Realtor Commission Discounts by Mike McCashland, Sales Associate

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.

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