North Carolina Land Sales Real Estate Agent Eric Andrews discusses land agent commissions and why clients are happy with the way he structures commissions. In North Carolina, land sales often have a 10% commission. However, this commission is negotiable and is often less on larger tracts of acreage. Eric breaks down listing costs and the time involved in selling land.
Speaker 1: Why do land real estate agents like yourself, charge more for land transactions than a house transactions?
Speaker 2: So, first of all, commissions are always negotiable. You hear people say, oh, well residential is this and land is this or whatever, but the truth of the matter is that they’re all negotiable. Companies policies can have a company or a firm can have their own policy or an agent can have their own policy. But the truth of the matter is these are not set and they’re fully, fully negotiable. People can charge whatever they want to charge when it comes, to land. If you come to Maine, you have a $50,000 piece of land and you’ve heard all your life, well, commissions are 5 or 6%. And I say, yeah, I’m going to charge you 10%. That sounds really, really high. Because people are just fixed that number 10% or whatever, but on a $50,000 piece of land, the listing side, if we were to do 6%, the listing side could be 3%. And that’s 1500 bucks for me to sell that property. My average transaction costs, because I have some overhead and I do some different things advertising wise is about $1350 or $1,400. I can’t sell your land for $1,500 if it costs me $1350, it’s not worth it to me.
Some agents out there will be like, oh my God, $1,500. That’s great. And it is good and everything, but I have more overhead than some other people. If I do it at 10%, I’m keeping 6% and I’m giving 4% to the other agent. So, the other agent’s making $2,000, which is fine. I’m making $3,000, but I have those extra costs and like drone photography, land websites, SEO, I have all these different expenses and everything. So at $3000, I can make it work. And then I also do what not a whole lot of agents do, but I do what is known as a variable rate. So, if the buyer actually comes to me, I lower the commission down to 8%. And so that’s an advantage. So, people are like, well, how do you get away with 10% on a $2 million listing?
I don’t do 10%, very often on a $2 million listing. I have done it before and it has worked out well for me. One of the things that people need to realize is with these hugely expensive pieces of land, there’s usually some kind of rezoning involved. And I have been with some major subdivisions. I’ve been involved in the process for two to four years. So, at the end of the day on a $2 million property, if I’m doing it at 6, 7, or 8%, and I’m getting 3 or 3.5% off of that, or maybe even 4% off of that, there are a lot of man hours that, I mean, I’m in a lot of meetings, I’m going to a lot of different planning board. There’s some meetings that I have to do beforehand. There’s soil scientists, surveyors. So, there’s a lot that’s involved and it’s a constant thing, that thing can be under contract. I’ve had them under contract for as long as four years. So, there’s a lot of man hours in there. So, one of the things that one of my buddies in Charlotte always laughs at is I say, please don’t be as concerned with what I make. Be more concerned about what you’re taking home. And if I can get you that higher reward, the most money, hopefully… I’ve never, I’ve had people complain about my commissions beforehand. I haven’t had people complain about my commissions after hand, which makes me feel good.
