Will it hurt your sale to have a 4% or 5% commission (2%, agent)
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We are selling a house in a desirable neighborhood that will be >$500K. We have two realtors that want the listing. One offered to sell it at 5%, and the other came back and offered 4%. This means that the buyer's agent will only get 2 or 2.5%, which is lower than the normal 3%. Is this going to cause realtors to skip over this house and try to sell the buyer one that they get paid more commission on, or would they rather sell the house the buyer likes best, regardless of the commission? It really isn't any different than someone looking at house in a $100K range and deciding on one vs. the other. If it makes a difference, there really isn't much competition for this house... very few houses are sold in the development and as I said, its a desirable place. Thoughts?
We are selling a house in a desirable neighborhood that will be >$500K. We have two realtors that want the listing. One offered to sell it at 5%, and the other came back and offered 4%. This means that the buyer's agent will only get 2 or 2.5%, which is lower than the normal 3%. Is this going to cause realtors to skip over this house and try to sell the buyer one that they get paid more commission on, or would they rather sell the house the buyer likes best, regardless of the commission? It really isn't any different than someone looking at house in a $100K range and deciding on one vs. the other. If it makes a difference, there really isn't much competition for this house... very few houses are sold in the development and as I said, its a desirable place. Thoughts?
Here is a simialr thread on the RE forum with lots of responses:
Yes. We're not supposed to show based on commission offered, but that being said, human nature takes over with a lot of people. There isn't a perfect house out there, so when we pull up homes to see, we pull up a lot. They may come to see yours, but it'll probably be last on the list, if at all. If those agents agree to take it at a lower commission, tell them that they still need to offer 3% to a buyer agent and take the hit personally. I won't take discounted listings for that reason. Even though you might save money on commissions should it sell, you won't make anything if nobody's coming to see the house.
We are selling a house in a desirable neighborhood that will be >$500K. We have two realtors that want the listing. One offered to sell it at 5%, and the other came back and offered 4%. This means that the buyer's agent will only get 2 or 2.5%, which is lower than the normal 3%. Is this going to cause realtors to skip over this house and try to sell the buyer one that they get paid more commission on, or would they rather sell the house the buyer likes best, regardless of the commission? It really isn't any different than someone looking at house in a $100K range and deciding on one vs. the other. If it makes a difference, there really isn't much competition for this house... very few houses are sold in the development and as I said, its a desirable place. Thoughts?
Keep in mind though that the agent offering 4% may be able to afford to offer you 4% because they aren't doing as desireable marketing as the one for 5%. So if you go with the 4% Realtor and no buyers can find your home...well you actually end up saving 5% because you end up paying nothing because 4% of no sale = no commission.
I recommend you ask the agent what their "sell-through" rate is (% of listed vs sold). Any good Realtor should know what their sell through rate is.
Well in this case, I don't think that one agent is better or worse than the other. They both have about 25 years experience and are very good at what they do. They both actually used to work in the same office at the largest realty firm in the area. Ironically, around the same time, one of them sold their independent firm to the larger firm, and shortly after, the other one left the large firm to start their own. So now I have the big vs. little thing going on. The big firm's best commission is 5% which they go to with more expensive homes. The other guy pretty much does the same, but he wants the listing so he's offering us 4%. A lot of what the big firm does for marketing isn't really all that valuable... TV Ads which they even said that not very many people watch, a big relocation catalog that goes out quarterly, but it takes about 2 months to get out there after you go in it, etc. The smaller firm guy had a good plan I believe, advertising in a business paper that is primarily read by executives, vs. running more spots in the regular newspaper. I don't think that I'm going to get less marketing, just different marketing. The other thing is that the service from the smaller firm will be dealing directly with him at any time, vs. an assistant. So if someone calls about the house, they will talk to him directly instead of whoever got assigned to work the phone in the larger firm. One thing the larger firm will do is do their caravan day and so a lot of the realtors in the larger firm will see it there, but the other realtor said he will do the same thing... buy free lunch for realtors that come to a realtor's open house. Bottom line is there is not much inventory to compete (actually none right now), its a very desirable location, and once in the MLS it will show up everywhere. So if someone is working with a buyer looking for a house like this, it would be on their list. One suggestion the realtor had was to bump it to 4.5% to make sure the compensation to the buying realtor is the same as the 5% guy, so its kind of splitting the difference. He also offered to knock it down to 3.5% if he actually sells the house himself. I don't know... its a tough decision because I hate telling either of them no. We are more interested in selling the house than worrying about the difference in commission, to be quite honest. We are closing on a house in Raleigh on the 29th of this month, so we will be carrying two mortgages until we sell our house. We are what you call, "very motivated".
One suggestion the realtor had was to bump it to 4.5% to make sure the compensation to the buying realtor is the same as the 5% guy, so its kind of splitting the difference. He also offered to knock it down to 3.5% if he actually sells the house himself. I don't know... its a tough decision
Looks like a great compromise to me, although I would bump his end down to 3% since he was only going to get 2% with the other arrangement. You apparently like his marketing plan and the fact he would be handling you and phone calls on the listing himself. Sounds to me like he is motivated and hungry. Sounds like he has a plan in print marketing. What is his online marketing vs the bigger companies online marketing?
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