First, I do not know your market. (disclaimer). You may not be aware that fees vary from area to area, so I would be surprised if you actually receive a pat "I like proposal A!".
I am assuming that your goal is to maximize your profit when you sell, right? Califl. Association of Realtor Buyer survey shows that 90% of the time, the buyer sees the home they purchase with a Realtor, so you definitely need to attract Realtors, who most of the time have the buyers.
You may be unaware that Realtors sign a Code of Ethidcs when they join the National Associaiton of Realtors. Part of the Code prohibits us from "steering" clients. That means that if there was ONLY an above-average commission, that alone will not cause a Realtor to show a property. However, combine above-market commission with a well-prepared property offer our clients value, then you have a pretty powerful combination.
So far as the "sliding scale" approach goes, there are two sides to your idea. One is that, for listing agent, technically I think you could offer them an incentive. However, There may be ethics questions regarding compensating the lisitng agent for a higher price based on the MLS rules. (everyone in the Realtor community wants a level playing field).
However, for you, this is a one or two time project, selling your home. For us, buying and selling homes is our livihood. In most cases the fee negotiated by the seller and listing agent is split equally between the listing office and the selling office. If word gets out that the split is not equal (this is called a variable commission rate, which also applies to other arrangements), it can create bad relationships between Realtors.
In the sale of a property the first part is to attract a buyer's agnet, then a buyer, then a lender who will fund the loan, then a appraiser that will certify that the property is worth the sales price. Given the current market conditions you can imagine that lenders are anxious about making a loan for more than a property is worth.
So I hate to upset your theory, however the truth is that the market sets the price. Once an offer is accepted, it's BOTH Realtors' job to get the process through escrow. In truth, this is where we earn our money. Anyone can put a property in escrow, it's closing that takes skill. i
I do know a little about the Southern California market, and IMHO you need to find a Realtor that has a firm grasp of the market conditions and what it will take to sell yoiur home for top dollar. My studies repeatedly show that homes that sell in the first 30 days sell closest to list price. So the longer the property is on the market, the larger the difference between list price and sales price. For the month of November the MLS shows that wthin 30 days homes sold at 99.4% of list price. 120 days, 94.6%..remember that the list price at 120 days has probably been reduced at least once or twice.
Hope this is not too complicated.
I think your most important job is to (yes, a canned answer, but I truly believe it) find a reputable, proven and great Realtor to represent you.
In this market, you want to have a Realtor who knows the market, who knows how to market your house, and who has your best interest in mind. If you find somebody who is going to worry about how to get $2,000 for each $10,000 he gets, I'd be super worried where his loyalty lies.
A very complex question. My simple answer is I show my clients property to fit their needs irrespective of commission. Many times prior to presenting the offer I find out the commission may be something less than I think I am worth. We more forward because my happy client (buyer) will be forever grateful and send me lot's of business.
As to listing a property with a complexity....I split whatever commission agreed upon 50/50 with the buyers agent.
Are net listings legal in CA? Would such an arrangement like this have some spins that might get on the fringes of this? Curious..... I am not licensed in CA, and don't know the answer. But, I have been reading this and following the answers so far.
With specifics to your proposal, I am unable to respond because I don't know how license laws in CA might impact your suggestions for compensation.
In general, a buyers agent, even when paid by the seller, has a fiduciary to the buyer client. As such, it is their job to look out for the best interest of the buyer. That would mean negotiating the best deal for the buyer.
Several good posts, and excellent well thought out response from Keith. I will continue to follow the thread.
Do you as the agent take the listing, lie and tell them the price is great, and try to beat up the seller for a price drop later, or do you tell them the truth and let them know what your research results are?
By the way I have been successful with the 3/4 senario. Agents will say that they show all homes but if someone is between 2 homes I have seen the higher buyers agent coop sell a home. Why do you think builders offer additional incentives over the normal coop? They want the agent to push their homes.
You have really been working overtime on your comission strategy. I commend for this. It does sound very complicated. I understand the concept. I tend to agree with Jackie. It is great to have a seller that is willing to work with his agent to get the job done. I wish you and your agent (to be) luck.
Sorry I was nasty with my second post. but if there were 20 homes on the market all comparable not over priced and you had one buyer with no listings that matched, which one would your salesmen deep inside hope they like. Come on you can do better then that... No one wants to talk about sales here I understand.
Thanks, your points are well taken. Yes your right, I would have to make an calculated judgment call on the agent who would except this incentive proposal. it's also quick way at the end of a sales call to smoke out someone like you said that would not have my best interest in mind. I would only offer and keep this incentive on the table to someone after they earned my trust. More on the lines of 3% 3% with incentives.
Thanks, I was looking for some Ethics points of views. I will do some more research on this in my area.
What's the point... Your kidding me.... Attracting buyers agents making selling agents use negotiating/sale skills. You should be paying your clients for their advice.
I knew I would get some watered down points of views in an open professional form like this.
Thank you to all that tried.