Home Selling in Boston>Question Details

Matthew Goss…,  in Fort Worth, TX

Will a 5% commission be more likely to get agents in the door then 4% commission?

Asked by Matthew Gosselin, Fort Worth, TX Wed Jan 23, 2008

Our home is listed a little below market value because we are in a rush to sell. Our agent thinks offering 5% will get more agents in the door.

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Your profile says you are a real estate pro? Just curious!
When a property is sold the buyer first sees the home on average 90% of the time with an agent.
(CAR Buyer Survey 2007). So in reality to get a home sold you need to convince:
1. The llisting agent that it's a good deal so take the listing
2. The buyer's agent, so they will call their buyers
3. The buyers, so they will agree to see the property
4. The appraiser, so the lender can approve the financing.

All this being said, the average buyer looks at 10-12 homes before they buy. Buyers are buy in a certain price range, so if there were say 25 homes that were generally good fits for the buyer, how does the Realtor select which listings to show? Just like you, if you have a choice of two jobs, both requiring the same amount of work, and one paid more, which one would you check out?

According to the Realtor Code of Ethics Realtors are bound to show ALL property to their buyers however Realtors are only human, so do you think the compensation affects the Realtor's selection of homes to show?

So, depending upon your needs, a properly prepared and marketed home should receive (IMHO) 10 showings or two offers in two or three weeks of market time (on average). No showing activity means something is wrong, no offers means something is wrong. It is likely that a Realtor will show a home that might be a little over priced (and in some markets it is difficult to know what exactly "over-priced" means).

My rule of thumb is not to charge my sellers more than I need to in order to get their home sold in their time frame. That being said, one point of commission is going to be less than a 3-5% price reduction that we will need to make if we do not see the showing activity we need to get the home sold.

Hope this is helpful.
2 votes Thank Flag Link Wed Jan 23, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
Greg, you must have a problem with reading comprehension because I stated in my post that the properties were exact. Do you know the meaning of exact? If not, it means that EVERYTHING is the same. Anyhow, I stand by my answer. If EVERYTHING (for those that don't know what exact means) is the same, I will sell the property with a 5% over a property with a 4% commission every time. By the way, I (or you) would not "be in extreme violation of my fiduciary responsibilities and therefore defrauding my clients of their right to fair representation" if everything is exact. Again, it is impossbile for two properties to be exact and that is the reason I am speaking in hypotheticals. Greg, do me a favor and don't call me out to make yourself look like a hero. Later, Jon
Web Reference: http://www.bowenboston.com
2 votes Thank Flag Link Wed Jan 23, 2008

This issue has been run over more times than Paris Hiltons Mercedes ...

The fact is .. raising commissions, bigger bonuses, free trips to Madagascar just don't work, never has - it may feed the agents ego, they might burn up more gas ..

But ~ it won't get a buyer to tattoo an offer on a house he/she doesn't like, or want - simple..

If nothing else, it alienates the agents current client, because now they've been shown 3 homes in a row that look like Aunt Martha's and she's been dead for 12 years ... the problem is, the wheels are spinning backwards, not forwards.

You're selling a commodity to the public - not to the local agent at Billy Bobs barbecue and real estate Emporium ...

Broader advertising, works .. interior changes, works .. painting pink bathrooms, works .. paying closing costs, works .. home staging, works .. lowering the price to accommodate a changing market - it really works.

Giving Billy Bob an extra $5,000, that's nuts ... a good agent would have you doing "one or all" of the above - and we wouldn't be having this conversation, now would we..? -- because it would be $old.


1 vote Thank Flag Link Fri Mar 14, 2008
and here in lies the problem with the real estate indusrty ... what should sell the property is having your agent price it properly, help you come up with a great marketing strategy and staging ... the property and price sells the property ... Spend what you feel is appropriate for commission, hire a great agent who has a great selling history and plan, and hope for the best. Don't feel pressured to increase commissions (the whole idea of % commission is ridiculous anyway) just focus on what the house needs to get attention and a quick sale.
Web Reference: http://www.territoryre.com
1 vote Thank Flag Link Fri Mar 14, 2008
Why not offer an incentive to the Buyer rather than the agent? You could do something like offer to pay for 6 months of condo fees, offer a set of new appliances, or a cash seller's concession of several thousand dollars (if the Buyer's lender allows it).

Although it may be enticing to a buyer's agent to see an offer of 5% commission, the agent is only going to be able to sell your home to a buyer who wants to buy it. Offering incentives directly to the buyer seems to me like a better way to convince the buyer to select your home over others.
1 vote Thank Flag Link Sat Feb 23, 2008

While there is no "standard" commission, I know that seeing and offer of less than 2.5% in a co-broke payment in Boston speaks to the motivation and competitive drive of the seller.

Unlike Jonathan before me here, I will not sell one property over another based on commission because I would be in extreme violation of my fiduciary responsibilities and therefore defrauding my clients of their right to fair representation.

However, I know that a "motivated" seller will in fact evaluate strongly and position their property appropriately in comparison to other properties on the market. For sellers in Boston at this point that means a 2.5% co-broke or more. The seller speaks to the agents in many ways, and this is one of them.

Ask your agent what they plan to do with the extra percentage point, ask them to show you records about time on market for 5% and 4% property. If you're agent is good this should be no problem for them at all.

Best of luck!
1 vote Thank Flag Link Wed Jan 23, 2008
Yes. Hypothetically speaking, if there were two exact properties for me to sell (hypothetically speaking, because we all know that there is no such thing) and one property was listed with a 4% commission and one was listed with a 5% commission, I would try and sell the property with the higher commission every single time. Good luck, Jon
Web Reference: http://www.bowenboston.com
1 vote Thank Flag Link Wed Jan 23, 2008
It sounds like it should, doesn't it? Suddenly hoards of Realtors descending on your property because they've noted that you're offering a 5% co-op fee to the buyer's agency. Woo Hoo!! Yes, it might catch some attention. But it probably won't help the property sell any faster.

In order to sell the property, as a buyer's agent, I still have to have a client that fits your house. I'm not going to show your 3br/1.1 bath home to my 4br/2.1 client, merely because you're offering to pay me more money. And I'm not going to show your in-city home to my suburban client. And I'm certainly not going to be able to talk my client into accepting a house that they're not interested in, simply because I'll be paid more.

I'm going to show your property if it fits my clients needs. Period. And if it fits their needs, and they happen to like the house, yes, I'm going to help them buy it, and I'm going to "rebate" anything over 3.5% directly to the client. Because honestly I think that's where all the incentives are most effective.

I think that your "promotion money" is better spent by leaving the co-op commission in line with the regional rate and reducing the purchase price by that same amount, to help attract more potential buyers... these are the people actually buying your property. The more buyers who actually want to see your home, the more likely you'll attract an offer (or more)... which could lead to a quicker sale and potentially higher price.
1 vote Thank Flag Link Wed Jan 23, 2008
Alan May, Real Estate Pro in Evanston, IL
Genius response Tman!!! Much better put then my below response ... and i am usually funny, what gives. This topic really gets my pantalones in a bunch ... Agents: STOP CHASING COMMISSIONS ... oh wait, that is IMPOSSIBLE because you are all independent contractors who aren't salaried and are rewarded for raising commissions ... ugh, anyway, matthew (if you really are a person and not a "Real estate pro") i think you get the point ... either tell your agent he/she is fired or tell them to shove it and come up with a better plan ... there are many options.
Web Reference: http://www.territoryre.com
0 votes Thank Flag Link Fri Mar 14, 2008
RE Pro is right, to an extent. The price and condition/appearance will determine the results, but: I contract with my seller clients for a fixed % for me, not dependent on whether or not the buyer has an agent. I discuss with the seller..how much they will offer a buyer agent. In a good market, I tell them 2% is possibly enough, and that 2.5% will attract more agent interest, even though it should not. I, personally, avoid the conflict of representing both sides in the same deal, which is worth discussion here, in this whole "how much commission" talk.
0 votes Thank Flag Link Fri Mar 14, 2008
I am new to this "answer the question on Trulia",..but the question, while superficially simple, had, implicitly, the "inner question" : "will the extra commission" get more action?"... Whether that is moral, etc...is beside the point.... It will get more action from buyer agents... Maybe it should not, but it WILL. Note that I am NOT in favor of necessarily upping the commission for the listing agent, but..for the agent who has the "wind in his favor", the agent with the buyer at his side...
0 votes Thank Flag Link Wed Mar 12, 2008
I think that offering this is a great idea! Commission sells! It is not that I am going to push a buyer into buying a house because I will make more money, but I sure do want that house on the show list! If that is the perfect house for my buyers, then I get a bonus. If not, oh well. It was worth a shot. In the meantime it gives you another buyer through the door to give you feedback that can help you get your home SOLD!

I would rather see a higher commission, than a bonus coming to the buyers agent/broker. It always makes me feel like I am in an akward position when my buyers see that. I don't want them to think I am pushing them in the house just because I am going to get more money. I prefer just to have the bonus in the commission if one is going to be offered.

However, just like another agent said. Offer a bonus to a buyer. Offer to pay X amount of money towards the buyers closing costs or something like that. That way you are offering 4% to a buyers agent and then a bonus to the buyer. Everyone wins!

I hope this information helps! Best Wishes!
Web Reference: http://www.gomelinda.com/
0 votes Thank Flag Link Wed Mar 12, 2008
Offering 5% TOTAL, split equally between the two agents? Yes do it... In fact, it is a buyer's market, so offer the buyer's agent 3%, if you can.
I am a realtor in SF, Ca....but the idea is universal: "sail with the wind".
0 votes Thank Flag Link Wed Mar 12, 2008
I have to agree with James - a buyer's incentive will get buyers through the door. To me there is nothing more frustrating than seeing a listing sheet that says "$5000 BONUS TO ANY AGENT WHO BRINGS IN A FULL PRICE OFFER !!!!" How can I tell my buyer with a straight face (in today's market especially) that they should put in a full price offer ?

Your commission should reflect what the other full-service realtors in the area are earning. If 5% is the norm, that it what you should do.
Web Reference: http://www.LissaSells.com
0 votes Thank Flag Link Sun Mar 9, 2008
My answer is that you may get about the same agents in the door but the 4% listing will not make them as enthusiastic and an enthusisatic agent will bring more positive energy to the situation. Although now with most of my buyers getting automatic emails from MLS, they "tell" me what they want to see. I cannot/will not hide a listing from them. My client relationship puts their needs ahead of mine.

Good luck

Howard Koor
0 votes Thank Flag Link Fri Mar 7, 2008
One of my buyers just sent me a listing he's interested in that pays 3% PLUS a $5,000 bonus to the selling agent. While I would LOVE to sell that home, I don't think it will be what he wants. Meanwhile another one he sent is an online brokerage and they're paying 2%. 3% of nothing is still nothing. I'd like to be paid, so I have no problem showing the 2% home.
0 votes Thank Flag Link Wed Jan 23, 2008
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