Imagine that your home was worth 1 million dollars.
At an average 2.5% commission, a local agent would charge you $25,000 for selling it.
BUT, of that $25,000, the agent would ONLY get $2,500 for the last $100,000 of your home’s value.
Now, do you think that an extra $2,500 is more important to a real estate agent than an extra $100,000 is to you?
90% of the commission, or $22,500 dollars is based on the first $900,000 of your home’s value.
Do you think it would be easy to sell a million dollar home for $900,000? Of course it would!
So why reward your agent with 90% of their commission on the easy part of the sale?
When you do this, you are discouraging the agent from fighting for the rest of your home’s value.
This is why scientific studies have proven that traditional real estate commissions encourage agents to achieve a quicker sale, instead of the highest sale price.
The problem is NOT with real estate agents. There are many wonderful people among them.
What most people don’t realise is that a traditional real estate commission creates an expensive conflict of interest between you and your real estate agent.
This conflict of interest will lead you to sell for less than you could – even if you are happy with the sale price and even if your agent is a nice person.
You’ll only be happy because you’ll never know how much better you could have done.
As a seller, you want the highest sale price, but that’s not what a commission encourages an agent to do.
The agent is encouraged to sell quickly at whatever price, because they will get most of their commission anyway.
If you don’t believe this, the symptoms are everywhere you look. Click on the button below for a few examples: