Anyone have experience with increasing buyers commission?

Question

We're selling our flip and it didn't get the attention we needed it to on the first week. Hundreds of views on the real estate sites, exactly one visit.

We know that purchasing happens the strongest in the first few weeks of being posted and that we're on a strict schedule. We are considering telling the agent that he needs to hold an open house, then dropping the price, but then also increasing the buyer's commission from 3 to 4 percent. We need this house to sell now and a few thousand spent to ensure that buyers have a bit more pressure from their agents to get in there and see the thing seems like a really good idea.

Our current agent agrees that dropping the price is good but disagrees with changing the buyer's commission percentage, instead keeping it at the default 3%.

Has anyone had experience with increasing the buyer commission and could share their perspective, please?

Chris Mason · Answer

Given the volume of threads on private Realtor social media groups that consist of "omg I didn't realize until the 11th hour that the buyer's commission was only 1.5%! What do I do?!" (& subsequent debates about if you should/shouldn't charge the difference to the first time buyer, who has no idea any of this is going on & probably thinks the 3% is enshrined in law somewhere, or something), I'm not under the impression that the majority of buyer's agents pay close attention to that. At some point in the future if variance is more common, perhaps they will check more frequently, but I don't think that day is today. I think a price reduction is in your near future. And, in the medium future, keep in mind that if you have to error either way, it's better to error on listing too low than too high. If you list low, it just gets bid up to market value. If you list too high, it sits stagnant, basically what just happened to you will happen time and time again. But, hey, it's all good. If this is your first flip, and you eek out even a dime of profit, but took away some "lessons learned" that you get to keep forever, chalk it up as a win. The #1 mistake home sellers make, not just flippers but home sellers in general (this is just my $0.02, a reasonable person could totally disagree), is they seem to think that when they discuss the list price with their Realtor, they're negotiating the sales price. The listing agent has absolutely no direct say in what the home sells for, the market dictates that. The listing price is just a marketing tool, nothing more, and nothing less. "Where do we want to show up on redfin/zillow/MLS searches?" is the ONLY thing the list price dictates. Viewed as a marketing tool (not unlike "where do we want to show up on Google? Page 1, or page 10?"), yes, good marketing can certainly impact the final sales price (by expanding the pool of potential buyers, to potentially include folks that want to "overpay," for example), but it's not direct, and it's certainly not the case that listing for $25k higher means it'll sell for $25k higher (the OPPOSITE might happen, since that could reduce your pool of potential buyers!).

Russell Brazil · Answer

If the agent has a good direct email campaign to other agents, that absolutely can work well. I always take notice of the emails I get that show high commissions or agent bonuses. The best part of this strategy is that it is risk free. If it doesnt work, simply later put it back to a standard commission and drop the price.

Chris Mason · Answer

The above is kind of how it's always been here in the SF Bay Area, word on the street is that we've been exporting our normal listing price practices to the rest of the country since March of 2020. You are all welcome. :) It's always been the case that if you saw an Oakland or San Jose listing for $800k, be ready to pay $875k, or whatever. As that becomes more and more true everywhere, that means that people who want $875k homes do not search for homes listed at $875k. They search for homes listed at $775k to $825k. If your $875k home is actually listed for $875k, they won't even see the listing, so you get zero offers. And the people searching for $950k homes have their search parameters set for $850k to $900k. If your "actual" $875k home is appearing on searches for $950k homes (search parameters set for $850k to $900k), then it's going to he the crappiest home that pops up on those ($850k to $900k) search results (because your home is appearing next to a bunch of $950k homes!), so those buyers aren't going to come check it out either, they think the home is trash (b/c they are comparing it to the $950k homes, on the assumption that if it's listed for $875k, you must "actually" think it's a $950k home, which in turn makes you appear to be a "delusional seller, so let's not waste our time on that listing" when all you actually did was list it at actual value [HERETIC!]).

Rick Albert · Answer

@Brendon C.Instead of increasing the buyer commission, maybe offer to pay an amount towards the buyer’s closing cost. This can especially be helpful for first time home buyers.

Sebastian Marroquin · Answer

Agree with most on here… the 4% commission will entice and motivate a few realtors that do not have much business, so you could put on “agent remarks: a bonus of $1000 for any full price offers if we get into escrow by said date _______.” That could help a bit, but not much… I would call back the one agent that looked at it and get some feedback from them. You may want to hold an open house and get straight forward feedback from Potential buyers. 1. What do you think about the home? About the renovations? About the neighborhood? About the flow of the home? The finishes? 2. Would you put an offer on it at this price? Why yes or why not? If not: at what price would you want to move forward ? What other homes are you considering right now? These questions will give you an indication and feedback of what buyers are thinking about.Maybe the renovations are not up to par with other homes in the area… or maybe the neighborhood is not there yet… At the end of the day : it is likely overpriced. But getting the feedback is crucial. If they say: I won’t make an offer… why? Bc it only has 1 bathroom… (what if the seller puts in the other bathroom ? Would you consider it then?) yes or no… But you will never know unless you ask. This is why you have to work with an active realtor that is out there asking questions, doing open houses, and negotiating on your behalf. If homes are selling for $325k and $330k and $317k : I would list for $300k ($295k) If they are selling for : $355k to $370k : list for $349k : etc etc : every market is different and you have to assess the trends, assess your pool of buyers, assess your competition (active listings) and so on… Make a move and reduce the price. Get offers and negotiate a higher amount and good terms. If reducing the price by 5% or 10% will put you in the red when it comes to profit.. then you have to get better properties from the beginning. For flips : 75% of ARV or lower and assess renovations really well also. Good luck What’s the address? Curious now :)

Brian Larson · Answer

As a California Realtor, who represents mostly buyers, I generally don't look at the commission offered. It is my experience that most buyers agents do not look either.