTICES SHOULD ADAPT AND EVOLVE NOW, AS BUYERS AND SELLERS HAVE UNLIMITED ACCESS TO PROPERTY LISTINGS AND OTHER INFORMATION THAT WAS ONCE HARD TO GET
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