5 percent is not 4.5%

Lora Larimer listed a house for a client yesterday.  They were trying to sell their house on their own.  A lot of real estate agents tried to get them to list an were getting ‘competitive’.  The seller relayed to us that the ‘absolute lowest anyone would go was 5%’.  The seller wasn’t happy with that, particularly once we described how our 4.5% works.

5% is really 11% more than 4.5% (our rate), but wait, there is more to this story and it involves paying the Buyer’s Agent.  You see when brokerages try to compete with our 4.5% rate by ‘dropping their usual rate down to 5%’ they are still not competing with a rate that helps bring buyers.

Here’s why.

At 4.5% commission, we typically keep 2% for us and offer 2.5% to the Buyer’s Agent.

At 5% commission, most brokers keep 2.75% for themselves and give 2.25% to the Buyer’s Agent.  The typical 55/45 split that many cooperating brokers pay.

So in the example where you pay 11% more, Buyer’s agents are paid 10% less.

We don’t see that as very good for you – pay more, get less.