10 Reasons a Lower Commission will negatively affect the Selling Price of Your Home
By Al Filippone Associates, Broker, CIPS, CRS, GRI
Many sellers of real estate assume that a lower rate of commission will add to their “bottom line” at the closing table. Experience has taught us differently. In actuality, at least one of the following is more likely to occur:
1. Low enthusiasm often equates to a lower price. A man was once asked when getting a shoeshine if he wanted the $2 shine or the $5 shine. When he questioned, “What’s the difference?” the merchant answered, “my enthusiasm!” A major part of the mission in marketing your home is creating a sense of enthusiasm and a sense of urgency among the buyers. The alternative is a sense of apathy!
2. Commission cutting firms typically lack strategy. They are unfamiliar with the work and effort required to conceive and execute a sales plan. They fear their competition has these advantages and offer to ‘discount their fee’ as a way to “level the playing field”.
3. The agent within the firm lacks self-confidence. This can be a result of many factors, including inexperience or lack of training. In any event, the agent does not feel that he or she deserves a full fee and offers to reduce it. An agent who is confident in their skills is almost always to your advantage.
4. The Agent and his or her firm do not have a strong marketing plan. There are two types of real estate marketing plans. Active and Passive. Newspaper ads and open houses are examples of passive marketing. The agency places an ad and waits for a response. Active marketing is taking a clearly defined and executed plan of action to identify, pursue and bring a buyer onto your property. Which would you prefer for your home?
5. The Agent or firm does not have many other listings. If lack of inventory is an issue, the agent may feel that quickly listing your home at a low fee will help them generate more business.
6. The Agent lacks negotiating skills. These skills are as important as sales and marketing skills. If an agent lacks the expertise and experience to substantiate their own fee, how are they going to negotiate the best price for you on the sale of your home?
7. The firm wants a For Sale sign in your location, at any cost. In some locations, a sign will generate many leads that can result in the sale of other listings that an agent’s firm may have. This is also the reason that some agents suggest above market offering prices.
8. The firm that reduces fees has a history of taking the path of least resistance. Due to many factors, the agents with these firms are incapable of explaining the value of the services that they offer, or the value is just not there. Will the path of least resistance serve you well in negotiating with a buyer?
9. The Agent and his or her firm do not invest in technology. A significant investment in technology is a must for a real estate firm to provide you with optimum service and generate the most prospects for your home. The only area boutique staffed with a full-time, in-house Social Media person, Al Filippone Associates is positioned to market your property to more potential buyers than any of our competition. From the highest quality marketing promotions – including search engine optimization, enhanced mobile applications, email dissemination and more – Al Filippone Associates provides you with the most extensive array of technological advances. Add to that the twelve million visitors per year and interactive capabilities at Raveis.com – the choice is obvious.
10. It will take longer to sell your home. Is there any doubt that even one of the above factors will likely result in a longer market time for your home? The longer a home is on the market the more likely it is to become ‘shop worn’. One of the first questions that most buyers ask is “How long has this house been on the market?” There is a direct correlation between sales price to list price ratio and market time.
In some respects, selling a home is similar to building one. Builders in any given area pay virtually the same price for like materials and components. Labor costs are dependent largely on experience, skill and expertise. The obvious way in which to initially save money building a home is to “cut corners”.
It’s the same idea with selling a home. It has become essential for today’s seller to leverage the broad range of opportunities that are available through the use of technology – services and innovative marketing to procure the highest price when selling a home. “Cutting corners” by cutting commission is a risky business. My responsibility is to protect your equity and my sale price to list price ratio indicates that I will be successful in doing just that.
Image by © David Selman/Corbis
