Commission Disclosure

I'm a big believer in the (essentially) free market system, including its application to real estate commissions.  I'm also a big believer in disclosure of unusually high and low commissions offered to me when I am representing buyers.  The free market doesn't require me to work for either lower or higher commissions than what my work is worth, it simply allows prospective clients to choose how much value vs. risk they want in their potential transactions and the services that lead to them.

Recently I was working with a buyer who was very interested in a property for which a selling commission was being offered that was nearly double the typical selling commission range for the market.  I immediately disclosed to the buyer that this unusually high commission was being offered, that I had some homework to do to find out why the seller and listing agent felt it was necessary to offer an unusually high selling commission, and that I don't accept commissions above the typical range for the market.  This made the buyer rightfully concerned about what might be wrong with the property, and rightfully trusting that I was an ally in finding out, rather than a salesperson looking to profit at the buyer's eventual expense.

It wasn't difficult to get to the bottom of the unusually high commission offer.  There was an issue that might have squeaked through an inspection and cost the buyer thousands of dollars in the not-to-distant future.  Armed with that knowledge, our eventual offer included a provision that the seller would hire a licensed contractor to remedy that issue prior to closing, and another provision that I would be paid a commission typical of the market we are in.  The deal closed with a very happy buyer who will remain very happy for a much longer time than if I had simply taken the unusually high commission and left the looming major expense to them.

There isn't anything inherently wrong with offering higher commissions.  But there is a great deal of value in turning them away when taking them would have the effect of shifting risk or cost to our client, especially with our knowledge but without theirs.