Sign Our Guestbook | Contact Ann | Home About Commissions! The subject of money makes most people uncomfortable. Putting a value on our services isn’t always easy, particularly for women. It seems each industry has its own history and traditions for how they get paid for services rendered. Sometimes it’s actual expenses plus administrative overhead plus a profit (X percent). Sometimes it’s a certain percentage of the total cost of a project. Sometimes it’s a flat fee. The real estate industry is no exception. However, competition and technology are changing the way we do business and charge for our services. What's Typical and Customary? In the traditional real estate transaction, the Buyer does not pay the agent. The Seller pays a commission (X percent of the selling price) to his or her Broker, who then splits that commission with the Broker whose agent brought the Buyer. Each Broker then splits his or her share with the agents in the transaction according to individual formulas. (Some Brokerages work differently; some are owned by agents as partners, others allow the agent to keep all of his or her commission but pay a fee to the Brokerage owner. The consumer usually isn’t affected by the arrangement.) Typically, it works like this: A 6.00% to 7.00% commission rate is usual or customary in the Twin Cities real estate marketplace, although some Brokers may charge more and some may charge less and some advertise so. Typically, 55% of the listing commission goes to the listing Broker and 45% goes to the Buyer’s Broker. Applying this split to a 7.00% commission rate, the listing Broker would earn 3.85 percent of the selling price and would payout 3.15 percent of the selling price to the Buyer’s Broker. On a 6.00% commission rate, the listing Broker would earn 3.30 percent of the selling price and would payout 2.70 percent of the selling price to the Buyer’s Broker. Our Commission Rates & Payout Policy Our commission rates or fees are negotiable. Having said that, our variable commission rates and payout policies are summarized below, exemplified in a chart, and then further detailed below. It is our company’s policy and practice to: Reward client loyalty by offering special discounts to repeat customers and family referrals (the sibling or parent of a past customer). Offer clients special discounts for multiple transactions (if you use us to sell your current home and purchase a new home). Offer clients discounts for dual agent transactions (this role limits the level of representation we can provide our clients and prohibits us from acting exclusively for either party; we believe you shouldn’t pay for what you don’t get). Offer Sellers variable rates for different levels of service and representation. When a Buyer purchases a fixer-upper using special financing (purchase-rehab loans) to correct deficiencies and make improvements, our commission is charged on the purchase price of the property plus the cost of financed improvements. Charge a retainer fee of $250 when a Buyer representation contract is signed. The retainer fee will be kept by us even if the Buyer does not purchase a property. The retainer fee will apply toward satisfaction of the Buyer(s)’ obligation to pay us a commission if not paid in full by the Seller. Charge a cancellation fee of $250 when a Listing Contract is cancelled prior to it’s expiration date; this fee is waived if the property is relisted with Mavrik Realty within 48 hours of cancellation. The Listing Agent may also seek reimbursement for out-of-pocket marketing expenses. Charge a Broker Admin Fee of $175 at closing to both Buyers and Sellers Our Commission Rates & Payout Policy Effective 01/01/08 Standard Full Service Listing Rate* Dual Agency Transaction Discount Rate** FSBO Limited Service Listing Rate* "Loyalty" Discount Rate** "Multiple Transactions" Discount Rate** Percent of Selling Price 6.00% 5.40% 4.50% 5.70% 5.70% $100,000 example $6,000 $5,400 $4,500 $5,700 $5,700 On in-house sale, we get paid NA 5.40% 4.50% NA NA On Co-op sale, we get paid 3.00% NA 1.50% 2.85% 2.85% On Co-op sale, we pay out to Buyer's Broker 3.00% NA 3.00% 2.85% 2.85%       * Note: The actual commission rate for the sale of real property shall be determined between MAVRIK REALTY and its client(s). Our standard full service commission rate typically ranges between 6 and 7 percent, depending on the property, its marketability, the marketplace and other relevant factors.       ** Note: Client(s) are eligible for only one discount per transaction. Discounts are applied at closing. Seller's Broker Our standard “full service” commission rate for exclusive Seller representation usually ranges between six percent (6.00%) and seven percent (7.00%) of the selling price, depending on the property, its marketability, the marketplace and other relevant factors. In co-op sales, we usually split the listing commission 50/50 with the Buyer’s Broker (for example, on a 6.00% listing, we keep 3.00% and pay out 3.00% to the Buyer’s Broker). Our "full service" commission rate includes: Assessing the condition of your home Recommending repairs if needed and staging suggestions Determining the market value of your home Marketing your home to potential Buyers, including listing on the Regional Multiple Listing Service (RMLS) and company website for maximum exposure to potential Buyers, and placement of the MAVRIK REALTY “For Sale” sign with Brochure Box for flyers and a lock box for keys on your property Scheduling all showings and obtaining feedback from potential Buyer’s and Buyer’s agents Qualifying potential Buyers and providing financing referrals if needed Presenting all offers and counter offers, and negotiating a win-win deal Insuring a trouble-free closing All fiduciary duties, including advocacy Normally, our listing fee does not include the cost of print advertising (ads in the local papers). This exclusion is how we keep our commission rates competitive and your costs of sale lower.  We also exclude print advertising for three additional reasons: It’s not necessary for most properties in our marketplace Print advertising can get very expensive, and It’s not the most effective way to market your property for sale. Top agents all agree that the three top selling techniques for bringing in ready and willing Buyers to a specific home are yard signs, multiple listing service coverage and referrals. The fourth most effective technique now is getting the property featured on the Internet. All active listings on our local Multiple Listing Service (MLS) go out to the following local and national Web sites: www.Realtor.com; and the company websites of the real estate companies (Brokers) participating in the Broker Reciprocity Program, including our company web site. In addition, we pay extra to enhance our company’s listings on www.Realtor.com and MavrikRealty.com. With the enhanced listing features, we can display up to six photos of your property for everyone to see, a link to a virtual tour with additional photos, and offer a detailed narrative description of your property’s special features, amenities and recent updates. Most agents also believe that open houses, contrary to the expectations of most home Sellers, are not an effective selling technique. However, open houses limited to real estate agents exclusively, or to other invited guests, can be effective in selling a house. Normally, the best time to hold a restricted open house is when the property has been first listed for sale. If you want us to hold open houses, knowing the odds are long that an open house will produce a Buyer, then you’ll pay extra for the advertising. If you want us to place a classified ad in the local newspaper or specialty publications, then you’ll pay extra for the advertising. We’ll carefully evaluate the benefits of advertising on a case-by-case basis. If we decide it’s warranted, we’ll execute an addendum to the listing contract establishing a reasonable advertising budget with a not to exceed amount (usually not more than $300). You’ll agree to reimburse us for actual out-of-pocket advertising expenses at the time of closing or upon expiration or cancellation of the listing contract. Seller Facilitator - Our FSBO Option As a Seller Facilitator, we will facilitate the transaction, but will not act or advocate on your behalf. You will represent yourself. You will not receive advice or counsel from us. We will not owe you any of the fiduciary duties (see Fiduciary Duties), unless those duties are included in the written Seller Facilitator Services Agreement. We do not engage in the Facilitator relationship very often. We strongly encourage exclusive representation for our clients – both Buyers and Sellers. However, if a Seller wants to try selling their home on their own to save money, but wants to market the property through the Multiple Listing Service, we will act in a Seller Facilitator capacity to facilitate the transaction. Four percent (4.50%) of the selling price of the property is our standard “limited service” commission rate for a Seller Facilitator Service Agreement. In co-op sales, we will pay out 3.00% to the Buyer’s Broker. We will keep 1.50%. Our "limited service" commission rate includes: Assessing the condition of your home Recommending repairs if needed and staging suggestions Determining the market value of your home Marketing your home to potential buyers, including listing on the Regional Multiple Listing Service (RMLS) and company website for maximum exposure to potential Buyers, and placement of the MAVRIK REALTY "For Sale" sign Brochure Box for flyers and a lock box for keys on your property Under the FSBO Option, the Seller will be responsible for: Arranging all appointments and showings Developing all marketing materials, except for the MLS listing Paying for all marketing and advertising, except as noted above Hosting all open houses Qualifying potential Buyers Negotiating all offers and counter offers with the Buyer or Buyer’s agent If requested, we will gladly provide these additional services: Prepare the purchase agreement. Present all offers and counter offers in a timely manner. We will not provide advice or counsel, or advocacy since we are not representing you and owe you no fiduciary duties other than specified in the agreement. Provide you with information about other service providers related to the real estate transaction (such as home inspectors, warranty programs, lenders, real estate closers). Assist the parties in completing the transaction Dual Agency - Broker Representing both Seller and Buyer Dual agency is ordinarily NOT an option at our company (see "What You Should Know About Agency!"). Should this occasion arise with both parties consent, we don’t think it’s fair for us to charge the “full service” commission for less than full service. Remember, this role limits the level of representation we can provide our clients and prohibits us from acting exclusively for either party. For this very reason, we offer a dual agency discount rate of ten percent (10%) off the agreed upon full service listing rate. For instance, if the agreed upon listing commission is six percent (6.00%), then the dual agent discount rate would become five and four-tenths percent (5.40%). Our dual agent discount rate only becomes applicable if both parties consent in writing to dual agency. Buyer's Broker It is our company policy to charge a retainer fee of $250 when a Buyer representation contract is signed. Not all Brokers or salespersons charge a retainer fee. We do so for two basic reasons. One, we do not get paid for our services until you purchase a property and close the purchase. The retainer fee helps to defray some of our upfront expenses. Second, it helps us to weed out Buyers who are ready to buy or ready to commit to working exclusively with us. This allows us to better utilize our time and focus of energy on helping the serious Buyers. We will keep this fee even if you do not Purchase property, for whatever reason. If you do Purchase a property, the retainer paid will apply toward satisfaction of your obligation to compensate us under the terms of the Buyer representation contract (for example, if our commission is not paid in full by the Seller or Seller’s Broker, the retainer fee will be applied toward the balance owed by the you – the Buyer). Three percent (3.00%) of the sale price of the property is our usual and customary compensation for exclusive Buyer representation. More often than not, the Seller pays the Buyer’s Broker commission. Any commission or fee paid by the Seller or Seller’s Broker will reduce your obligation to pay our commission. Properties listed for sale on the MLS always state the Buyer’s Broker commission (BC), including For Sale By Owner (FSBO) properties listed on the MLS. FSBOs not listed on the MLS will require negotiation with the Seller to pay the Buyer’s Broker commission. More often than not, FSBOs are prepared to pay the Buyer’s Broker commission of 3.00% or more. Typically, the Buyer’s Broker compensation (the pay-out to us) on homes for sale in our marketplace ranges from 2.70% to 3.15%, but occasionally it may be lower or higher than these rates. If the Seller or Seller’s Broker pays us more than the amount of compensation agreed to in the Buyer representation contract,  it is our company policy to refund the excess amount to you upon successful closing and receipt of payment in full. For instance, if you agreed to pay us 3.00% of the sale price and if the Seller or Seller’s Broker paid us 3.00% of the sale price, we will refund your retainer fee of $250. If the Seller or Seller’s Broker paid us 3.15% of the sale price, we will refund you retainer fee of $250 plus 0.15% of the sale price. We are not aware any other real estate company in our area that behave similarly. On the other hand, if the amount of compensation received from the Seller or Seller’s Broker is less than the amount of compensation agreed to in the Buyer representation contract, you -- the Buyer -- will be obligated to pay the difference, unless we agreed to a variable rate in the Buyer representation contract (we do offer a sliding fee for first-time homebuyers) or agree in writing prior to signing an offer to purchase a property to waive all or part of the difference. Normally, we will not waive the difference for experienced Buyers, but do offer a sliding fee for first-time homebuyers (typically, it ranges from 2.70% of the sale price plus the retainer fee to 3.00% of the sale price). If you are happy and satisfied with our services and can afford to pay the difference, we trust and expect that you will. If money is really tight (i.e., limited cash to close), we will not jeopardize your purchase by insisting that you to pay the difference. Each exception will require Broker approval and will be decided on a case-by-case basis with fairness as the over-riding principle. One notable exception to our standard commission rate for exclusive Buyer representation is regarding the purchase of “fixer-upper” property using “purchase-rehab” financing. If the residential property you want to purchase requires extensive repairs or functional updating, there are special financing programs available to help you to buy it and fix it up (for example, HUD’s 203 (K) loan, US Bank’s American Dream loan, and others). The cost of the rehabilitation will be based on licensed contractor’s itemized bids for all work to be done after closing. Some programs allow, “sweat equity,” however, the cost estimates must include labor and materials sufficient to complete the work by a contractor. Your loan amount will be based on the as-completed (or “after rehab”) appraised value of the property (the purchase price plus rehab amount) and the program’s LTV ratio. The funds for rehabilitation will be placed in an escrow account at the time of loan closing and the work will be completed after closing. Our standard commission rate for “purchase-rehab” properties is three percent (3.00%) of the purchase price of the property AND the total cost of repairs and improvements to the property. For example, if the purchase price of the property is $80,000 and the total cost of repairs and improvements is $20,000; our customary 3.00% commission on $100,000 would be $3,000. If the Seller or Seller’s Broker had agreed to pay us 3.00% of the sale price ($80,000 @ 3.00% equals $2,400), then you -- the Buyer -- would only be responsible for paying our commission on the rehab portion ($20,000 @ 3.00% equals $600). The reason we charge more when working with “purchase-rehab” transactions is quite simple. These types of purchases are much more labor intensive and our scope of services are much more extensive. We will help you select a lender and a financing program suitable to your needs and the property’s needs. We will help you decide what repairs are needed to ensure the property is safe and livable (we always recommend a Buyer’s home inspection by a professional home inspector; however, we do have a lot of knowledge and experience in evaluating property condition and estimating the cost of repairs). We will help you obtain and evaluate bids from licensed, bonded contractors. You will select and hire the contractor(s) of your choice. And we will oversee the work and coordinate with the lender and Title Company for the release of funds from the escrow account upon satisfactory completion of the work to be done. There are a lot of wonderful older homes for sale that are “diamonds in the rough.” They need more than a little TLC or cosmetic treatments. They need repairs or remodeling to remedy deferred maintenance and/or functional obsolesce. But if you like older homes and if the home is priced right “as-is,” it may be worth the extra effort and hassle. Really!

Ann Leviton, ABR CRS ABR CRS GRI - Broker/Owner, her personal bio and client testimonials can be found at www.realestatefairy.com.

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