Why Real Estate Agents Will Never Achieve The Highest Sale Price

The short video at the bottom of this post by respected economist Steven Levitt of Freakonomics fame talks about researched and documented evidence for why real estate agents are simply not incentivised to achieve the highest sale price for your home. Most people mistakenly believe that the commissions real estate agents receive provide an incentive for them to achieve the highest sale price for your home. The theory is that the more they sell for, the more commission they receive. Sounds like an open and shut case, right? Wrong. A real estate agent who charges 2.5% commission, will only make $250 for every $10,000 they fight for. Put another way, an agent only loses $250 when they convince you to take an offer that is $10,000 less then what you would like or what could possibly be achieved. When the average commission in Australia is around $15,000, how much incentive does an extra $250 or even $500 give? The unfortunate truth is that a typical real estate commission only incentivises the agent to make a sale and not necessarily to achieve the highest price. Please watch the video below for a great explanation. For more information, please go to: www.revolutionaryrealestate.com.au

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