3 ms·

so if the agent is more incentivized to sell at $9m and make guaranteed money rather than $10m and making a little more at the risk of losing the deal, but it g

by cwilkes 10y ago

so if the agent is more incentivized to sell at $9m and make guaranteed money rather than $10m and making a little more at the risk of losing the deal, but it gains you ~$1m in income in selling it, doesn't that mean the agent should get a higher percentage of the sale? I can see this going either way where the seller is annoyed the you are making a lot more money for not that much more work or that the seller realizes that if he can make an extra $900k by paying someone $100k it would be worth a 10% commission.

akiselev 10y ago
Who said anything about losing the deal? It just takes longer to sell the house when the seller is looking for a better deal. Studies have shown that when a realtor sells their own home, they have better returns and keep the property on the market longer because of information asymmetry [1][2][3] while also displaying the opposite behavior when they sell their own property in competition with their own clients, which is in and of itself a huge conflict of interest [4]. It's not about annoyance. If the realtor gets more money for the client they deserve more money themselves. Before that sale takes place, however, the commission creates a perverse incentive which combines with information asymmetry, resulting in shady behavior. If realtors were bound by law, like other professions or fiduciaries are, this wouldn't be a problem. [1] http://www.mitpressjournals.org/doi/abs/10.1162/rest.90.4.599 http://www.mitpressjournals.org/doi/abs/10.1162/rest.90.4.59... [2] http://www.sciencedirect.com/science/article/pii/105113779290012F http://www.sciencedirect.com/science/article/pii/10511377929... [3] http://www.sciencedirect.com/science/article/pii/S0304405X05000218 http://www.sciencedirect.com/science/article/pii/S0304405X05... [4] http://link.springer.com/article/10.1007%2Fs11146-015-9543-y http://link.springer.com/article/10.1007%2Fs11146-015-9543-y

by cwilkes 10y ago

akiselev 10y ago

Who said anything about losing the deal? It just takes longer to sell the house when the seller is looking for a better deal. Studies have shown that when a realtor sells their own home, they have better returns and keep the property on the market longer because of information asymmetry [1][2][3] while also displaying the opposite behavior when they sell their own property in competition with their own clients, which is in and of itself a huge conflict of interest [4]. It's not about annoyance. If the realtor gets more money for the client they deserve more money themselves. Before that sale takes place, however, the commission creates a perverse incentive which combines with information asymmetry, resulting in shady behavior. If realtors were bound by law, like other professions or fiduciaries are, this wouldn't be a problem. [1] http://www.mitpressjournals.org/doi/abs/10.1162/rest.90.4.599 http://www.mitpressjournals.org/doi/abs/10.1162/rest.90.4.59... [2] http://www.sciencedirect.com/science/article/pii/105113779290012F http://www.sciencedirect.com/science/article/pii/10511377929... [3] http://www.sciencedirect.com/science/article/pii/S0304405X05000218 http://www.sciencedirect.com/science/article/pii/S0304405X05... [4] http://link.springer.com/article/10.1007%2Fs11146-015-9543-y http://link.springer.com/article/10.1007%2Fs11146-015-9543-y