Are you getting a good deal if an agent agreed to sell your house for less than average commission rate ?
Performance and Commission
(1) Why is commission rate always in % ?
The reason is, the higher the agent is able to get for the Seller on the price, the more commission the agent is making. It is good for both of them.
(2) When a Seller tells a realty agent that if he/she does not agree to a lower commission rate or the Seller will give the business to another agent, that agent will still take that business, but without saying anything. All incentive to sell for the highest possible price has been killed by the Seller himself/herself.
(3) Agent Alec Leung a few years back, was presenting an offer for his Buyer. There were 2 other offers from 2 different agents to compete for that house. The Listing Agent representing the interest of the Seller asked the Seller to pick the best offer, and that was the end of it.
Alec Leung’s Buyer was ready to offer $4,000 more at the second round. But the Listing Agent did not suggest a second round to her Seller. Since most of the sellers only sell their house(s) once or twice in their life time, what would they know about the procedure ? This is the best example of the Seller offering lower than the average commission rate to the Listing Agent, and she had no incentive to get more for the Seller. The Seller in this case lost at least $4,000.
(4) In his years, Agent Alec Leung had been told many times by his former agents working at the same office that they had been pressured to take a listing for less than average rate, During offer presentation, they simply would not work hard enough to get more for the Seller. “ What for ?” They said. “My vendor cut my commission”.
(5) Testimonial of Margaret Monas of 83A Beaconsfield Ave., Toronto, Canada. In this transaction, Agent Alec Leung was able to get $46,200 more than the bank appraised it for. See www.GoodRealEstateAgents.com. It represents 13% more than the true market value estimated by the bank. It also means that if the commission rate was 13%, the Seller still did not pay for the commission ! The agent got the commission from the price there ! This is why commission=performance !
(6) The Tassios family needed to their condominium in the summer of 2007. They interviewed an active realtor in that area, and was given a value price of $300,000. The family was not satisfied, and noticed the advertisement of Alec Leung on the newspaper with many Testimonials from previous clients. After seeing the property, Leung quoted them the price of between $320,000 and $330,000. The family asked for less than average commission rate, and Leung explained to them why it would kill the incentive of the agent doing a good job for them, from this Article. They agreed. The realtor was motivated, advertised on the right newspaper for a month, ordered Virtual Tour for the internet on MLS, designed colour flyers for distribution for all the condo building residents in that area, have the condition of unit in tip top shape, and put all the window blinds in perfect position for the correct amount of sun light coming to the suite so that it looks just right and at the same time not too warm to spoil the air-conditioning air flow in the middle of the hot summer.
The suite was sold to the very first buyer who read the newspaper ad on the very first day. The price sold was $325,000. The Tassios family was overjoyed, because they knew every step and work their agent did, informing them all the way, was the reason for that result ! The realtor got $25,000 more for them, compared to what an active agent quoted them, and delivered what he promised. See Testimonial under Tassios.
(7) Testimonial of 39 West Side Drive, Markham, Ontario, Canada. In this transaction, Agent Alec Leung got $20,000 more for the Seller compared to the previous agent only 2 weeks earlier. The house sold for $349,000. The additional $20,000 represents 5.7% of the price. It also means that if the previous agent charged the Seller 1% less, or even up to 5.7% less, the Seller was still better off with Alec Leung !
(8) Remember, an agent only has a finite length of time to work. Would a good agent agree to work for less, given the alternative of selling another house for more commission ? Would a good lawyer charge for less ? You better believe he/she charge for more, not less.
(9) You always get what you pay for !