You get what you pay for. Paying a low commission will often get you a "For Sale" sign on weekends and an Internet listing, perhaps a Newspaper ad but little extra effort from your agent.
Estate agents use their own funds to market and advertise your home, which costs money: the lower the commission, the less incentive there is for an agent to finance the marketing of your home. For example: part of my funding goes to national TV ads with Remax: we don't use newspaper ads (they don't work), instead, we run national ad campaigns on DSTV which drive leads to our website. I have noticed that my Internet ad response increased dramatically (40 leads instead of 4 per listing) after joining Remax as a result of their strong SEO and recognized branding.
Incentive plays a key role in sales. An agent earning a full commission will often “drop everything” to handle any challenges that come along – an agent earning a small commission doesn't have that same incentive. Most agents will focus on those listings where they know the commission is not an issue.
Negotiating ability is an important skill in a listing agent. Are you willing to put your faith in an agent who can’t even negotiate his or her own commission? If they cannot do this, how can you expect them to negotiate the best price for your most expensive asset? An agent who is prepared to drop even 1,5% in their commission is effectively taking a salary cut of 20%. Would you be happy if the agent likewise reduced your profit on the sale of the property by 20% because they were unable to negotiate a better offer from the Purchaser?
Something to remember is to check if the commission excludes VAT.
7.5% plus VAT = 8.55%
7% plus VAT = 7,98%
6% plus VAT = 6,98%
Since I am an Independent Contractor with Remax there is no VAT applicable to my commission.
Any agent whose main bargaining tool for securing a listing is to reduce their commission is not likely to secure you the best price or be the best person for the job of selling your property.
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