Do you think it matters if you use a 5% or 6% commission?

[Rob Lawrence]

I am currently selling my house, and I have a 5% commission on it.  My realtor says that maybe I am not getting as many people coming or an offer because of my commission percentage.  In you experience, do you think it makes a difference?

[Nick G.]

Hi @Rob Lawrence, commission amounts absolutely make a difference, the specifics of which I'll hit in a second. The laws and normalities of different states vary a lot, but in my experience, certain principles are true across any market.

The vast majority of buyers purchase homes through agents. In my market, those agents are typically accustomed to earned 2.5%-3% of a property's purchase price for their work. There are agents who will work for less, and there are agents who will charge more. However, for decades, 2.5%-3% to each agent has been the typical and customary fee.

What this means is that if you're offering less than the typical commission amount for your area for a buyer's agent to bring their buyer to your property, you will always tend to get less of their attention. I'm not talking about the morality or ethics of any of it, I'm simply talking about human nature. If an agent has two similar houses to show to their buyer in an area where they normally receive 2.5% for their work, and one house is offering 1.5% commission, and the other is offering 2.5%, you can bet that that agent is going to be a whole lot more interested in showing their buyer the house offering the standard commission.

Now, your original post asked about the difference between 5% and 6% - I'll speak to that as an agent in Southern California. When I take a listing, I never ever offer less than 2.5% to a buyer's agent, because in my area, I know that will do nothing but hurt the attractiveness of my property to other agents, whom 99% of buyers are using - even if that means I end up making a lot less than the buyer's agent.

I suggest you research your area by asking someone you trust what the typical buyer's agent commission is in your area. That will give you your answer.

For what it's worth, selling a home is actually very easy to do, agents make it sound super complex in order to make themselves sound smarter, but it's a load of crap - navigating the escrow is the complex and risk-fraught part, selling the house is easy. The top things you should make sure are in order are the following:

1. Your pictures/remarks. Buyers typically only buy homes after seeing them, but they won't bother seeing them if your pictures and comments suck. Don't cheap out, hire a professional photographer.

2. "Showability." How easy is it for buyers to see your home, and is it clean and presentable once they get there? A vacant house with a lockbox is the best you can get. If you're making people give you 142 hours of notice, or forcing them to schedule a showing with your agent and forcing your agent to be present as well, or if you only allow showings once per 8.5 days, or if your entire house looks like my 10 year-old's bedroom after a weekend of playing with Legos... all of those things will hurt you.

3. Buyer's agent commission offered (also called SoC - Selling Office Commssion.) Covered above.

4. Your price. If you're over-priced, you'll know it, because your home won't sell, period - but this is last on the list for a reason. Your price has to be justified, and if the market's not giving you your price, then check to make sure the above things are in order - only adjust your price once there's nothing else you can do to the first three things.

Last but not least, do keep in mind that markets differ wildly from area to area. I believe what I've said above holds true in most markets, if not all, however, I'd be doing you a disservice if I didn't say to verify my opinion with a local agent in your area who really knows their stuff. If nothing else, hopefully some of this helps you ask some good questions. Good luck.