Someone popped up on my chat widget a moment ago curious and concerned that an agent told her that she was going to sell her home for only 1%.
“How can she make any money doing this?”, she pondered.
I questioned that lady a bit about what lead her to this point and it turns out that she met the agent at the house that she intends to buy. That agent is the listing agent of this house so she is already, as we say in real estate “double ending” the deal. The agent is representing both the seller and the buyer in the transaction. That means that the agent is keeping both halves of the commission on the house she is selling – maybe 5% of $350,000. That is a good payday.
But what about the 1% on the next transaction?
The lady on the chat widget was right to feel a little dubious about this. Likely what the real estate agent meant to say but failed to elucidate was that she would only take 1% of the selling side of the commission when she listed and sold this buyers house. This means that she would list the house at 3% or maybe 3.5%, paying the cooperating brokerage 2% or 2.5% when the buyer’s agent brought the buyer and a deal was successfully negotiated. For listing the house, she would keep 1% of the commission.
One of the most popular posts on my website is “How much commission do real estate agents charge?”. There I explain not only how commissions are split up, but also how you can negotiate a lower commission rate. I think our governing real estate bodies, brokers and agents should try to do a better job of educating the public about commissions – how they work, where they go, who pays who…
Things that Realtors say that don’t make sense
What they mean: You have to qualify, pay upfront and sell below market value and we have 6 months to get the job done.
What they say: Your home advertised 24 hours a day until sold.
What they mean: We are going to put a sign on your lawn. We are going to put your home on at least one website.
What they say: Premium marketing services.
What they mean: I don’t know. Probably something that sounds good but matters not.
What they say: Written updates and feedback weekly.
What they mean: Emailed reports
What they say: Our team of specialists for the same price as hiring a single agent.
What they mean: You might meet the listing agent once or twice, but mostly you’ll be dealing with his subordinate.
What they say: #1 Agent
What they mean: #1 Agent in my office a few years ago.
What they say: We sell a home everyday.
What they mean: We are a volume dealer, like McDonalds.
What they say: I will sell your home faster and for more money.
What they mean: There is going to be a lot of pressure put on you and the buyers.