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How Lower Commissions Can Negatively Affect Selling Your Home

"Negative Impact of Lower Commissions on Home Selling"

Whether you are selling your first home, or you have sold multiple homes, chances are you have experienced numerous listing appointments with realtors competing to sell your home. Each realtor has their personal systems and processes, and some have brokerages that empower them with the latest technologies. Toward the closing of their presentation, each agent will share their commission structure and how the commission is split between the agents and brokerages involved.

How an agent (and their brokerage) position their commission structure will reveal a lot about their experience, expertise, and overall strategies. If you are like most sellers, you might assume that a lower commission rate will add to your profit on your home. However, experience has taught us differently. In actuality, when an agents resorts to reducing their fees before a proper negotiation, one or more of the following reasons are behind their decision:

  1. Agents and brokerages who reduce their commission lack strategy. Most of the time, the agent is new to the industry and inexperienced, so they are unfamiliar with the work and effort that goes into building and executing a sales plan for your home. Because they fear the fierce competition, they resort to discounting their fees as a way to stand out from other agents.

  2. The agent and/or their brokerage have incomplete or weak marketing plans. When it comes to marketing real estate, there are two types of marketing plans: Active and Passive. An excellent example of passive marketing today is newspapers and open houses. An active marketing strategy does include open houses, but that is just one part of the overall marketing strategy.  A truly active strategy will consists of social media, video, professional photos, live or 3D tours of your home. Active marketing utilizes a clearly defined and executed plan of action to identify, pursue and bring a qualified buyer onto your property.

  3. The agent (or their firm) does not invest in technology. Simply put, technology is an absolute MUST for real estate sales and marketing to properly provide your home the proper amount of exposure and generate the best prospects in the least amount of time. At The Claircius Group, we are very aware of the power technology offers. We actively invest in social media marketing, SEO, and other digital marketing experts to help us market your property to more potential buyers than any of our competition.

  4. The agent lacks sales training or self-confidence.  Experience is the greatest teacher! If an agent has not had the proper amount of experience and training, they will lack the confidence to understand the value of their skills, network, and ability to help you sell your property. An agent who is experienced and confident in their skills is almost always to your advantage.

  5. The agent (and possibly their firm) do not have many other listing or sales. If the market is in fierce competition or inventory is low, the agent may feel that quickly listing and selling our home for a low fee will help generate more business in the future.

Any of the five scenarios described above are examples of shortcuts or cutting corners to try to sell your home. These scenarios, in some ways, make selling a home similar to building one. Builders pay virtually the same price for land, materials, and supplies. However, labor costs are dependent on experience, skill, and expertise. For builders who lack a sense of value for the quality and craftsmanship their skills can offer, they tend to try to save money and increase profit building a home is to “cut corners.”

Many realtors are guilty of this same behavior when selling a property. In today’s market, agents need to leverage the broad range of opportunities available through the use of technology and supporting services along with innovative marketing to secure the highest price in the shortest amount of time when selling your home. “Cutting corners” by cutting commission is a risky business for everyone involved. At The Claircius Group, our team’s passion and responsibility is to protect your equity and list your home at a price that successfully attracts the right buyer as quickly as possible. If you are considering selling your home, allow us the opportunity to provide your home’s value for you in a complimentary report or contact us to schedule a listing presentation to experience The Claircius Group difference.

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