Want to sell faster? Try paying real estate agent more
This was the headline in an article published in the San Francisco Chronicle on Sunday. The author said that he raised his commission to the Buyers Agent which he thinks resulted in his home selling faster. You can read the article here
This one gets my blood boiling. To me, a real estate agent that will “push” a home because it has a higher commission than another home that also fits what the client is looking for is a crook for violating trust. These type of agents deserve the Realtor-bashing that some give to the entire industry. I wish I could say that this doesn’t happen but I’ve met agents who focus on the commission offered when they look at new listings. I’ve heard stories about some agents that have called Listing Agents and said “how dare you put a home on the MLS at such a low commission rate”. Unfortunately, these agents are still out there selling in our area and the people they have sold homes to aren’t even aware that their needs were not the #1 priority for the agents they trusted in finding them a home. Some of these type of agents are even rewarded with “Top Producer” awards which is more of a sales award than a service or integrity award.
So, how can you avoid these type of agents??
Well, you’re already doing the most important thing if you’re reading this blog which is doing your own research and becoming educated. With the multiple MLS Searches I have on my website, you are able to see homes on the market yourself rather than having an agent pick ones they think interest you. Some Buyers still don’t go on the Internet to search for homes before they contact an agent so they are at risk of having one of these bad agents filtering what homes to show them based on the commissions offered.
The second thing you can do is ask your agent for the Buyer Agent commissions on the homes that you are interested in. If your agent tries to make an excuse why they can’t provide you with this info, I’d RUN away from this agent and go get one that will. Why wouldn’t you want to know what commission the Seller is offering? A good price negotiator will want to know this.
Being the statistics guy I am, I ran some reports to see if the facts supported the article. I looked at the Solds in October for Single Family Homes (stick-built) in SLO County to see how long it took to sell for different commissions offered. I first did it for all price ranges but then I thought that breaking it down into price categories may be a better comparison. Following is what I found…
For homes selling under $500,000-
2% commission to Buyers Agent – 31 properties – 106 Days on Market (DOM) average
2.5% commission – 28 properties – 111 DOM
3% commission – 18 properties – 142 DOM
For homes selling between $501,000 – $750,000
2% commission – 22 properties – 125 DOM
2.5% commission – 19 properities – 135 DOM
3% commission – 16 properites – 128 DOM
For homes selling over $750,000
2% commission – 33 properties – 178 DOM
2.5% commission – 24 properties – 145 DOM
3% commission – 6 properties – 92 DOM
So the stats say that the amount of commission doesn’t have any impact on how quick a home is sold for homes priced below $750,000. For under $500,000 homes, the higher commission ones even took longer to sell!
I don’t know if the the differences in the over $750,000 market are due to the price of the commissions or other possibilities. This price range has the biggest percentage of price drops so maybe Sellers offering 2% are doing less price drops to price their home to today’s market??
If I was a Seller listing a home in today’s market, I’d offer the Buyers Agent what I thought was a fair commission. If I had a home in good condition and with pest (and home inspection) reports already done, chances are the Buyers Agent will have an easy time. If I had some issues with my property and knew that there were going to be some hurdles to overcome that the Buyers Agent would need to assist with, that’s when I’d think about offering a higher commission. It should be more about fee for service anyways!!