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True. But agents aren't incentivized to negotiate lower prices because payment on both sides is proportional to total price sold. So logically only sellers woul

True. But agents aren't incentivized to negotiate lower prices because payment on both sides is proportional to total price sold. So logically only sellers would benefit from this.

scarface_74 3y ago
Actually they are. It’s about volume not the few extra pennies they get on a sale - especially once you consider the brokerage takes some of that money. The Freakonomics book went into this in detail. https://freakonomics.com/2008/02/real-estate-agents-revisited/ https://freakonomics.com/2008/02/real-estate-agents-revisite... If your house sales for $50K more, each agent gets $1500 more and the brokerage gets 20-40% of that. Let’s say 30%. That means the agent will get a little over $1000 extra. They would much rather sell your house for $50K less and move on than convincing you to hold out for $50K more.
- moduspol 3y ago
  This. Though also worth noting: these agents are often working with the same small pool of other agents throughout their career. Their relationship with them is often more valuable than with any individual client, so it doesn't really pay for them to be adversarial on behalf of their client. Both agents are incentivized to keep a healthy working relationship and focus on closing the sale despite the commission percentage.
  - cyanydeez 3y ago
    right and their negotiations are likely synthetic and geared towards mass deal making, which distorts the market in nuclear ways. if we're all for transparent markets, these commissions interfere and it doesn't matter how close to reality they are as we can agree that they're largely not real, but synthetic amalgamations of something not related to the market.
dragonwriter 3y ago
> But agents aren't incentivized to negotiate lower prices because payment on both sides is proportional to total price sold Typically, agents (on both sides) are incentivized to doing whatever makes the sale happen with the least time, risk, and effort, because what they lose on commission if that involves a (not extraordinarily unreasonable) price cut they make up for in volume.

True. But agents aren't incentivized to negotiate lower prices because payment on both sides is proportional to total price sold. So logically only sellers would benefit from this.

scarface_74 3y ago

Actually they are. It’s about volume not the few extra pennies they get on a sale - especially once you consider the brokerage takes some of that money. The Freakonomics book went into this in detail. https://freakonomics.com/2008/02/real-estate-agents-revisited/ https://freakonomics.com/2008/02/real-estate-agents-revisite... If your house sales for $50K more, each agent gets $1500 more and the brokerage gets 20-40% of that. Let’s say 30%. That means the agent will get a little over $1000 extra. They would much rather sell your house for $50K less and move on than convincing you to hold out for $50K more.

moduspol 3y ago
This. Though also worth noting: these agents are often working with the same small pool of other agents throughout their career. Their relationship with them is often more valuable than with any individual client, so it doesn't really pay for them to be adversarial on behalf of their client. Both agents are incentivized to keep a healthy working relationship and focus on closing the sale despite the commission percentage.
- cyanydeez 3y ago
  right and their negotiations are likely synthetic and geared towards mass deal making, which distorts the market in nuclear ways. if we're all for transparent markets, these commissions interfere and it doesn't matter how close to reality they are as we can agree that they're largely not real, but synthetic amalgamations of something not related to the market.

dragonwriter 3y ago

> But agents aren't incentivized to negotiate lower prices because payment on both sides is proportional to total price sold Typically, agents (on both sides) are incentivized to doing whatever makes the sale happen with the least time, risk, and effort, because what they lose on commission if that involves a (not extraordinarily unreasonable) price cut they make up for in volume.