Incentivising Listing Agents? (first post)

[Michael Eichstadt]

Hello Everyone,

I was curious as to if anyone has structured any interesting deals with their listing agent in order to try to motivate them. I've completed 8 deals in my local market in the past couple years and have 2 properties (1 buy and hold and 1 flip) that I will be listing soon. My listing agent says if she can bring a buyer before she lists on the MLS, that she'd be willing to work for a lesser commission (4-4.5% vs. 5-5.5%) This decrease in commission is due to decreased fees and time associated with listing on the MLS, etc. I understand that, but to me, what's her motivation to sell early for a decreased commission?

I remember hearing in, I believe, Real Estate:  Mastering the Negotiation Process that one approach was to use a sliding scale based upon the number of DOM until under contract.  For example:

If the property went under contract within 30 days of listing, the commission would be a full 6%. 

30-60 days would be 5%

60 days plus would be 4-4.5% 

I'd be really interested in hearing from anyone who has had any experience with this or anything similar.  For real estate agents, is this something that is fair to you?  Pros and cons, in your mind?

To me, this makes sense because it gives my agent an incentive to really push the property quickly, which, in turn benefits me.  I've done deals in the past where I have listed for 4% and those properties have sold fairly quickly (30-60 days).  The properties are unique for the market, which gives them a leg up on any properties in comparable price ranges.  Maybe this is a terrible idea but very interested to hear your feedback.

Thanks!

[Jeff Keller]

If an agent brings a buyer before it is on the MLS it sounds like she is being paid for both the listing and buying sides. There is ample opportunity for a conflict of interest to prevent you from getting market price. It doesn't cost anything to list a property on the MLS. The annual fees that have to be paid cover that. If it is not on the MLS the agent is probably thinking she can represent both you and the buyer, getting 100% of 4.5% rather than 50% of 5.5%.

The sliding scale would likely work to your disadvantage. If it can't be sold quickly the agent loses the money needed to place ads etc. 

Pick the right listing agent and the agent will try to sell it without extra incentives. In competitive markets we sometimes recommend our sellers to pay us 2.5% and offer the buyers agent 3% if they want to try something different. The higher commission for the buyer's agent catches the attention of agents with buyers.