This week, I received an email from an invidividual who simply asked, "Nic, I'm thinking of selling my home, what is your lowest you can go in commission?"  The following was my reply to that email: 

Let's say your home is worth $750,000 (for discussion sake).  The difference for 1% at that price would be $7,500.  That may sound like a good amount, but when you have the wrong Realtor listing your home and they give you 4.5% or 4% commission, it seems like you saved money, but in reality, when they don't market your home online, having the connections, do the Open Houses, possibly photography and home staging, your home sits on the market, loses equity and now $7,500 seems like nothing when you're down $25,000.    Consider what a state-of-the-art, comprehensive marketing plan looks like and how much can come out of a Realtor's pocket: 

• 750 local and active Realtors receiving an "email blast" Just Listed of your property
• 400 prospective buyers receiving email blast
• Yahoo!'s Online Seller Advantage (OSA) Featured Listing
• Realtor.com Featured Listing
• Full-Bleed, High Gloss, UV-coated Property Flyers
• Exposure on Manual Load websites most Realtors don't know about
• Caravan of Realtors 
• Proactive Open Houses, with Open Houses Ads to Public
• In-House Networking w/ Prudential CA Realty
• Global Presence with Billions of Dollars in World-Wide Advertising
• Print Ad in OC Register Prudential Homes Section
• Home Staging
• Professional Photography (when applicable)
• Print Advertising with Homes & Land Magazine (when applicable)

  In this market you already have a monster-sized challenge of selling your home, the last thing you need is another strike against you e.g. listing your home with 2.5% on MLS as incentive to buyer's agent.  With literally hundreds of homes that are in competition with your property, you really need to offer out 3% because most of your competitors are. Offering out 3% to buyer's agent attracts more agents to your home, which may sell your home faster and help you to lose less equity.  We have to sell your home twice, once to the agents, and once to their buyers.   In the "gold rush" of 2002-2005 you could offer out 2% to buyer's agents and the home would still sell.  In this market, there is a massive inventory at every price level.  Sellers are realizing that they need to be one step ahead of the competition.   There are some things I skrimp on -- laundry detergent, store-bought cofee, etc.  Your home is a much too important investment to go cheap on your Realtor.  I've seen it happen too many times -- a seller goes with agent Y because agent Y was willing to "drop their shorts" and take 4.5%...then agent Y puts a sign in the ground and throws it up on the MLS, having no clue that 85% of home buyers are looking online and are completely unaware of all the websites available to us that the public is browsing.  Agent Y has no email blasts, has no connection with professional photography (if applicable), home stagers, and the like.  The home sits on the market, gathering dust and losing equity....the seller winces, drops the price again and finally an opportunistic buyer comes in for the kill.