Sellers Choose Your Agent Well
Deciding to put your home on the market is a big decision, but sellers choose your agent well or it could end up costing you time on the market and ultimately money in the long run.
As I am researching properties my buyers want to see and setting appointments for them when needed, one of the first things I look at is who the listing agent is. Mostly I do this out of curiosity to see who I might be working with. I have been in the business long enough now to know or, if their reputation precedes them, know of a lot of agents and how they work.
I have genuine concern on some of the agents as to whether they have their clients’ best interests at heart. Examples of this include listing agents that require we contact them to show a property and then do not return calls or the agents who habitually overprice their listings in today’s market. From time to time I answer questions on Trulia.com. Yesterday, a question came up from a seller asking what the average commission charged in the area for a listing was. One of the answers given made my blood boil and epitomizes an agent not having their client’s best interest at heart. The agent, a broker no less, answered the seller’s question with basically an advertisement for himself on how he charges a flat fee and anyone who pays more than that should reconsider. I decided to look him up on our MLS and see what I could find out. As it turns out, he pays only 20% ($995) of his flat fee to the buyer’s agent and keeps 80% for himself. His fees on a $200,000 listing, for instance, give the buyer’s agent less than .5% gross commission which is customarily 2.5-3% but almost always half of the commission the listing agent has negotiated with the seller.
There is no doubt, listing agents can incur a lot of costs associated with marketing your property and can spend many hours putting that marketing together. But believe me, buyer’s agents earn their commission as well and for the most part spend many, many hours working with their clients before they finalize on a home. There is a huge misconception as to how much money Realtors make. The gross commissions look like a lot but subtract MLS fees, the broker split and fees, advertising/marketing costs, admin costs, education costs, gas and automobile expenses, not to mention taxes the net is quite different. Now throw in the time it takes us from our first encounter with our client until their transaction closes and many times it works out that we are acutally only earning afew dollars per hour.
An agent who is willing to cut their own commission is one thing but cutting the other agent’s commission and expecting them to do all their work for nothing in getting buyers to the table for you does not have your best interest at heart.
The old adage “you get what you pay for” could end up costing you in the long run so sellers – choose your agent well.
This article was written originally for my Real Estate Information Blog - November 2010.