What’s the Story with 7 and 8% Commissions?

With properties spending more time on the market, many brokers have convinced sellers to increase commissions to as much as 9%. Rather than lower the asking price, they are hoping to increase the number of showings by the brokerage industry and ultimately sell the apartment for an excellent price.
Many of my friends, family and clients have asked me for my thoughts on this subject.
I recently represented a high-end property in which we needed to find a buyer with a vision for the property’s potential. After five months on the market, the seller and I decided that an 8% commission may just rescusitate this apartment and incentivise brokers to bring a new pool of buyers to see the space.
The result was INCREDIBLE. Some brokers who had previously shown the space at a 6% commission and had nothing positive to say were suddenly transformed into the “ultimate salesperson” within only remarkably positive things to say about a property in which NOTHING had changed but the amount of money the broker would procure. I was stunned at this behavior. I must add that most brokers didn’t change their views on the space, but enough did that I became discouraged by their behavior.
Ultimately, the seller and I decided to lower the price and pass savings onto the prospective purchaser. We sold the apartment immediately upon lowering the price. So as convincing as these brokers attempted to be when they stood the reap the rewards of an 8% commission, none of them were able to effect a sale. A reduction in price did the trick.
Moral of the story: “don’t get bitten in the asking price.” Now more than ever, the price at which you begin marketing a property is the most important factor when selling, followed by a solid marketing plan, and savvy negotiations.

This entry was posted in Dirty Real Estate Tricks, Market Insight. Bookmark the permalink.

2 Responses to What’s the Story with 7 and 8% Commissions?