Well, here is a new take. Lots of people believe real estate agents are too highly paid as it is, that deals are easy to make and the earned commissions are high. Of course, most people do not really know the time a Realtor spends in the business, and how much they spend for overhead, advertising, education and marketing to make that deal seem easy. But, now, New York Time Columnist Daniel Gross suggests that, beyond the basic commission, there is not enough incentive for your agent to, in fact, work to get you the best deal. He makes some good points. If you are asking, say, $300,000 for your home and an offer comes in at $270,000, how does your agent respond? Would he encourage you to take the deal based on the old adage that "the first offer is always the best"? Or, does he help you push for a better deal? What rationale is used in either case? Gross' point is that, with the $270,000 deal, the agent has already made most of his commission. Assuming the agent gets about 1.5% (of a 6.0% commission, typically, 3.0% will go to the selling brokerage and your agent will pay 1.5% to his borker, leaving him 1.5%), if he helps you push for an additional $10k, and you get it, the difference in his commission is only $150. Why would he want to risk the deal over that amount? On the other hand, you've got $10,000 additional income at risk. Who is trying harder here? Gross is reporting on a study by Steven D. Levitt, a self-described "rogue economist", who tested his theory by comparing sales prices vs asking prices for the public (represented by agents) and those sales of agents' own homes. He found that the agents actually sold their homes for closer to the asking price that their sellers did. Of course, there are a lot of variables that could not be accounted for, such as incentive, preparation, and so on. For example, how many sellers actually take their agent's advice on spending money to fix up their property for sale vs agents taking their own advice. Nevertheless, it would be important, for example, to make sure you are working with an agent whose livelihood does not depend on the sale of your home. A busier, more successful, agent can afford to be more objective, and will more likely provide you with objective material to help you make a decision that affects your bottom line. My new book, Get the Best Deal When Selling Your Home covers this and many other points to consider when selecting an agent. But the ability to be objective, and the ability to focus on your needs rather than their own, should be primary considerations. In Summit County, the SnowHome Team is unique also, in that it is the only team that participates in every commission earned. Each team member gets much smaller, but many more, checks, evening out their income, creating a base for cooperation (and brainstorming on the sale of your home), and creating a source of pride in our results. With the SnowHome Team, the normal rules don't apply. And the winner is you. |
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