Real Estate Fee MythBusting

Real Estate Agent with RE/MAX Select NJ# 9483506

Recently I offered to show a property being "sold by owner."  I sent the seller a one-showing agreement providing for a 4% fee if successful.
My seller asked a typical question with an interesting twist:
“Thanks for the interest. Yes, the renovated unit is still available.  Question: my impression of RE/MAX is a 2.5% commission. Why is yours 4%?”

To address the typical part first, sellers believe "if I did list my property, and you brought the buyer, you'd get 2.5% or 3%, so why are you expecting more in this case?"
The reason, dear seller, is that for 30,60,90 days from contract to closing, I will have to assume the vast majority of duties of the listing agent and selling agent:
• Double the care it takes to be fair to all parties in a naturally adversarial situation.
• Double the risk of being sued for something or nothing
• Double the number of lawyers and paralegals with whom to interface
• Double the questions from the principals to the transaction
• Double the moving parts (inspection repairs to adjudicate and facilitate, appraisers to service with supportive comps, town officials to schedule/admit are just the tip of an iceberg.
• Half the collateral value of the business.  Marketing a house for sale produces great value to an agent’s bottom line  even before it sells.   Listed inventory is seen by hundreds of thousands of buyer’s online, with my contact information attached.  Neighbors see my marketing efforts and successes, and some remember when they choose to sell their houses.  Open houses introduce my to even more buyers.  Selling a FSBO is a relatively secret accomplishment.
• Double the eggs in one basket.  Although I enjoy a hugely exceptional high track record of bringing contracts all the way to the closing table, many of my colleagues are experiencing a plague of transactions falling through, usually after investing double the time and passion in the doomed deals as they have on the winners.  The why’s of that are fodder for another post. . .

As I enumerate, I am questioning why I discounted so much!  I earn 3% and up for representing just the seller, and about 40% of the sellers in our market offer 3% to repesent just the buyer, with their own agent handling a healthy share of the above tasks and risks.
I do it because in my listing agreements I do offer some discount for the rare events of single agent sales, and because I appreciate that it's a big adjustment for a seller who thought they would sell their property without paying a professional to connect the dots, to accommodate the idea of 0% popping up to 6 or 7%.  So I consider it a win-win.

Next visit I'll address the interesting twist: the idea that RE/MAX agents charge alike, and  discount.


Scott Gleason is a Westfield NJ resident and Realtor, expert in Luxury Home Marketing and local real estate investing.  To learn about all things Westfield NJ, visit For superior results and a smooth experience selling or buying property in and around Westfield NJ, call Scott at 908-698-2630. 



Comments (1)

Debbie Holmes
John L. Scott - Boise, ID
Gets the job done!

Gee isn't everything negotiable.....Did the buyer actually want the property?  I found a lot of FSBO do want an agent they just don't think they are ready so they throw a sign in the front yard.

Dec 16, 2011 05:56 AM