Flat fee MLS sellers in Florida do not pay listing commissions. This opens the door for flat rate listed sellers to offer more commission to agents bringing buyers. This strategy is working well for our flat fee MLS clients across Florida in such counties as Hillsborough (Tampa), Sarasota, Manatee County (Bradenton) and Pinellas, Miami-Dade, Broward, Orange (Orlando) and Pasco.
So how much should you offer buyers' agents? I think 4% works well and 5% possibly gets a bit more attention. These higher than normal buyer's agent commissions simply garner more Realtor® showing assuming the seller is priced right. I recently wrote a blog about "How to price a home yourself in today's crazy Florida markets of Orlando, Miami, Tampa and Jacksonville which applies just as well to Bradenton, St. Pete, Clearwater, Brandon and Oldsmar.
I have been asked whether offering a buyer's agent commission higher than 3% is over-the-top and not really ethical to entice a Realtor® with such a larger incentive to sell...possibly creating a situation where the Realtor® is working more for the seller than the buyer. After seeing Street Smart ADDvantage® in action over the past 2.5 years, we do see better sales from Street Smart ADDvantage® (4% or >) over our (3% or < ) MLS ADDvantage® plan but we see no evidence that buyers' agents look at the commission and then push their buyers towards Street Smart Listings. The reason the sales stats are better for Street Smart ADDvantage® listed properties is likely due to the promotion from the Street Smart ADDvantage® eblast in combination with the natural draw of a higher buyer's agent commission that in turn creates more Realtor® showings. Buyers are just as savvy as Realtors® and they do what they want when they want. So ultimately, even if an agent really wanted to make something happen to cash in on a big commission, they can't force a buyer to purchase a property that they don't want. However, if a buyer has a tight schedule and is depending on the agent to pick the best options to show, the agent still has influence in that regard. It certainly seems logical that if an agent had a choice between two similar properties-one offering 2.5% and one offering 5% (double the amount) commission-that the agent will show the property offering 5%. They are human, after all.
From a seller's standpoint, the extra commission offer will cost more but when compared with a drop in price, it's generally cheaper to offer more commission than to drop price. For example, take a $300,000 home...to raise the commission by 1% it costs the seller $3,000. To raise it by 2%, costs an additional $6,000. However, a typical price drop is between $10,000 and $20,000.
Another interesting question about offering 4% or greater buyer's agent commission is whether or not a Florida flat fee for MLS seller can negotiate a commission lower than what's advertised in the MLS. The legal hotline for the Florida Association of Realtors seems to believe that commissions are negotiable (so long as it isn't a full price offer). We all know price is up for discussion but commission? I have seen at least 10 cases in the past 2 years where sellers have successfully negotiated a lower commission than what's advertised in the MLS. Once you read my blog on "how to price a home yourself...," you'll see that I promote the concept that it's far better to receive an offer and not negotiate price than it is to leave $30,000 of negotiating room and never have an opportunity to negotiate because no one makes an offer. So how would you attempt to negotiate a lower buyer's agent commission? Assuming you are presented with an offer that is $20,000 under your listed "mean and lean" price, the only room a seller has to move is a possible drop price by a few thousand and throw it back to the Realtor® to close the remaining gap. On a $300,000 home, one point of commission is $3,000 and the seller may have $5,000 left to negotiate and from there it looks like the Realtor® has some work to do. They must raise their buyers' offer by $12,000 and drop one point of commission if they wish to participate in closing this deal.
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