Flash back 10 years ago…I knew several Realtors in the area. There was Bob from church, Bill from Rotary, or my wife’s good friend Sally. I bet one of them would sell my home for me at a reduced commission. Good heck, I helped Bob fix his car and helped him move, he for sure owed me a favor. Did I really want that favor to be selling my home for a reduced commission?
Shortly after getting my real estate license, I realized I needed to go on a major apology tour. That’s right, I was now on the other side of the transaction and my eyes where finally open. I must have bugged, harassed, annoyed and alienated a dozen Realtors in my community asking for reduced commissions. On one such occasion my good friend Dennis locked me out of his office after he just dealt with a buyer from hell who purchased one of my homes. I have since apologized.
What could possibly be wrong with asking for a commission discount? We all know real estate agents make way too much money, right? Let me explain a few things that did not cross my mind before I became a Realtor. Lets assume a commission of 6% with 3% going to the listing agent (the agent listing your home) and 3% buyers agent (the agent bringing the buyer). Lets say Bob finally agrees to list my home for 5%. That’s great, on my $300,000 home I just saved $3,000.
In hindsight I should have considered the following, how does that 5% get split? It can happen two ways. Bob can take 2% for listing and give 3% to the buyers agent. Bob is now taking a $3,000 hit for listing my property. I need to ask myself a few question. How motivated is Bob to show my home on Sunday afternoon to a buyer leaving on a plane in 3 hours or miss the first half of his sons ball game? I now have a good friend feeling unappreciated and I promise you it will affect his effort in selling my home. It may even affect our friendship.
Scenario two looks like this. Bob simply says I am going to split it 2.5% to the listing agent and 2.5% to the buyers agent. Let me explain what can happen with this scenario. I have now not only asked my listing agent and friend to work at a discount, but now I have asked every agent in the MLS to work for a discount and they don’t know me from Adam or owe me a thing. Lets suppose my house is competing with several other homes in the neighborhood. What exposure do you think my house is going to get? I am sorry , but it is human nature, all things being equal, do you think my home is getting promoted over another when the other is paying a full 6% commission being split 50/50? The second thing that can happen is I might be dealing with a buyer who has an agency agreement with a Realtor. In that agreement, the buyer has agreed to pay the agent 3%. What do you think the buyer is going to think when they have to pay an extra $3,000 to buy my property?
DONT DO IT. As tempting as it is to ask for reduced commissions, you will get what you pay for and put your property at a disadvantage.
Mike McCashland is a sales associate for Silver Peaks Realty. After graduating from Idaho State University in 1992 with a BBA and a degree in Marketing, Mike landed a job in the area that has lead to 20 plus wonderful years here in Teton Valley, Idaho with his wife Brenda and their 4 kids.