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The “C” Word….Commissions!

I was reading a real estate agent message board today and there was a thread titled

Do you show listings that pay less than 3%?

This type of thread really irritates me. First, it’s rare that I see these discussions since usually there is a smart real estate agent that chimes in that discussing this could result in a fine or loss of license as you can’t blackball listings because of the level of commission offered. Unfortunately for this thread, no agent was smart enough to realize this topic shouldn’t be discussed but what it did show is that there are agents out there do look at commission percentages to determine which homes to show their clients. To me, these type of agents are the bottom of the barrel and shouldn’t be in this industry.

So, how do Buyers make sure they are seeing ALL the listings?

If you are reading this, you already know about my site with my MLS Searches. I put EVERY home that I’m able to display in my searches. Gone are the days that the agent could pick and choose what listings to give to a client and keep the client in the dark about other listings for sale. I should restate that, for Buyers using the Internet, the days are gone. There are still a small percentage of Buyers that don’t search for homes on the Internet and rely solely on an agent.

I also believe that a Buyer should know how much commission is being offered the Buyer’s Agent on homes they are interested in. The  Buyer should ask the agent rather than the agent automatically disclosing  the commission rate to their Buyer because if the Buyer didn’t understand the way commissions work, it may just confuse things.  I would love to be able to display commission rates for listings on my site so Buyers that were interested could get this info but commission percentage is considered confidential information in the MLS rules, so I’m unable to include them.   A good Buyers Agent won’t see anything wrong with a Buyer asking. But, if the agent says they aren’t able to disclose this or give some other excuse, that would raise a red flag to me. Best thing to do is when you first talk with a Buyers Agent, tell them you’d like to know the commission percentage being offered on homes. If the Agent won’t do this, go find another Buyers Agent BEFORE you start looking at homes with them.

There is another solution which would just remove any thoughts that an agent may be pushing a home that offered the agent higher commission. When you start working with a Buyers Agent, just tell them that they will receive a minimum of x% for their service they are providing you. If the commission being offered by the Seller on a home is lower than x%, the Buyer will make up the difference.

On the same message board, there was another thread about a Listing strategy that one agent uses and says he has had success with. In his “strategy”, he prices the home 10% higher than what the comps say and starts out at 3% commission for Buyer Agents. Then if the home doesn’t sell, instead of lowering the price, he raises the commission. He claims to have gone as high as 12%.  He uses the term “raise the bribe” in the post.  Don’t know what to say about this other than I’m glad this agent isn’t in our area.   I really don’t know how this strategy will work in this market as the home would need to be appraised unless the Buyer was paying all cash (no mortgage) and the bank probably wouldn’t loan on a home that is overpriced. But, it does show another reason why Buyers should know what commission is being offered to the Buyers Agent for homes they are interested in.

If you want to sell your home, I’ll give you the ultimate strategy on how to do this…..price it right and make it easy to show!

Written by Keith Byrd - Go to Keith's Website/Profile