Q: Denise, I have had a few of my buyers decide to go with rebate and discount brokerages who give back commission dollars at closing to my buyers. I am so tired of this happening, but don’t feel like I can – or should – cut my commission. What do you think?
A: I think you need to read the fine print. Many of these programs have limits on the amount of commission that is given back, so you definitely need to do the math to show the buyer what they would really get back on their particular transaction.
You should also look at your numbers and see how they compare. For example, if you are able to negotiate the final sales price down more than your MLS average, this should be taken into consideration.
Here is how this works – say your average sale price to list price ratio for buyers is 95%, but the average for your MLS is 97%. This means that on average, using a $300,000 home for example, your buyers would pay $285,000. But the average agent would only negotiate that down to $291,000. But let’s say that average agent is part of this commission program and has agreed to give the buyer back $2,500 at closing. The buyer would still be financially better working with you to the tune of an additional $3,500 in their pocket.
You should also look at the services that are provided by the rebate and discount brokerages as often, the level of service and representation is less than what they would receive when working with you.
Read the fine print and you can articulate your value to buyers who are considering going with a rebate or discount brokerage.