Real Estate Commissions Exposed

By Robert Jenson (c) 2008

:::Myths and Truths About Home Sale Commissions:::

A real estate agent's commission as a percent of a property's final saleprice represents thousands upon thousands of dollars. Sellers can andshould leverage this bargaining chip to gain a significant strategicadvantage - or simply ensure they retain as much of the sale proceeds aspossible.

To help sellers make informed decisions, consider the followingcommission-related myths and truths:

Myth: All real estate agents charge the same commission percentageTruth: Not all agents - and agent packages - are created equal. From fullservice agents to discount agencies, make sure you know the type ofprofessional you are hiring and what EXACTLY they are going to do to sellyour home. An agent that can professionally market your home above andbeyond the MLS listing will increase your exposure within the marketplace,which will lead to a higher selling price and less days on the market. Willyour agent incur costs to give your home that visibility? Find out, so thatyou may take everything into consideration when establishing the commissionpercent. Despite what an agent might say otherwise, commissions are always100% negotiable.

Myth: It's admirable when an agent offers to lower his or her commissionTruth: Agents that are quick to cut their fee to keep your business are alsoquick to cut the all-important marketing budget for your home - often attime when it needs it most. If an agent is that amenable to giving awaytheir own money, imagine how quickly they will give away your bottom linewhen negotiating a deal with the buyer's agent purportedly in your bestinterest. Realtors can and should be paid on results. If you're housedoesn't sell, they don't get paid and it's your prerogative to move on toanother representative if need be - it's as simple as that.

Myth: One dedicated agent is better to sell your homeTruth: In real estate, a team approach is far more effective than one lonesoldier for getting the job done expediently. Commonly referred to as a"co-op", ensure your agent is offering other agents a financial incentiveshould they bring in a buyer. Make sure it is at least on par with whatyour competition is offering. You may even want to offer a bonus to enticeother agents to show your home. Ask to see your home's MLS "Detail View,"so that you can make sure your agent isn't decreasing your exposure bywithholding a competitive co-op.

Myth: Agents should set the list price based on the seller's needs, desiresand recommendationTruth: Most agents will know the fair market value for your home in thecontext of current market conditions, but beware an agent willing tooverprice your home. He or she is likely willing to do so not only in anattempt to get the seller their desired bottom line, but also to help themjustify the agent's full commission fee upon signing. A common scenario isthat an agent sets the price at a price higher than is reasonable, knowingit won't sell and anticipating future price reductions - but with the agreedupon commission percent in tact. The overpriced home will likely languishtoo many days on the market, which puts it at a strategic disadvantage andmay ultimately force the home to sell for a lower price than it would haveotherwise. Be wary of agents telling you what you want to hear. Seek out anagent who is honest, even if reality is disappointing.

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Please contact me, Robert Jenson, for more information on this or any otherreal estate related matter at Rob@TheJensonGroup.com or through my Web sitelocated at www.TheJensonGroup.com.