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.
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.
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.
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!
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.
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!
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.