HOW REAL ESTATE COMMISSIONS WORK AND HOW TO PAY ZERO TO 2% TOTAL COMMISSION WHEN SELLING YOUR HOME!
SELLER COMMISSION SECRETS!
YOU PAY YOUR AGENT AND THE BUYER'S AGENT!
In a traditional listing, you're required to offer compensation to the buyer's agent if you wish to list on the MLS! You’re forced to pay the buyer's commission in addition to your own! The seller paid buyer agent commission treats sellers unfairly.
THE BUYER AGENT'S JOB IS TO WORK AGAINST YOU!
The Buyer Agent's job is to work on behalf of the buyer for best price and terms AGAINST you! Your net is reduced by the amount of any buyer commission paid. It's an inherent conflict of interest.
NAR "COOPERATIVE COMPENSATION RULE"
To list on the Multiple Listing Service, the MLS, the National Association of Realtors mandates that listing broker "shall" make a blanket offer of compensation to "cooperating" brokers. Most Brokers will not allow entry of a listing offering less than 2.5% buyer agent compensation.
SELLER PAID AUTOMATIC COMMISSION!
Because "cooperative compensation" arranges automatic seller-paid commissions at settlement for them, buyer agents don't negotiate their commissions, since the buyers, their clients, are not paying them! You are! There is no competition on rates on the buyer side!
HOW SELLER-PAID COMMISSION WORKS IN A TRADITIONAL REAL ESTATE LISTING
Industry compensation practices are the source of a lot of confusion and have resulted in litigation alleging that they violate the Sherman Anti-trust Act. Ultimately, the lawsuits center around the mandatory offer of compensation by the seller to cooperating brokers! Disclosure and negotiation of buyer-broker commissions is also at issue.
In a traditional listing, seller net is reduced by whatever commission rate is charged. Example: 6% total commission, split "cooperatively" 3% to the buyer side. Home sells for $500,000. $500,000 x 6% = $30,000. Before other costs of sale, seller net is $500,000 - $30,000 = $470,000. Under standard rules, the seller had no choice but to offer $15,000 compensation to the cooperating buyer broker, whether or not cooperation was wanted or needed!
The auction structure is not subject to seller-paid "cooperative compensation." Buyer pays his own commission, saving you that 3%. That's $15,000 on a $500,000 transaction!
The buyer marks the $500,000 offer up by a 3% "buyer premium." So, $500,000 + $15,000 = $515,000 final sales price x 6% commission total (His own agent is paid from that amount as is the seller's agent. All costs are drawn from gross proceeds at settlement.) $515,000 x 6% = $30,900. $515,000 – $30,900 = $484,100.
Buyer paid their own agent. Seller paid a total commission cost of 3% not 6%. Seller net is higher. And that's using a traditional 6% commission! (I use a Total Seller commission of 2%, with a Buyer Premium of 3%, which pays buyer agent 2.5% and .5% platform costs.)
Those "cooperating" buyer agents aren't "bringing the buyer" to your listing. The buyer saw it online and asked the agent to schedule a showing. Agents representing buyers bring a lot of value to the buyer and to a successful transaction. And in this market, they're working extraordinarily hard with multiple competing offers, and difficult frequently unsuccessful negotiations. Depending upon the value they bring, they deserve to be compensated. But shouldn't the buyers, their clients, be compensating them?
On January 6, 2022, M. Ryan Gorman, president and CEO of Realogy Brokerage Group and CEO of Coldwell Banker, told the court, “[I]t is the position of Realogy that the mandatory nature of the NAR Cooperative Compensation Rule should be rescinded.” (Amend the rule from “shall” to “may.”) That may be the beginning of the end for the rule.
You can buy or sell a house online without ever taking out a pen to sign a contract. Electronic document systems, online Notaries, and virtual closings are routine. Multi-million dollar homes are sold globally in online luxury auctions. While online bidding is part of the process, no hammer is struck, and highest bid doesn't necessarily get the property!
It's NOT technically an auction since highest bid does not necessarily win! (Contingencies affect real estate offers and all standard contingencies apply! We use the structure.)
Marketing is massive and exceeds standard marketing efforts, contract negotiation is offline, as is the contract to closing process.
The "Auction" structure has been in the MLS as long as there's been a MLS. An "auction" traditionally is a one-day "event" with an auctioneer openly calling prices at the property. We're NOT doing that. We're just using the structure. It allows you to have the buyer pay their own commission!
It is standard in the auction structure to include a "Buyer Premium." It can be set at any level. A Listing Agent might offer a Seller a Zero % listing commission while charging a 5% buyer premium, drawing his or her compensation, and any "cooperating" compensation, entirely from the buyer premium.
Or, the listing agent could charge the seller a TOTAL commission of 2-3% with the separate 3% buyer premium paying cooperating compensation and platform cost. That is fair to both parties.
How does a seller get full benefit of the MLS, accommodate "cooperative compensation," yet have the buyer pay his own commission thus saving half the expected cost? And how does he pay a TOTAL commission of 2%? (Not 5-6%)
My system is a hybrid between the traditional real estate listing and sale process and a real estate auction. I use all the technology resources mentioned! Online bidding is part of the structure, but it is NOT strictly an auction. Online bids assure speed, efficiency, competition, and transparency in the sale of your property.
You always have the final say to accept, counter, or decline any offer!
SPECIFIC DETAILS AND .pdf Download:
"HOW I PLAN TO SELL YOUR HOUSE!"
DON'T PAY 5-6% ESPECIALLY IN THE BEST EVER SELLER'S MARKET!
With online listings, everyone has access to home sales price data and detailed information through the internet. Searching for new listings is as simple as downloading an app, choosing your location, and awaiting notifications with options. Technology has had an enormous positive impact on real estate, but little impact on reduction of the traditional 5-6% commissions. That's largely because buyer agents are not forced to compete and negotiate their commissions!
Business models have emerged with entities like Rex (which refers to industry practices as “cartel economics”), Clever Real Estate, Ideal Agent, Redfin and others offering sellers 1-2% seller (“Listing”) commissions. These brokers cannot reduce the buyer side commission and comply with the rules. So they compete with a lower listing commission. Buyer commissions of 2.5%-3% offered through the MLS in addition to the listing commission then make total seller paid commission 3.5%-4.5% vs. the traditional 6%. (The listing agent, who is typically a more highly-qualified agent, bringing much greater value to the seller, is compensated 1-2%, while being forced to offer 2.5%-3% to buyer side!) While lower, seller is still paying both "sides!"
Defense of the status quo causes downward pressure on commission rates, listing commissions! Sellers unknowingly forced to pay high unnegotiable buyer agent commissions request lower commissions from the Listing Agent, who must offer a broker-required minimum percentage amount to the buyer side, then reducing their own compensation to get the listing! Listing agents resent reducing commissions while mandated to offer a higher portion to the buyer agent than they receive!
Call or text me now at 540-841-1825.
Let’s accomplish your goals and get your home sold!
1440 Central Park Blvd., Suite 210
Fredericksburg, VA 22410
Samson Companies LLC is an independently-owned real estate brokerage headquartered in Chantilly, VA, operating as Samson Properties. 14526 Lee Road, Ste. 100, Chantilly, VA 20151. 703-378-8810.
2022, Ernie Dill, All rights reserved.
Licensed in the Commonwealth of Virginia, 0225-196087
I’ll sell your house by providing you a far superior professional home sale, to get you the highest net asset value with minimal hassle, while streamlining the process to 14 days or less! My strategy and technology platform breaks with traditional real estate industry approaches to have your buyer pay their own costs and give you the best and lowest commission!
It will triple your buyer demand, bringing you 50-100 buyers, maximize competition, and result in multiple competing offers to get you the highest possible sale price and net in your pocket!
