Many of us look for bargains when we’re shopping. Getting a good deal on something we buy usually makes us feel better about the purchase. So when you’re shopping around for a real estate agent, you may be tempted to choose the agent with the discounted commission. After all, you’ll be saving money, right? Wrong!
You actually won’t be saving money. When you choose an agent with a discounted commission, you’re basically signing up to work with someone who doesn’t value their own experience. The discounted commission is a big, fat red flag telling you that they don’t even believe in their abilities, so why should you? You don’t want to waste your time working with a real estate team that doesn’t full heartedly, 100 percent believe that they can sell your house successfully.
By choosing an agent based on commission, you’re incorrectly making the assumption that all agents are created equally, and that the one who will take a smaller cut from your sale is just as good as the rest. Choosing an agent is one of the most important decisions you will make when buying or selling a home. Don’t make your decision based on commission. Here’s why:
#1: You Get What You Pay For
Finding your favorite wine — the exact same bottle — for less than it is at a different store is not the same thing as choosing an agent who charges less and getting the same services as an agent who charges more. You really do get what you pay for in the real estate industry.
It is expensive to market a property in this day and age. Agents who have experience selling houses know this, and would never be able to limit their own income and still market your house professionally. The money agents make off their commission goes straight into paying for online listings, open houses, and more for the next client.
Ask yourself, does it make sense to trust an agent who doesn’t even trust themselves?
#2: Negotiation Skills Come At a Price
If an agent is willing to discount their commission, it’s clear they don’t know anything about negotiating. You’re looking to sell your house at top dollar and that requires working with someone who knows their way around the negotiation table.
The most important thing you should be worried about as a seller is how much money you will make off of the sale of your home. After all the expenses are paid, you still want to walk away with money in your pocket. An experienced agent will know just what to say in negotiations and will ensure you sell to your ideal buyer for the best possible price.
Here’s a real-life example:
In Arlington at Station Square, a two bedroom condo with 1,524 square feet and two parking spots sold for $925,000 with a successful real estate team.
A two bedroom condo with 1,304 square feet and one parking spot right next door sold for $702,000 with a discount broker.
If you take out the value of the extra parking spot ($25,000) to compare the two condo sales, the unit sold by the real estate team fetched $590 per square foot while the unit sold by the discount broker only sold for $538 per square foot.
That’s a $67,360 difference! No matter how much the discount broker cut his rate, it in no way makes up for the value lost on the sale. This is why it is so important for the seller to focus on what their agent brings to the table and not what they charge in commission.
#3: Buyers Have Agents Too
When selling your home, don’t forget that you’re trying to market to other buyers and their agents too. A discounted commission risks turning away buyer’s agents.
In real estate, it’s common practice for the seller’s agent and the buyer’s agent to split the commission, usually about 2.5%. Anything less won’t be worth it to a buyer’s agent who has to put in a significant amount of effort to find their client’s dream home. Agents perform a service just like any other profession, and they do what they do to make a living for themselves and their families.
When you choose an agent with a discounted commission — let’s say 3.5% — that means they’ll only be able to offer the buyer’s agent less than 2% of the cut. Even if your house is a knockout, it’s going to be hard to convince a buyer’s agent to go after your property and really sell it to their client. The Keri Shull Team never lets a commission get in the way of making a client happy, but we can all be honest and admit that money is a big motivator for a lot of agents.
The Bottom Line
So there you have it. An agent offering a discounted commission is like a dentist performing root canals for free. At some point you have to wonder why it’s so cheap. Don’t let commission be a factor when choosing an agent. You want to work with the absolute best in your area.
If you’re thinking of selling your house, work with the best real estate team in the DMV. Contact The Keri Shull Team today to get started!