Sunday, April 30, 2006

The Commission Question

The question is why is there such a variance in what one agent charges over another agent? The reason for this is the amount of service they provide to you for their commission.

What some people don’t realize is that the commission isn’t paid by the buyer. So a Real Estate Agents services are free to the buyer. You can have a agent represent you in a transaction for free. What most sellers don’t understand is that not just your agent gets a cut of the commission. The listing agent gets only a portion, and the company he works for get a portion. Then the buyers agent and his company get a cut also.

So why does one company charge so much more than another? The difference is usually the amount of service you get. When you pay your agent. 2.7% of that usually goes to the buyers agent the company that they work for. Now if an agent will offer a buyers agent 2.7% for one home and the home next to it is selling for the exactly same price but is only offering 1% to the buyers agent, what home is the agent more likely to want to show and present in a more favorable light to their buyer?

That doesn’t mean all agents think this way. But there are agents that are not willing to even show that other home. This can effect how fast you sell your home, even in a hot market. It also will effect how much money the listing agent is willing to put toward advertising your home, or even having an open house.

My best advise is you usually get what you pay for, and if it sounds to good to be true it usually is. What you end up saving in commission you will usually lose in price.

Todd Clark – broker
Kastings & Associates