What happens if home sellers offer too low a commission?

A new listing comes on the MLS that looks perfect for your homebuyer. As you browse down the details of the listing you notice the commission...only 1%.  It's way below which are used to and after all your hard work you hate to see such little compensation. Do you show the home or not?

Ethics and Commissions

REALTORS are constantly hammered to reduce commissions. It adds insult to injury when you see a listing that already has a commission less than half of what you're used to.  It's very difficult to be motivated show a property with a buyer you been working with for a year when you know you'll be paid far less than you normally would.  YOU MUST STILL SHOW THAT PROPERTY!

Like it or not the commission that we are paid is not the driving factor in what properties we show clients. However, not every agent follows that line of thinking. If I see a property that will meet the needs of my clients I will show that property regardless of the commission. What about the agents that don't?

Small Commissions = Fewer Showings?

The few listings that I have seen with way below average commissions typically fall into two categories; the seller can't afford to pay commission (close to a short sale, etc) or they see little value in real estate agents and their work.

These listings are frequently through a small agency that was willing to take the listing no matter what. The sellers are not doing themselves any favors by offering such little compensation to the people who bring them buyers.  While I have no hard numbers on the actual showings I do notice that many of these listings sit in the MLS much longer than normal. To me that's anecdotal evidence of fewer showings. I'm sure buyers are finding these properties because they're in the MLS but if they're not getting sold it seems there's a relationship to the compensation offered.

What's Fair Compensation?

Without going into specifics, sellers need to keep in mind that the compensation offered to sell their home should be reasonable in relation to their local market. While all compensation is negotiable, sellers should keep in mind that agents representing either buyers or sellers have a certain expectation of compensation. Compensation levels are where they are in most markets because it is what is necessary for the agents to effectively do their work. Properly compensating an agent to do their job well will ultimately result in a better sale and better end result for both seller and buyer.