How to Handle Requests for a Lower Selling Commission

Discount brokers are popping up nationwide, sporting “sell-to-the-commission” tactics. In today’s real estate selling tips, we’ll take a look into how this concept backfires for all parties, and how to explain to buyers why a fair commission will net a better all-around sales experience.

The Unalienable Truth of a Fair Commission:
Lower Sales Cost + Lower Commission = Shortage of Showings.
This also equates to confusion and frustration for buyers and sellers, who are left on the sidelines. If more buyers/sellers understood the following facets of agent commissions, they would finally understand why ‘you get what you pay for’ when it comes to sales commissions.

The Split:
In the typical 50/50 commission scenario, a 5% split would pay 2.5% each to the buyer’s and seller’s agents. With a discount broker, the buyer’s agent typically ends up shorted, getting 2% to the seller’s 2.5%. With an average home price of $250,000, sellers see that 0.5% saved as an extra $1,250 in-pocket. This miniscule portion, however, points agents representing buyers to other homes not nickel-and-diming agents.

The result? Less showings, with less potential sales. Less competition, with a lower possibility of the coveted ‘bidding war’. A longer time on the market, with buyers wondering what’s wrong with the home. A negative stigma, resulting in a lower purchase price, and lagging sale. It’s the same extended market time that overpricing leads to, which likewise kills the potential to get top dollar.

The Ridiculous Question
Ask your sellers to ask themselves, “Which house do you think a buyer’s agent will want to sell: A competing home willing to pay the typical commission, or a home listed by a ‘discount broker,’ which involves the same work for them, but pays less?”

Delve into the nitty-gritty of this argument in Part-2, exploring what you assume clients know, but often don’t, about commissions, and the real estate selling tips to break it down from Properties Online today.

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