Wednesday, October 3, 2007

Denver real estate commissions negotiable?

The other day, I read an interesting article from the Denver Post written by Christian Toto.

The article describes how average real estate commissions are dropping due to market conditions, and describes a few different commission structures being offered. In a nutshell, if you want to protect yourself as a consumer, you need to know that ALL commissions are negotiable. There is no standard rate or fee, and to say anything different would be a violation of Federal law. That's not to say that all Realtors negotiate their fees, but it can't hurt to ask.

As with any industry there always have been (and always will be) discount brokers, full-service brokers, and every variation in-between. If you are going to rate-shop, here are a few tips:

Ask your broker how they represent you (or if they actually represent you). The most common mistake buyers make is to call the listing agent, assuming they'll "get a break" on the commission. First off, you won't get a break unless you ask for it. Even if you do get a commission break or rebate, make sure to find out how that broker will represent you. Depending on your locality, they might not be legally allowed to represent you at all! More important than how much of a commission rebate you might get, be sure to hash out the details of how you are represented. Colorado real estate agents are required to present a "Disclosure of Agency Relationship" before any discussions about property even happen. Make sure you have that discussion before you start discussing anything about a home you're looking at.

Ask if you can get a discount if you find the house yourself. Some brokers might offer a rebate if you do the legwork yourself. Seattle Washington real estate company - based their entire business model on this concept. It can't hurt to ask your local agent if they'd be willing to do this for you, but again, have that discussion up front to prevent any misunderstandings.

Don't shop by price alone. As with anything else, lowest price isn't always the best deal. In fact, it rarely is. If you are going to shop for a discount Realtor, be sure to interview them as if you were going to be their employer -- since you essentially will be. Ask for references from past clients, and ask for lots of them! If they're a discount real estate agent, they need to be doing more volume, so they should have lots and lots of happy customers. If they don't -- caveat emptor.

Don't disregard the full service broker. Just because you might be getting a few hundred bucks back from the discount broker, that doesn't mean you're getting a "good deal". Full service brokers that don't discount their commissions, usually do so for a reason. That reason is usually because they are excellent negotiators, and can often far-outweigh any rebate you might have received with price negotiations on your home, or terms of purchase. Again, ask for references. Any good agent should have dozens...

This is only my second post, and I'm still "wingin it" as far as where to go with this blog. Please feel free to chime in with comments on what you would like to hear about.

No comments: