And last, but certainly not least…
10. You’re cheap. Guess what- if you aren’t offering a competitive selling commission (aka buyer’s agent commission or SOC) on your listing, you are doing it wrong. It is time to get serious about selling your house, and short-changing the professionals whose job it is to get it sold is a great way to shoot yourself in the foot. This is one of the biggest (if not THE biggest) financial transactions of your life. Do you really want to trust it in the hands of someone who is willing to take a fee-cut without even negotiating? While that last statement applies more to the listing agent, it goes both ways. Now, I know I’m not supposed to say there is a “standard” SOC, at least not according to WA state law. However, I can say that if there were such a standard, everybody would pretty much agree that it would be somewhere in the neighborhood of 3% (are there enough qualifiers there to keep me out of trouble?!). There are agents, like myself, who understand that the ethical (and common sense) approach is to show homes based upon the needs of their clients, not their personal bank accounts. Those agents will show your house regardless of the offensive and laughable 1.5% SOC you are “offering.” Those same agents are probably smart and confident enough to remind their clients that the SOC is negotiable and that their expertise and effort deserve respectable compensation, ie. 3%. And then there are the rest of the agents. Here’s an example of what is probably a very common scenario.
An agent has out-of-town buyers visiting for a weekend. They have two days to find a suitable house, in order to close in time to start a new job. There is only enough time over those two days to comfortably tour 15 homes. An MLS search reveals 20 homes that more-or-less match the buyers’ needs. Let’s say 4 of those homes have reduced SOC’s, the rest have 3%, with all other factors remaining equal. Which ones do you think will get crossed off the list first?
That’s not even the worst of it. There is an unfolding trend that has become a major pet-peeve of mine. It starts with the aforementioned reduced SOC. Then there’s the price drop. As I mentioned earlier, the price drop is almost always the first thing that happens when a house isn’t selling. And that’s fine…it is usually a smart move, especially if your house has been listed for more than a few weeks, or months, these days… However, you’re making a huge mistake, in my opinion, to reduce the price before raising the SOC. Here’s a real-world example I saw earlier this week:
A home was listed for 6 weeks for $350,000 with an SOC of 2.25%, which is low by any standard. This week they dropped the asking price to $325,000. In case you don’t have a calculator handy, that’s a $25,000 drop. Want to know the difference between a 2.25% SOC and 3%? At the original asking price of $350k, that is a difference of $2625, barely more than 10% of the price drop. How does that make sense? Keep in mind here that it costs you NOTHING out of pocket to raise the commission vs. dropping the price. I understand that staging, painting and re-carpeting is expensive and requires out-of-pocket investment with no real guarantee of a return, but this costs you nothing. Instead, the person in this example just gave away $25,000 before any possible offer negotiations could begin. Why not do it the other way? I’ve seen agents offering 4% commissions, or combinations of cash bonuses to buyers and their agents. In the above scenario the owner could have raised the SOC to 4% AND offered a $10,000 buyer bonus (for paint, repairs or closing costs, etc.) and still come out $1000 ahead vs. the price drop. It won’t necessarily get your house sold, but it will probably get you a lot more attention, and you can bet it won’t be the first one crossed off the list anymore!
Click these links to read part 1, part 2 and part 3
Rob LeRoy is a Seattle real estate agent and social media marketing coach with eXp Realty.
