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paying a percentage based fee gives me confidence that my agent's interests are aligned with mine. And I have two interests only. One, close a deal. Two, get th

paying a percentage based fee gives me confidence that my agent's interests are aligned with mine. And I have two interests only. One, close a deal. Two, get the highest price. One of the key things a realtor do is set the asking price. the higher they set it, the more work for them. of course i want it high, so i want them incented to make it as high as possible, and to push me to stage it properly, have knowledge of WHEN to sell and then CRUCIALLY help me evaluate competing offers. Because often the highest offer is a scam. Its a wild world out there you absolutely need a seasoned professional in your corner, who knows your market, fighting for you.

ryandvm 3y ago
Actually, do the math and you'll realize that a selling agent is incentivized to quickly take lower offers rather than hold out for higher offers. They more than make up the difference by increasing the volume of closings.
- MichaelZuo 3y ago
  This depends on local market conditions? If supply outstrips demand the agent will be incentivized to wait as long as needed, or perhaps even too long.
dalyons 3y ago
but with the run up in house prices, the percentage doesnt really do that anymore. For many areas in cali with a median > 1mil... The agent is getting 30k on your 1mil sale. If they push REALLY hard and get it to 1.1 mil, they get 3k extra, which is something, but not much extra incentive compared to the 30k. What they are actually incentivized to do in expensive housing markets, is do the minimal possible effort per house, but sell more volume. You could of course design a better incentive structure (fixed fee for median sale, tiered incentives for every % over that), and thats what i hope happens from these changes.
jedberg 3y ago
When people have done studies, they have found real estate agents on average sell their own homes for 10% more than anyone else. Because think about it. If their commission is 3%, are they really gonna fight to sell for $350,000 in a week if they can sell it for $300,000 today and get a new client, when the difference to them is $1,500? If they can get even one extra client per year for the other $9,000, it's much more worth it to do that than to hold out for a better offer.

ryandvm 3y ago

Actually, do the math and you'll realize that a selling agent is incentivized to quickly take lower offers rather than hold out for higher offers. They more than make up the difference by increasing the volume of closings.

MichaelZuo 3y ago
This depends on local market conditions? If supply outstrips demand the agent will be incentivized to wait as long as needed, or perhaps even too long.

dalyons 3y ago

but with the run up in house prices, the percentage doesnt really do that anymore. For many areas in cali with a median > 1mil... The agent is getting 30k on your 1mil sale. If they push REALLY hard and get it to 1.1 mil, they get 3k extra, which is something, but not much extra incentive compared to the 30k. What they are actually incentivized to do in expensive housing markets, is do the minimal possible effort per house, but sell more volume. You could of course design a better incentive structure (fixed fee for median sale, tiered incentives for every % over that), and thats what i hope happens from these changes.

jedberg 3y ago

When people have done studies, they have found real estate agents on average sell their own homes for 10% more than anyone else. Because think about it. If their commission is 3%, are they really gonna fight to sell for $350,000 in a week if they can sell it for $300,000 today and get a new client, when the difference to them is $1,500? If they can get even one extra client per year for the other $9,000, it's much more worth it to do that than to hold out for a better offer.