Who Wants to Pay Big Commissions? Part One

So, you’re selling your house and looking for a real estate agent that is offering a discounted commission rate. You’ve decided there’s no way you’ll pay a full 7 percent commission, or even the 6 percent rate that most agents pitch as part of their fees.
You would, however, consider 5 percent or less. Let’s take a look at this commission strategy and see if it really does save money and sell your home at the same time.

First, let’s gets agree on two important points. You want to sell your home for the highest price possible and the real estate agent wants to sell your home for the highest price possible! Secondly, the commission percentage is the incentive for the agent to sell your home. Great. Now that we all agree on these two points let’s move on to what happens when you find the low price leader of real estate agents.

By negotiating down the commission price on your listing you are actually taking away the agent’s incentive. I thought the idea was to entice your agent to work harder, but this is a clear message to the real estate agent to work to harder on someone else’s listing, particularly someone paying them more than you are.
The listing agent deserves more money than the agent bringing the buyer. For example, let’s say you negotiated down the commission on the sale of your home to 5 percent. We’ll divide it evenly with the listing agent getting 2.5 percent and the buying agent (agent bringing the buyer) getting 2.5 percent. Now you’ve placed all the risk with the listing agent. You see, the marketing plan to sell your home in a city flooded with listings is going to cost money. The money and time required to execute a successful marketing campaign will come out of the listing agent’s pocket. That agent also has a slew of other duties to perform in order to make sure your house sells (all of which I’ll list over the next couple of weeks on this blog). The buying agent simply pulls up your home on the multiple listing service (MLS). If it fits the client, he or she will bring the client for a showing and then write a contract. Very little expense, very little risk. In fact, it’s good to be a buying agent instead of a listing agent. In the final analysis, much more risks, expenses and time are involved with being the listing agent. So why would the buying agent deserve more money in this transaction? You may be thinking why not give a higher percentage to the listing agent and a lower percentage to the buying agent. Remember, the idea is to entice an agent to bring a buyer. Going lower than 2.5 percent is not going to entice anyone.
Cutting the total commission on your home screams to an agent, “Please do as little work as possible!” An agent who has to cut their commission to obtain your listing is probably going in with the mind set that they’ll do as little as possible once they get the listing. In fact, I can almost guarantee their plan of attack to sell your home consists of putting a sign in the front yard and listing it in the MLS. And the truth is if that’s all you’re getting for 5 percent, you’ve paid too much. There are plenty of “Help You Sell Your Home” type companies that do the same services for far less than 5 percent.

Come back next week and I’ll tell you the difference between hiring a listing company or a marketing company to sell your home. One sells your home fast; the other might never sell it.

I would consider it a pleasure to represent you in your next real estate transaction. If you would like to speak with me regarding the sale or purchase of a home, please contact me at 303-522-1161 or dpolimino@fullerproperties.com. Take a moment and visit my listings by clicking on the button to the right labeled Dan Polimino’s listings.

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