Posted: Mar 20, 2012 / Real Estate Business
As a Seller, Is a low commission Realtor a smart move?
There are 350 licensed Realtors in the Key West Association of Realtors. Perhaps one-third of them actually practice real estate. Even so, for a town as small as Key West, 100+ Realtors creates a lot of competition.Some Realtors focus on a specific geographic area, some on a price range and others on a particular style as in fixer-uppers, distressed properties (Short sales & foreclosures), condos in a specific development, etc. Some Realtors emphasize their internet skills. Some Realtors belong to various social or athletic clubs, associations and agencies and use those contacts, their” sphere of influence”, to generate business.

Eventually there is competition in money. In this case – commission. So the question for the Seller is:

“What do I get by using a Realtor who will work for 4%? How do I benefit?

Most Realtors ask for 6% or 7% commissions. Some sellers with expensive properties ask for lesser commissions feeling the large potential sale price and resulting commission amount should be offset by a lower commission percentage. Some sellers are in businesses or cultures where negotiations are common place, if not expected. Some sellers just want to haggle. Some sellers do not understand how commissions work. And some sellers are just plain ole cheap.

Realtors usually have failed to prove their value if a prospective client asks them to reduce their commission.

To demonstrate their worth, your Realtor should have some sort of Premium Marketing Plan that shows how they go above and beyond other agents in helping sellers sell their properties quickly and at top dollar. If you, the Seller, ask the Realtor to lower his commission after presenting his Premium Marketing Plan, you might receive one of these responses:

  • The Realtor accepts the reduced commission
  • The Realtor offers to refer you to Realtors who provide lesser service
  • The Realtor tables the issue until the entire listing relationship is apparent

Even if willing to negotiate a commission, the Realtor will consider holding firm if you refuse to list at the appropriate price, to stage the property, to make recommended repairs prior to listing, or ensure that the home is easy to show. If you, the Seller, don’t value the Realtor’s work before the home is listed, that feeling probably will not likely change down the road.

The explosion of the number of (Realtors) … has led to “a whole lot more people chasing a smaller piece of business, so you’re going to get price competition,” says Steve Murray, president of REAL Trends, an industry research company in Denver. “The lack of measurable differentiation among brokers and agents leaves most with little to compete on except price,” he says. “From our studies,” Murray says, “we know that consumers are starting to resist the price of the commission, not the percentage. It’s one thing to pay a $12,000-$13,000 commission on a $200,000 home, but in a lot of markets, the commission is $35,000-$50,000, and those numbers get people’s attention.”


But back to our question:

If the Realtor is willing to work for a low commission; i.e. 4%, how are you, the Seller, benefitting?

Short answer – If the Realtor can not stand up for himself, how can he possible stand up for you? If the Realtor values her time so low, then how much of it is she going to allot to you? If they have other properties paying 6% or 7% commissions then on whose property will they focus the majority of their time, talent and marketing budget?


I had this seller one time. A self-employed gent, 35 years my senior who had busted his butt his whole life. He had a prosperous business, had sent his three children through college and law/med school. He challenged me heartedly on List price and commission. At his kitchen table with two of three adult children present and after 40 minutes of discussion he finally relented to both. His daughter chided him “Daddy, why were you so mean to this man?” Grinning, he said, “I just wanted to see what he was made of”. His house sold 55 days later at 93% of list. Everyone was happy – especially me as I wanted like hell to do right by this gentleman.


If you have any comments, please contact me here.


Ultimately, a 4% commission on a $975,000 listing that does not sell is a disaster compared to a 7% commission on a$975,000 property that does sell. You, the Seller were so focused on saving money with a 4% commission that you didn’t pocket anything from a sale. I know it can be hard but, that commission is your ticket to a successful sale – and money into your pocket.

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