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An Idea to Get Your Home Sold Faster

Let me start by reminding you that I am NOT a real estate agent; however, I do think my parents raised me to have some common sense.  So, here it goes….I think you should RAISE THE COMMISSION YOU WILL PAY AN AGENT WHO BRINGS YOU THE EVENTUAL BUYER OF YOUR HOME.  Is it contrarian?  Maybe.

But, hear me out. Typically, home sellers agree to a total commission to be paid to sell their home. Many don’t realize that their listing agent then posts the percentage of that commission they are willing to share with the agent that brings a buyer that purchases the house.

As an example, you agree to pay a listing agent $10 to sell your home (depending on your market, the $10 may be a flat fee or a percentage of the sales price).  The agent posts the listing on their multiple listing service so all other agents become aware your home is now for sale. Your agent agrees to give $5 of the total commission to the selling agent.

Normally, the selling agent is unaware of the total commission.  They only know what they will be paid.

Now, let’s say your home and commission agreement is standard for your market…in other words, your home offers the same compensation as every other home in your neighborhood. In that scenario, your home doesn’t stand out.  If an agent had a buyer who wanted to live in your neighborhood, is there any reason to show your home over another?

What if you insisted that the selling agent was paid $6 of the $10 when you negotiated your commission?  Or even better, what if you agreed to pay $11 or $12 for a total commission and offered the selling agent $6 or even $7?  If all the agents who had buyers knew that they would make 20% more money if they sold your home, don’t you think you would see more traffic?  More traffic = more offers.  More offers = highest possible sales price.  Isn’t that worth paying a few more dollars in commission?

I am sure agents will argue that they have moral and ethical obligations to make all buyers aware of all their options.  However, common sense tells me they will be sure to make people more aware of similar properties in similar neighborhoods that pay them more money.  Wouldn’t you?

Pay higher commissions to selling agents in a buyer’s market…get more visitors…get more offers….sell quicker…and likely for more money.  Just my opinion….


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32 replies
  1. Angie @AgentKnowHow
    Angie @AgentKnowHow says:

    Disagree! What’s the point of raising the Buyer’s Broker commission if the house is in the wrong price range to begin with? Contray to popular belief, we don’t control what the buyers see on-line. Often, they come to us with a list of houses they have already found online. Paying points, willingness to offer more or a seller’s concession, staging, the right price point, smart, experience agents. . .that’s what sells a house in a Buyer’s Market!

    Reply
  2. David Kovalsky
    David Kovalsky says:

    This idea has been available to Real Estate Agents forever, it’s a great idea, the challenge is the fear the agents have in asking the sellers to do it!!

    Reply
  3. Mahesh Mike Patel
    Mahesh Mike Patel says:

    Not neccessarily True….there are are many reasons, here is one.
    Listing agent lists the house, does all the work and advertising and buyer comes along, who eventually goes to his mom, dad cousin etc, who happens to be an agent, and writes up an offer with them: why pay the buyer’s agent more….PS: this agent is also part time and does not what is going on? and make our work harder.
    If this agent really want to find a home for his buyer, he should get the same commission as the listing agent, who works just as hard to get the right price and to get the escrow close, after all, it is the price that sells the house.

    Reply
  4. Steve Bland
    Steve Bland says:

    An even better option is a BTSA (bonus to selling agent). An increase in commission gets split between the agent and his broker (company), but the BTSA goes straight to the agent. After a group of homes meets my first rough criteria for a client, I then whittle it down to a manageable number of properties. If one has a BTSA, I make sure to give the client the opportunity to reject it themselves–I don’t take it out of the list as long as it meets what my client has told me to look for. As far as the ethics goes, I make sure they know that the home carries a bonus for me, but that my ethical obligation is to protect their best interests, and my advice to them will not be swayed by the commission I will earn–and it won’t be!

    Reply
  5. Dean Hartman
    Dean Hartman says:

    personal opinion….in a seller’s market tilt commission split to the listing agent…and in a buyer’s market (like today) tilt the commission towards the selling agent.

    Reply
  6. Brett Matsuura
    Brett Matsuura says:

    I agree somewhat with your theory…13+ years ago I would agree with it 100%. It used to be that the Agent was the primary source for listings. However, in today’s market most Buyers go to the internet first to search for homes. In fact, many Agents and/or Brokers have IDX websites that show all of the active listings for sale in an area…not to mention realtor.com, Zillow and Trulia. My point is that on many occasions the Buyers searching the internet and are going to their Agent to inform them of the new listing on the market, driving by and wanting to see and not knowing or even caring about the compensation being offered…and I doubt that if a Buyer goes to their Agent wanting to see a property that they are going to say no.

    Reply
  7. SarahGray Lamm
    SarahGray Lamm says:

    I STRONGLY disagree! I can cite more than one example where I was the second agent in on a listing carrying a higher commission to the Buyers Agent and it did NOT sell. If there is “extra” money to throw around I will advise the seller on how EXACTLY to spend it to get the home in tip top, market ready condition, then PRICE IT RIGHT so that the buyers who see it will be COMPELLED to make an offer because s/he REALLY wants the house. Just getting an agent to include the home in a tour because they might get something extra can not possibly make up for price, terms and condition.
    A full commission (meaning nothing “extra”) fairly allows me to do a bang up marketing job, use my hard earned experience and set of negotiating skills to get the job done and still offer a fair split with a buyers agent.
    I’m sure you will find this hard to believe but I do NOT calculate my commission on any transaction, including when I represent the buyer, until it appears on a closing statement. There is simply no way I would allow the promise of extra cash to sway my buyer in any way…as if that would even be possible.

    Reply
  8. David Mott
    David Mott says:

    When you are on the receiving end of the sales commission, this makes terrific sense. When you have to ‘pony up’, it makes horrible sense. There is no more value added to the transaction, whether the sales commission is 1% or 10%.

    Folks that are buying a home don’t care about the sales commission. They only care about the price of the property, which usually includes the sales commission.

    If the seller has to adjust the price of the property to offset a higher sales commission, the number of available buyers starts to diminish.

    6% sales commission on a 100K home is $6,000. 6% sales commission on a 300K home is $18,000. Is the seller getting more bang for the buck by paying 3 times more to sell their property? If so, then something is wrong with the process.

    Just my opinion… ;)

    Reply
  9. Jim Slack
    Jim Slack says:

    Terrible idea. #1, like some have already posted, who cares what the commission is, if the buyers don’t like it, what’s the point. #2, in our MLS, there is not way to search for “higher commissions” that are paid. So, you just have to pretty much be lucky and come across it. #3, say you do find a listing that pays more, so you “push” this on your buyers, how is that doing them any good? Simply a bad idea. I’d much rather the sellers lower their listing price, or accepting price then to give money away to another Realtor.

    Reply
  10. Janine Gregor
    Janine Gregor says:

    As a virtual assistant who works with agents, I can vouch that this is indeed a smart idea to sell a home faster. A better commission does help a home stand out from all others particularly in a subdivision where the homes tend to be similar. Of course, the only catch IMO is for the seller who doesn’t have much leeway with the commission to begin with. In other words the standard commission can be difficult to reap from the sale of the home given the housing economy. But if the opportunity to pay a higher commission is affordable to the seller, it does work! Great post! Thank you!

    Reply
  11. Carol Cappelletti
    Carol Cappelletti says:

    Disagree! Like SaraGray I too never calculate my commission till I see the HUD. And in our market we do know the commission paid to both Buyer and Seller Agent as published in our MLS. Goal of Buyer Agent is to find the best possible home for our clients and in doing so we will continue to work in and profit in our business. If we ran around showing only those homes with higher commissions splits and or bonus’s we might consider selling something else!!

    Reply
  12. Janine Gregor
    Janine Gregor says:

    I hit the send button too fast….

    I’d like to add that the commission can’t be the only factor though. The home must still be priced well afterall the buyers won’t care one way or another if an agent is showing a home with a bonus attached or not. That information should be disclosed as well.

    Reply
  13. Dean Hartman
    Dean Hartman says:

    I love the debate, but OF COURSE the house has to be priced to sell. My point is if three houses are “priced correctly or compelling”, don’t you think the agents will show the one with the higher commission more often, thereby creating a better chance of selling? (and at a max price).

    I am disheartened by the premise that PRICE is the only component. Why pay an agent any commission to find a home, if all that matters is price???

    I believe many of the commenters here have forgotten how truly valuable their service is…research, education, negotiating, and so on are crucial. Price is not the only factor.

    Reply
  14. Tim Devinney
    Tim Devinney says:

    Mr. Hartman, I appreciate your insight but I doth protest. We do not consider commission when showing a home. In fact, I rarely even know what the commission is when I am showing the home. We routinely get email flyers offering bonuses and higher commissions for certain homes but if the property doesnt fit my clients criteria and isnt the right home I dont care what you are paying me. The best way to sell your home is to put it in the best market position relative to location, condition, and price. If your home backs up to the nuclear waste site paying 20% to a buyers agent will not sell it. Pricing it to reflect the free glow in the dark installation service will. Thanks for sharing.

    Reply
  15. SarahGray Lamm
    SarahGray Lamm says:

    To answer your question Dean, NO I do not think an agent worth working with will show the higher commissioned home more often. If the goal is to get the home to closing a good agent on both sides is invaluable to both parties. As a buyers agent I have already disclosed and negotiated with my buyer what it will cost to have me represent them, how I will get paid and if I have a minimum below which they will compensate me should the seller not offer enough to cover my fee. I do NOT need a lagniappe to get me to do what I have CONTRACTED to do for my buyer already. And I don’t want dinner at a five star restaurant, a porsche or anything else to try to get me to do what I have already promised to do.
    When I am the listing agent I can absolutely find improvements which can be made to the property with that “extra” cash which will accrue to the buyer, not their agent.

    Reply
  16. Dean Hartman
    Dean Hartman says:

    SarahGray, while I applaud your conviction, it is not my experience over the years with most people (in real estate and outside real estate). Most people want and chase what is in their personal best interest.

    Further, I am not promoting the idea of compromising ethics. The premise is same house, same neighborhood, same price……higher commission….which house gets shown more?

    Additionally, in my market here on Long Island, Buyer’s Agency is the exception, not the rule. That does affect my belief.

    The beauty of opinions is that they are like belly buttons—everyone has one.

    Reply
  17. Byron Sibbet
    Byron Sibbet says:

    Agree! Buyer agents are being “rewarded” with little once all of their expenses are tallied. This is especially true when a lease is involved and the listing agent only wants to give 25% or less.

    Reply
  18. SarahGray Lamm
    SarahGray Lamm says:

    Dean, I had no idea since you did not make it clear from the beginning, that you are in an area where buyer representation is NOT common. As KCM members we need to remember that real estate IS LOCAL. In our area, what you are suggesting would not be protecting our clients interest. We typically represent buyers here and we do protect their interests which is more than a naive conviction!

    Reply
  19. Jim
    Jim says:

    I do not agree. I believe most home buyers are looking for the best Value. Customers know more than ever. If you are a good agent you are educating them on values of homes they are looking at.

    instead of raising the commission value pricing. commission does make the top 5 of how a home will sell.

    Reply
  20. Dave Woodson - Northwest Indiana Marketing
    Dave Woodson - Northwest Indiana Marketing says:

    I am a licensed agent (in referral), and years ago when I was selling my 3 unit rental property. I put up a $1000 dollar bounty to the agent that sold it. I had one guy that should have set up a turn style at the front door. It was great, he wanted that money. I am sure that he had some deal that he got it all from his broker because that was all he did was take people through my house.

    So, yes it does work and I would urge anyone to do it .

    Dave – you want referrals, you want leads. Well, I am a lead generating machine.

    Reply
  21. Toby Boyce
    Toby Boyce says:

    Dean,

    In theory, your idea makes perfect sense and the strong compelling argument of SarahGray would be the response from the entire real estate industry.

    But we know that theory isn’t the place where houses are sold.

    1. Buyer’s Agent Commission: I applaud any agent that honestly “never” looks at the split when showing homes. I am showing six houses on Saturday to a couple and one of them is offering -.5% less than our area average. If they love the house, does it matter? No. However, my experience has been when you GO BELOW the area average is when agent’s begin to eliminate your home from searches. I remember listing a house at -.5% below area average and an older agent called and asked me about the listing her final questions “so why is this only going to pay me x%?” I told her I was splitting it 50/50. Her response “I deserve the local average, good luck with that.” She never showed it.

    2. Agents Show Homes With Bonuses More. This is a hard item to calculate. Two big issues is that usually when the bonsues are offered it is two situations: over priced house where owner is trying to find some way to save face or a bank-owned home. Obviously in the first case no one cares. In the second case — it is hard to tell whether the number of houses being sold were because of price or the HUD bonus. BUT it would be remiss to not consider that Fannie/Freddie had selling agent bonuses, pulled them off the table, and now it is back. So obviously someone at Fannie/Freddie thinks it helped move homes.

    Just my thoughts.

    Reply
  22. Danny Griffin
    Danny Griffin says:

    Good thought here….BUT…if the house is over-priced who cares how much you offer anybody for that matter…the buyer these days knows within about 10% ultimately where is will sell and wont buy if it’s not priced right in spite of the “selling agent” compensation…

    Reply
  23. Keith Schulz
    Keith Schulz says:

    Like several others, I completely disagree with this thought . As an agent, I never even look at the commission when I’m working for a buyer. I show them properties they want to see, not properties that make me money. If your buyers agent is seeking out properties that pay them more, find a new buyers agent!

    Reply
  24. Johnny
    Johnny says:

    The main item to remember is we owe Fidiciary Duty to our clients NOT to the amount of comissions or the trips or the cars being given away or the electronic gizmos offered by the developers to BRING SOMEONE to their developments.

    Perhaps a motivating action to a Buyers Agent would be a reverse-declining bonus ove a 30 – 45 day period. An example would be $1500 bonus that on the 46th day the bonus dissolves. The rate of decline would be $33.33 per day.
    It seems to me this would “encourage” more traffic through the property.

    We just have to be sure “the property” meets the Buyer’s criteria which in turn
    should satisfy ones’ Fidiciary Duty to our client.

    I feel, especially in these declining markets we have to be sure “our clients” interest are above our financial interests in order to maintain our Fidiciary Duties .

    Reply
  25. Aaron Johnson
    Aaron Johnson says:

    My market is very different than the national average; we’re very healthy. That being said, I don’t know that it makes a difference. I have a very good IDX search on my site that I sign buyers up to after we’ve discussed exactly what they are looking for. While I search through the MLS for them, almost always what happens is they find homes to look for, and we go out and view them. They don’t care spit about the commission- after all, they don’t get it. On my listings, I make sure they are the prettiest on the block BEFORE it hits the MLS and we price it to sell using Relar rather than a CMA. If the house looks better than the competition, is priced better (Compellingly priced!) and I make sure the prospects have all the information they need at the home, it sells. If it’s in the lower-price point, we may up-front market closing costs are covered with a full-price offer, and THAT catches a buyer’s eye.

    The days of buyer’s agents controlling what homes the client sees are rapidly disappearing due to IDX searches. You want to sell the home, concentrate on marketing to the buyer, not the agent.

    Reply
  26. Randy Wilson
    Randy Wilson says:

    I recommend to all of my sellers that they continue to offer the buyer’s agent at least the 3% that has become a standard in this market. If they want to offer more, they are likely to get increased traffic and if they choose to offer less, they are guaranteed to get less traffic (maybe none). As the listing agent, I take a flat $795 for the listing side of the equation. That makes it easier for my sellers to offer more to the buyer’s agent as they aren’t having to pay me more. Just look at a $300,000 house … if I only charge them $795 listing fee, they save $8205 over the traditional agent that will charge them 3% on the listing side. They can pocket the difference or possibly throw some of that to the buyer’s side to help move their house faster. And what do they get from me for the $795 … all of the same services I offered when I was asking for 3% as an listing agent for a large national firm. The only thing discount about me is the fee I charge to list the house.

    Reply

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