Do Increased Commissions Sell Homes?
Does offering more commission to the buyer's agent help sell a home?
Several times this week, I have received flyers and info advertising homes for sale with an increased commission for the real estate agent who brings the buyer.
One offered 6% to the buyer s agent on a home priced at $681,000. Almost $42,000. if I bring a buyer for this home. A similar one offered the same and boldly stated, $42,300 Commission.
Another offered 5% plus $5000. on homes priced between $299,000 and $350,000. One of these offers was from another city and two were here in Indianapolis.
There are two schools of thought about increasing the buyer agents commission to help sell a home.
One school says it s the seller s equity and they can do what they want with their equity. I agree! The other side says the commission is built into the price of the home and the buyer ends up paying the commission. On this, I also agree.
Allow me to explain .
If a home is priced well and comparable to other homes and the seller offers an incentive for the buyer s agent, it is truly the seller s equity. If, on the other hand, a home is overpriced to begin with, the increased commisssion is a attempt to get buyers agents to sell the home. Then, it does become the buyers cost, because it is built into the price of the home, which the buyer will pay for.
Luckily, I know many honorable, trustworthy agents who would never allow their clients to pay more for a home than it s current market value, just so they can make an extra buck. These agents research and know the true value and will advise their clients about the recent sales and comparable properties in the area. These agents will be worth every penny when they are able to negotiate the price their clients should pay for the home.
Although I have had clients who have offfered an increased commission to the buyer s agent, I always tell them I do not believe increased commissions sell homes. Homes sell when they priced right, properly presented and well marketed. BTW marketing does include a buyer s agent commission. It just doesn t have to be excessive when all other factors are in line.
I personally believe there is a limit to the amount I feel comfortable accepting to represent my buyers. As a Fiduciary, I would not feel comfortable accepting $42,000 on the sale of a home priced at $681,000. Disclaimer: Real estate commissions are not set by law and are negotiable.
These are my own personal opinions. ~ Paula