I often hear real estate agents complain that they lose listings solely based on their commission rate. This is a common gripe, and when I read and listen to the musings of real estate agents outside of the country, I have come to think it is a universal problem. It seems around the world, real estate agents are being judged on their commission rate over anything else they are offering a customer. As a result, often agents are asked to reduce their commission and when they refuse, they are opening themselves up to losing the listing.
I know of real estate agents who have won the standard "interview" process that a vendor goes through when they are looking for the realtor to sell their home. I also know of these winning agents then losing the gig because the vendor asked them to reduce their commission and they refused. In this situation, some vendors then go with the real estate agent that was actually their second choice rather than pay the higher rate to their preferred realtor come sale time.
This scenario interests me greatly because an agent with a higher commission rate usually has good reason for doing so. Particularly in circumstances where this agent is the first choice, it would seem the vendor actually knows that too. Whether it's their reputation, record of sales or how much they are prepared to spend marketing the properties they have on their books, a higher commission rate is often indicative of a higher level of service.
When these real estate agents who know they will do the very best for a customer lose a listing to a competitor based only on commission, it can be a bitter pill to swallow. Professionals know how much they are worth and why, and when it comes to selling homes, the proof is in the pudding. I have said before that the best choice when it comes to a real estate agent isn't necessarily the one that seems to be presenting a bargain, and I stand by that. Although a particular agent may have a higher commission rate, have a look at why. Is it because he or she is a lot more confident in their ability to sell your property based on their past experiences? Because their record with selling properties similar to your own outshines other realtors in the area? Or maybe the marketing plan they offer for the properties they represent blow the competition out of the water? Chances are, there's a valid reason and that should be considered as carefully as the rate of commission to be paid.
But if things still don't work in your favour, who knows, if the cheaper agent ends up not being able to sell that home, the commission rate may become secondary after all.
Disclaimer: The opinions posted within this blog are those of the writer and do not necessarily reflect the views of CENTURY 21 Australia, others employed by CENTURY 21 Australia or the organisations with which the network is affiliated. The author takes full responsibility for his opinions and does not hold CENTURY 21 or any third party responsible for anything in the posted content. The author freely admits that his views may not be the same as those of his colleagues, or third parties associated with the CENTURY 21 Australia network.