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Some Truth About Lower REALOR Commissions

By
Real Estate Agent with Cherry Creek properties FA100044492

Money is always the bottom line. So when someone searches for a Realtor, shouldn’t their Realtor’s commission be the most important factor? Not necessarily.

I recently had a client ask me to take 4% commission to list his home, instead of my typical 6%. I always offer the buyer's agent 3%, so that would leave me 1% of the sales price to sell his home. He explained that his last REALTOR gave him that offer on his previous house sale. I thought it was a great deal, so I looked his last house up on the MLS and noticed that it was on the market for over a year. Then I noticed that his agent only offered 1.5% to the seller’s agent. So, his REALTOR got 2.5% and the buyer’s agent only got 1.5%. The final sales price was also much lower than I would have expected. Why?

When Buyer's Agents take their clients out to look at homes, they usually preview the properties on the MLS first. This is where REALTORS can see what the offered commission is for the houses that they plan to preview. The potential client that wanted me to list his house for 4% probably lost a lot of buyers because REALTORS avoided his cheap listing, which would cause his house to be on the market for much longer. I'm sure this guy lost money buy trying to save money on a cheaper Realtor and his selling experience was exhausting.

If a buyer has signed a buyer’s agreement that states that their agent will get paid 3%, then that buyer has to come out of pocket to pay their Realtor because the Seller’s agent hasn’t offered enough to the buyer’s agent in the listing. This can easily be enough of a reason for a buyer to move on to the next listing.

So, what’s the point? The point is that “you pay for what you get”. Selling a house is an emotionally exhausting experience. To go through that experience for a full year is enough to drive anyone crazy. The amount of money that you might save on Realtor fees is very minimal compared to the stress and financial burden of trying to sell your house for a year, or longer. I’m not saying that every agent who lowers their commission would do this, but I’m sure plenty of them would.

So, if you hire an agent who offers to work for a lower commission, make sure that you find out how much they are offering the buyer’s agent. Also, find out how long their listings typically take to sell. If they are offering less than 3% to the buyers agent, chances are that you are going to miss some serious buyers because their agents are not showing the property.

The point is, don’t go cheap on your Realtor. Negotiating their commission is very fair, but just remember that you pay for what you get. If your REALTOR does their job to their fullest potential, you are likely to get much more for your house. This would easily cover their costs and your selling experience will be better. I advise people to pay their REALTORS what they ask, and if you need to sell quick, offer an extra bonus to the buyer’s agent to sweeten the deal. You’re likely to get much more activity on your listing.

What are your thoughts?

Posted by

Andrew Fortune

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Comments (1)

Pat Champion
John Roberts Realty - Eustis, FL
Call the "CHAMPION" for all your real estate needs

This is so true you do get the service you pay for most customer's don't realize what all a Realtor does for them.

Jul 21, 2011 09:38 AM