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There is some talk amongst the Realtor community about these real estate shows that have sprung up on TV. Recently, one show had a couple that was using their landlord, also an agent, to find them a home. The couple was prequalifed for an amount but did not feel comfortable at the highest level they could qualify for and told the agent. So, what did the agent do?? They showed the couple homes at the top end of what they qualified for.

This is the type of thing that gets homebuyers in an uncomfortable financial position and is just plain POOR service. Is business that bad for some agents that they need to squeeze every commission dollar out of a transaction rather than putting the client first?

What’s also sad is what an agent actually makes after all the commission splits for that extra price they pushed on the clients. Let’s look at an example:

$700,000 vs. $750,000

Typical commission around here these days for a Buyers agent is 2.5%. For the $50,000 additional price difference, that’s $1,250 gross commission. If the agent is with a name-brand Brokerage, there’s an 8% royalty deducted which brings the commission down to $1,150. Then the Broker takes their cut, which on average is a 70/30 split (30% to the Brokerage). So the agent ends up with $805. Hardly an amount that would justify putting a client in an undesireable situation. A good Realtor counts on past clients to refer other people to them if they do a good job and the $805 they may get right away may jeopardize a future referral that may make them $12,000 instead.

I know that some Buyers think that in this market they can offer a lot lower on a home and the Seller will accept it. I just ran a report for the Solds so far in March and the average price the home sold for vs. the List Price is 95.60%. So this shows that there aren’t alot of Sellers willing to take a price a lot less than the List Price. In fact, this percentage isn’t much different than it has been over the past few years.

If you’re looking to Buy, I’d be careful in looking at homes with a lot higher price than you are comfortable with unless your Realtor can give you a reason why they may take a lot lower price before you go view it. If the home is listed at $825,000 and has been on the market for 21 days, chances aren’t too high you are going to get an offer accepted at $700,000. Unfortunately, if you get your heart set on that $825K home, the ones in the $700,000 price range probably aren’t going to excite you that much.

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