The broker friend of mine I call Lily recently related an encounter of hers that bears retelling.
She has an old acquaintance who wants to list his two adjoining apartments totaling something like 10 rooms in a building on Manhattan’s Upper West Side. Naturally, he called Lily to see whether she would be the right broker to market the pre-war condo.
A highly successful broker for the last 27 years who seems to know every apartment in the neighborhood, not just every building, she spent hours analyzing comparable listings and visiting other large apartments that came on the market. Then she arranged to get together with the seller.
They met, they talked, they considered selling the apartments separately or as a package, and they wrangled about price in the $3 million to $4 million range. Over several weeks, they met and talked some more.
Then came the dirtiest word that a seller can utter: Commission.
As most readers know, real estate agents and brokers who list a property almost always share half with the buyer’s broker and a substantial share of the remaining portion – often half – with their firm.
What Lily’s acquaintance of many years demanded was no more than a 4 percent commission when 5-6 percent is the going rate, a 33 percent reduction from the standard. (Sellers don’t tend to see from a broker’s point of view that a 1 point reduction of a 6 percent commission is a 16.6 percent cut in compensation.)
Understanding that too many brokers will not show customers a property with less than a 2.5 percent commission for the buyer representative, he said Lily should limit her fee to 1.5 percent.
As she should have, Lily said:
A preponderance of sellers go by the book. They research through friends, relatives, brokers in other locations and Web sites to find a “good” broker. Then they’ll call a few brokers, ask some questions, schedule an interview, ask more questions and obtain staging suggestions, market statistics, pricing recommendations and more vital information.
After a period of silence, no doubt because they are picking the brains of other brokers, only then will they ask the one question that really matters to them:
“What is your commission?”
If the amount of the commission is the criterion, sellers should ask that question first. And if the broker offering the lowest commission is the individual they choose, they’ll get what they pay for.
(Sometimes the highest estimate of the value of their property is an equally critical consideration. But a seller’s unfamiliarity with the practice of “buying a listing” will cost him or her too, since an overpriced property will not sell.)
Had Lily’s seller talked about the commission first, even asked her about it on the phone and honestly stated his requirement, he would have saved both of them a lot of time and her a lot of wasted work, not to say anxiety about getting the listing.
Although George Carlin articulated seven dirty words, brokers need only one. Sorry, I lied: They also need a choice few for the sellers who take advantage of their time, energy, experience and expertise.
I’ll leave those words to your imagination.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022