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How common, or I should say, how receptive would a selling agent be to a laddered commission negotiated by a seller of a house?
What I've been contemplating is negotiating something such as in this hypothetical situation ...say I want to list my property for the asking price of $750,000. I'm thinking of negotiating a laddered commission schedule with a prospective selling agent that might look something like this:
If the house sells for the asking price or above, the commission will be 6% (3% to the selling broker's office / 3% to the listing agent).
If the house sells for $700,000 to $750,000, then the commission will be 5.5% (3% to the selling broker's office / 2.5% to the listing agent).
If the house sells for $650,000 to $700,000, then the commission will be 5.25% (3% to the selling broker's office / 2.25% to the listing agent).
If the house sells for $600,000 to $650,000, then the commission will be 5% (3% to the selling broker's office / 2% to the listing agent).
If the house sells for anywhere below $600,000, then the commission will be 4.75% (3% to the selling broker's office / 1.75% to the listing agent).
Would most agents be adverse to making this kind of arrangement? I'm assuming that it wouldn't be a common proposal but I figure it would keep the agent on their toes and work harder to obtain a better selling price. Plus it would reward them with a larger share of the potential profit if one should exist.
Are there too many steps on the ladder? If so, what would be a better proposal?
That would depend on your area. In that price bracket we are in jumbo loan world, which is not a nice place right now. Out here, that would be a luxury home. Nothing has sold this year for more than $525,000 out here. So, me personally, I wouldn't agree to do that on a luxury home. I would need all of those funds to market the property for the two years it will take to sell the house.
While I understand why you are doing what you are doing, it would be too risky a business decision for me. I'd pass.
I doubt many good agents that would agree to that. The agent has no control for what your home sells for. It is worth what it's worth, and they'll do the same amount of work regardless. Personally, I've never seen it and I'd never agree to work on a scale like that knowing I can't make a home sell for more than someone is willing to pay. My personal take is "Why should I as an agent be punished for your not being worth more?"
Your suggestion also opens the door for agents to be dishonest with you about list price since some will put it on the market and hope that it sells for the higher amount. You best best would be the traditional scale and make sure you get a good agent. A good agent will want it to sell for max value anyway. If prices slip you could really lose money in the long run if you end up chasing a price.
So would it be any different if I just negotiated, perhaps, a two-tier commission? Say, full 6% if the house sells for the asking price or above and 5% if under the asking price?
So would it be any different if I just negotiated, perhaps, a two-tier commission? Say, full 6% if the house sells for the asking price or above and 5% if under the asking price?
I can, with 100% certainty, promise you that you'll find an agent that would take this commission scale.
But a good, experienced agent, one with the experience to market a higher priced home correctly, probably wouldn't.
Like Brandon said, a home is worth what it's worth - and the agent really doesn't have control over the sale price.
No offense, but the house will most likely sell for less than asking price...
Why wouldn't you just negotiate a 5% commission to begin with, but understanding that the lower commission will mean less marketing $ for the agent to spend money on.
Luxury homes (assuming this is a luxury home) are all completely unique. It is not like selling a spec home in a subdivision.
True, Silverfall, I fully expect the house to sell for less than the asking price. But giving the selling agent full commission if he can command the asking price wouldn't be an incentive, correct?
What if I lowered the two-tier to anything between $700,000 and 750,000 would be paid 6% and anything lower than $700,000 would be 5%?
So you're referring to the two-tiered schedule, Chuckity?
Yes.
And I forgot to mention that if it does sell for a price that puts the agents in a higher commission category, the buyer may be none too happy about it.
Wasn't there a thread somewhere around here with the buyer being upset because the selling agent got a bonus? This falls into the same category
Ah, I think I did see that thread. I'll go back and read it more carefully.
Ok, this whole thing sounds like it wouldn't work. I should probably just negotiate a straight commission with no bonuses or tiers involved, correct?
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