Real Estate Sales Commissions
I found this article, which is more of a report by someone else, to be one of the most insightfull on real estate sales commissions for the consumer.
The gist of it is, in slower markets, its in the sellers best interest, believe it or not, to pay a full commission rate OR HIGHER, and not negotiate commissions. I could not agree more and I have plenty of experience to show just why it works.
For instance, on one project I have worked on, a condo conversion in Minneapolis, where the supply of condos overall is vast. This project has a couple things going for it, price point, location, and equity building options. Basically you can get a 1 bedroom condo near Uptown for under $100,000. Yep, seriously.
The one con on that price point is that real estate agents representing the buyer make a lesser amount based purely on the percentage of the sales price. Solution, offer incentives to agents, or raise their commission rate. Incentives are not just for buyers anymore!
Or, take for instance a realtor has a single family house listed. The neighbors house is also listed by a different realtor/broker. The realtor with the listing has a reduced commission, for whatever reason, discount broker, negotiated by the seller, etc. That realtor gets a call off the for sale sign in the yard. The caller wants to see his listing, and also mentions wanting to see the neighboring house. Any realtor will offer to show it to them, its a potential sale!Â
Answer this though. The realtor shows both properties, his/her listing, and the neighbors house (listed with another broker). However because of commission breaks the realtor doing the showing would actually make more money selling the other listing. It happens all the time.
There are a few million factors Im not mentioning. And a few Im sure you will point out. I am just trying to show the simple math of how it works. Ask yourself this, if you have two job offers, one offers a $5000 higher salary. Which do you choose?
Derrik Dyka
Minneapolis realtor and real estate investor
I think there is some truth to this, but as an agent, I happy to get a sale anywhere, anytime and would never push for a certain house due to the payday. I just want ANY payday and a happy client.
Of course, I would make sure my potential buyer saw all homes that could be the home they want, and that house on the same street would probably be one of them.