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Eduard Shtog…, Real Estate Pro in Lincoln City, OR

Will a higher than average buyers agent commision, say 3.5% help a home sell faster?

Asked by Eduard Shtogrin, Lincoln City, OR Tue May 13, 2008

I am discussing this with my seller right now and I was wondering what everyone's thoughts are?

-Eduard

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Answers

22
I know it would get my attention. You want agents to show your property, a little extra cash can't hurt.
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2 votes Thank Flag Link Tue May 20, 2008
It's actually a good strategy. If a home is $250,000, it only costs the seller an additional $2500 to get more attention. I have raised buyer agent commission, sent out eflyers announcing the change, and had a swarm of showings. As an agent, we have to do everything in our power to get a home hte attention it needs...if it wokrs, then I see no downside. It certainly has worked for me in my market.
2 votes Thank Flag Link Mon May 19, 2008
I think that although agents should ethically think about their comission LAST when finding a property for their clients, it certainly can't hurt.
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Where it can hurt, is that the client's home may eventually sell, having absolutely nothing to do with the increased buyer's agent commission... and the seller had to pay extra commission unnecessarily. There's the "hurt".
2 votes Thank Flag Link Mon May 19, 2008
Alan May, Real Estate Pro in Evanston, IL
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I have listed my own home & will give an extra .5% to the buyer's agent because i recognize all the work involved on that side of the transaction. The listing agent incurs phenomenal upfront costs but the buyer's agent has to research, hustle & follow-through with personal needs & perceptions.

I have had closings within a month and also within a year. It's a chance you take when you represent people, not things! My broker does not allow us to "discount" our professional fees nor our professional services. Our only leeway may come on our own properties or on a transaction brokerage relationship where i procure the buyer for my seller. Then, of course, we try to accomodate the flow of the negotiation. I take pride in my work & make sure that all my clients are given concierge-level service, no matter the listing base or the range in which we search.
2 votes Thank Flag Link Thu May 15, 2008
I have to respectfully disagree.

I don't show homes based on the co-op commission. I show homes that fit my clients needs. I won't show it more, nor recommend it more simply because it has a higher co-op.

I've never had a client say "I'd rather buy house B, because you'll get a bigger commission". Clients see what they want, and buy what they want, because they like the house and it suits them.

the agent is not the one making the decision of which home to buy, and is often not even making the decision of which house to see. We send listing to our clients and they determine which ones to see.

Save the seller's money, and use it on marketing that will work... or reduce the price by that .5%, maybe that would bring more viewers and potentially more buyers to the table.
2 votes Thank Flag Link Wed May 14, 2008
Alan May, Real Estate Pro in Evanston, IL
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Eduard,
Simple answer is yes. If all things are equal and one pays more the natural inclination will be to sell your first.
I personally have have had many discussions on the ethical value of this because it might not be in the best interests of the buyer to have an agent motivated by self interest. Remember that it is the buyers money that is brough to the table and is used to pay the fees by the seller.
Is the house priced correctly so that the seller is giving up more or is it being positioned that the extra is tacked on?
I can tell for a fact that if the CSO is lower than usual, many agents don't show the property. Therefore if it is higher than usual more agents will show the property. And the more showings the better the chance it will be sold.
2 votes Thank Flag Link Wed May 14, 2008
Jed Lane, Real Estate Pro in San Francisco, CA
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I would think so. You would definitely have to market it on your MLS. A BTSA is more common in my area.
2 votes Thank Flag Link Wed May 14, 2008
I would use the 1/2% as a credit toward closng costs.

I'm pretty sure that a 2.5% commission will decrease traffic. Mose of the time the buyer finds the homes, so the commission is not that big a factor.

In Hawaii, we get a lot of people flying in, so we often compile a list, and can be more selective in the homes we show. Would a 3.5% commission make an agent take a closer look? Probably.
However, that higher commission often means a higher price. If you can have the same price as the house across the street, and a higher commission and a buyer credit, you are really on a roll.
I would even take 2.5% for myself, ask the owner for 1/2% as a credit and 1/2% as a bonus to the agent in the form of $000.

So, for a home for $400,000 instead of buyers agent - $12,000 (3% total + your three), no credits, offer $12,000 to buyer's agent, $2000 bonus for closing within 45 days from today, $2000 credit to buyer's closing costs. 2.5% to me ($10,000), $14,000 the their agent, $2000 credit.

Total of $26,000 = 6.5%. Try to get the $2000 bonus from the seller. If not, take it from your 3%. If it doesn't sell within 45 days, 3% to them, 3% to you. Credits negotiable, as always.

Just some ideas.
1 vote Thank Flag Link Wed May 21, 2008
Hello Eduard,

It really doesn't make a difference. A higher commission wont make me more motivated to push my buyer on the listing. I only want them to choose what they want, not what I talked them into. I think that an ethical agent should not be thinking of the commission when representing their client. I don't think it will help the home sell faster. This of course is just my opinion.

Good Luck!
1 vote Thank Flag Link Wed May 21, 2008
I think this is a great strategy, as long as the home is priced right and is in great condition. I feel that a higher than average commission does help bring traffic.. In addition to making sure the buyer’s agent walks in with a good attitude. Plus, when things get tough, if they do, there is more incentive to keep things together.
1 vote Thank Flag Link Wed May 21, 2008
I think that although agents should ethically think about their comission LAST when finding a property for their clients, it certainly can't hurt.
1 vote Thank Flag Link Mon May 19, 2008
Offering a higher buyers agent split is a good marketing idea. I would offer more, maybe 4%.
1 vote Thank Flag Link Fri May 16, 2008
Eduard,

Great question.
I don't feel that a BAC directly effects how much the property sells for, but it does help how many showings you get so long as the property isn't significantly overpriced. Showings are synonymous to sales at the end of the day and the more people that see your listing the more likely it will have an offer.

I also believe from personal experience that if there is a problem in mid-sale, a Realtor who has a lot more to loss financially if the deal falls apart, will put more heart and soul into making the deal work or figuring out more solutions when there is a road block.

People regardless if they are a realtor or not are looking to make money (which is why we do this), if someone offers me the potential to make more money in a transaction then of course I will take more time to preview the property, take time to make a comp report and see if it fits the needs of a client we are working with. Also if there is a property that a listing broker is offering at a higher BAC then it might pencil out for me as a buyers agent to send out an email blast or newsletter mentioning the property is available for purchase. What it shouldn't stop people from doing is negotiating a price that the buyer wants/market can hold or overlooking material defect against the property.

In conclusion, I strongly believe in offering more to a buyers agent in a challenging market as long as the property is properly priced.


Hope this helps.

Best of Luck,

Brian Ramsay
Principal Broker
Realty Trust Group inc.


*BAC is Buyers Agent Commission
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1 vote Thank Flag Link Wed May 14, 2008
Hello Eduard. I think a higher commission might increase the number of showings and exposure, but I am not sure it will necessarily sell faster because in the end, the buyer decides which house to buy and the buyer does not benefit from the higher commission (most likely does not even know about it). I would think a Buyer would rather see a buyer's credit than a higher commission for his/her agent. If your seller thinks of a higher commission for the buyer's agent, I think it should go hand in hand with a buyer credit. If your MLS rules allow it, make the concessions and the higher commission or bonus contingent upon the property being in escrow by a certain date. That creates a sense of urgency and will let the agents and potential buyers know that they'll have to act soon to qualify for the incentive. Good luck to you.
1 vote Thank Flag Link Wed May 14, 2008
Ute Ferdig -…, Real Estate Pro in New Castle, DE
MVP'08
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Hi Eduard,

I believe that the fee for service or commission should be 6% with the BAC at 2.7% . I think that your seller and you would be better served if the balance of any credit could be used to improve the conditoion of the property, staging ,or towards marketing that your seller is willing to assist with the buyers closing costs. I do believe that this is NOT the time to be discounting commissions, but when the fee is over sized then I think desperation or overpriced listing. Also, when there are concessions or bonuses to the buyer's agent in the form of cars, vacations, or money, then there also should be disclosure to the buyers, and that could create a new strain on that relationship. Just my thoughts. Thank you.
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0 votes Thank Flag Link Fri May 23, 2008
Eduard: If you asked 100 agents this question, you would get 100 answers. I think the responses below are VERY representaive of what 100 seasoned agents might say. A good consensus. I think they are ALL right. Our MLS detail sheets show the commission %. Sometimes when I see 3.5% (definately 4%) as the commission, I have a tendancy to think "over priced" listing. But, I will know if I preview the home, so so much for that. If it is significantly overpriced though, watch out. Agents are NOT impressed with that move. They won't be back. Agent to agent relationships in this business are to be respected. Reputation is crucial. Yet, if it is a reasonably priced home, whatever works. Agents are driven by personal circumstances. This market is a good example. This is just ONE of many potentially good options. Whatever works - works. So take a crack at it and see what happens?
0 votes Thank Flag Link Thu May 22, 2008
In MO, buyers sign a buyers agency agreement which states the amount the buyers agent will get paid. Sellers normally pay the buyers agent commission but if the amount offered in the listing is above what is in the buyers agency agreement then the buyers agent must get written permission or a new agency agreement stating that the buyers agent can accept the 'extra incentive'. Can make for a tough and awkward conversation. I think a home is more likely to sell by promoting incentives for the buyers such as closing costs, home warranties, etc. 80-90% of buyers start their search on the internet. If the incentive is advertised there they are going to ask their agent to show it to them.
0 votes Thank Flag Link Thu May 22, 2008
We had a similiar thread where one agent stated if she got a commisson "bonus" she would rebate it to her buyer. I think that's nonsense. I countered by asking if she got under some magical commission number would she ask her BUYER to make up the difference?
I think your client hires you to get the property sold and whatever strategies "work" in your marketplace, and is ethical, apply. The reason I got into this business was to earn unlimited income if I wished. So many Realtors want to be "professionals" and earn a "salary" and just can't get over the fact we are all "sales" agents. I get paid a contingenct fee based on my performance at any one time in the many business relatonships I choose to handle. I save my clients thousands of dollars many times over during my 30 years in the business. Taking an additional 1/2 point or more for doing this is irrelevant.
0 votes Thank Flag Link Wed May 21, 2008
Sure there will be those out there that say a higher commission MAY help procure a sale.....Focus on your price . Lower your price into a new buyer's pre-approval range and get your home sold. After all the more time you are on the market, the more mortgage payments your clients are paying.
0 votes Thank Flag Link Wed May 21, 2008
I have wondered the same thing. When I search for homes for my Buyers, I don't pay any attention to the commission--unless it is something really squirrely, like $500.00 dollars on a $400,000.00 dollar home. My license obligates me to find a suitable home for my Buyer.

On the other hand, there may be agents who "high grade" the listings and show higher commissions first. Also, if it is lower than typical for the price range, it may make the home seem cheap in quality, also.

I think that for an increased commission to make any difference, it would have to be promoted as a bonus, or a special incentive.

How long has the home been on the market? What is the commission now? Is it typical for your area?
0 votes Thank Flag Link Mon May 19, 2008
The short answer in my opinion is no.I will say that all other aspects of the transaction being equal a higher split to the co-op agent can't hurt. It still is Price,Price,Price after solid research for sold comparables and present competition(on the market comparables). We all are looking for something to make a transaction happen.Best of Luck
0 votes Thank Flag Link Wed May 14, 2008
Eduard,
A higher commission may appeal to the greed factor of the agents, but will it sell quicker: not likely. If you want a quicker sale, have your seller drop the price by x%; then market the fact that the home is listed below....

As mentioned below, there is always the ethical problems involved with commissions that are above the norm and with other incentives. Do you tell the buyer? Techinally, you should because they have the right to know how their money is being disbursed ( and yes it is their money, not the seller's). Would/could they have gotten a better price with a 'normal' commission or no incentives?

Bottom line, what does your agency and pricipal broker have to say on the subject? What are their rules and guidelines in regard to 'non-standard' commissions? Our agency requires that any commission that is not 'normal' be approved by the principal broker first.

Best of luck. It is hard to get sales in today's market; but I personally believe that offering more (or less) commission is heading towards a headache with the client relationships.
0 votes Thank Flag Link Wed May 14, 2008
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