A Revolutionary Take On The Cost Of Selling
For years the real estate compensation model has encompassed an injustice to the Home Seller. In the traditional compensation model the Seller’s representative (Listing Broker) is paid by the Seller at a successful closing. Customarily this compensation is a percentage of the final Sales Price.
In the agreement between Seller and Listing Broker there is customarily a paragraph that addresses the so-called Coop.Fee being paid to a Broker representing the Buyer. This Coop. Fee (as are all fees) is negotiable at the time of putting together the listing agreement. The Coop. Fee is part of the total compensation paid by Seller at successful closing. One function of the Coop. Fee is to entice the Buyer’s Broker to write an offer on the Seller’s home, because of the height of compensation that is being offered. When used right, it can be a great marketing tool. Not withstanding the large number of honest brokers out in the field, Real Estate agents are human and have bills to pay.
The injustice is found when the marketing activities of the Listing Broker result in a Buyer for the Seller’s home, where the Listing Broker also represents the Buyer. Because the listing agreement calls for a total fee to include the Coop.Fee, this said Coop.Fee is then also earned by the Listing Broker. The contradiction in all this is that the Listing Broker receives a bonus for that what he/she’s supposed to do: Sell the home!
Example: Seller agrees to pay Listing Broker a fee of 6 % of the final sales price for the marketing of their home. Listing Broker offers 3 % of the final sales price to any Broker representing the Buyer. In fact the Listing Broker implies that the marketing for a successful sale can be done for 3 % of the sales price. So why should the Listing Broker receive a 3 % bonus for finding a ready, willing and able Buyer? That was the job! Some will argue that they have to work harder as they need to keep track of the process on the Buyer’s side of the transaction. However, a good Listing Broker will do that anyway to protect their Seller. Granted, some Listing Brokers will give a small discount on the total compensation, but the question remains the same: Why the bonus for just doing what they agreed to do already?
Property Mill Real Estate Group LLC employs a compensation plan that prevents this from happening. Whenever the Listing Broker’s marketing activities result in a Buyer without representation from another Broker, the Coop. Fee is waived, effectively saving the Seller the agreed upon percentage of the Sales Price. This can amount to thousands of dollars.
Furthermore, Property Mill Real Estate Group LLC employs a compensation plan that is based on a combination of competitive Fixed Fees and the traditional percentage fee to compensate Buyer Brokers.