Some sellers, in an honest effort to save some money, COULD be sabotaging their own sale.
Whenever a home is listed on the MLS system, there’s a “co-operating agent” fee that goes towards the buyer agent’s services. It’s the agent’s compensation for working with the buyer, negotiating the offer, arranging the mortgage, attending the inspections, and completing all paperwork and steps to make the sale happen.
The seller and their agent decide on this amount to be offered to the buyer agent before putting their home on the market.
This is why buyers don’t typically owe anything to their agent when they hire someone to help them buy – it’s offered by the sellers as one of the mandatory requirements to be listed on the MLS. You HAVE to offer a co-operating fee to another licensed agent.
But the amount you offer can be anything. Even $1 dollar.
I reviewed the 208 currently active listings in Milton this morning. Here’s what I found:
188 listings, or about 90% of sellers, offered 2.5% as a co-operating fee. More or less, this is the accepted norm in Milton.
Three listings were offering a 3% co-operating fee. This is considered a bonus and some sellers and their agents use it as an “added incentive” for bringing a buyer.
Two offered 2.25%.
Another 11 offered 2%.
Four active listings offered a 1% fee.
That’s still many thousands of dollars, don’t get me wrong.
BUT these sellers are offering LESS THAN HALF of the “regular” pay… and I would bet that they’re probably losing MORE THAN HALF of their co-operation and goodwill in the marketplace.
I have NEVER seen a record-breaking sale in Milton offer anything less than 2.5%. And that’s going back 17 years, reviewing more than 250,000 properties on my computer, and seeing more than 13,000 in real-life.
Have homes sold by offering less? Yes, of course. Many of them.
But… they didn’t break any records. The best case was no better than average.
If a respectable wage for a certain profession is $50,000 a year, how much top talent gets attracted if you only offer $25,000 a year? Now let’s imagine this… if an agent is choosing properties for showings and 204 of them offer a respectable wage (and four do not), which ones would they likely choose?
This is a trick question, because the correct answer is… the agent SHOULD choose the properties that BEST fit the buyer’s needs and budget, regardless of how much they get paid. But agents are regular people that need to put food on the table like everyone else… and they definitely are NOT pushing hard to see anything offering them “half a meal” when they get a whole meal somewhere else.
The most important number to a seller is the NET number, after ALL expenses are paid (including commissions). By cutting the commission to the position that will most likely guarantee their chances of success (the buyer’s agent), some sellers are often undermining their own results by trying to save some money on fees.
My message to these sellers? Treat the agents right, and your odds go up significantly to gain co-operation, which in turn means you sell your home for the best possible price, and YOU walk away with even more than trying to “penny pinch” on fees.
One last thing…
I would offer the same advice on the listing side. An agent might seem like an attractive hire because they’re offering lower fees to sell your home. But consider that person the guardian of your house’s value.
Are they a poor negotiator?Are they clear about their value and their results, or were the agreed-upon low fees a result of the agent being a poor negotiator? That can be a dangerous person to hire.
Will you be a priority in their schedule?Will the lower fees mean they spend less time with you (and less time communicating), because they need to sell twice as many homes to earn the same income as an agent who charges more?
Will they cut their spending to sell your home?Will the marketing plan and reach be reduced, because there’s no longer a budget for it? Less eyeballs can mean less buyers.
Instead of hiring the agent with the lowest fees, many sellers go higher, further and faster by hiring the RIGHT agent with a proven track record of happy clients and superior results.