Hiring a creative and flexible agent is perhaps the most effective and least often employed method of selling a home. At its simplest form, it’s is a combination of characteristics of the exclusive agency and exclusive right to sell agreements.
What You Should Know About Finding the Right Agent
To find an agent who is willing to offer more flexibility in the listing agreement, there are a couple of things that are important to understand. Traditional agencies operate on a “split commission” basis with their agents. The house covers most, if not all, overhead, training and marketing expenditures, and the agent agrees to split the commission when they are successful in helping people buy and sell homes. These commission splits are usually tiered based on performance and productivity.
These “house-agent split commission” agencies are the least likely to compromise on contractual points and relationship structure. When meeting with an agent from a traditional brokerage, they are not going to have the ability to negotiate something creative without checking with their broker or another decision maker first, and the more decision makers, the less decisions are being made. This is especially true when asking both a broker and their agent to potentially discount their commission.
Why Agents May Be Reluctant to Be Flexible
When an agent doesn’t want to do something differently, it’s easy for them to say, “My broker would never go for that,” or “Our company doesn’t allow us to discount the commission or offer exclusive agency.” They have some good reasons for this.
As we mentioned in an earlier post, every listing costs marketing dollars, time and effort that could be put toward listing homes on a traditional commission structure. So the first step for you to take is to reach out to companies that allow their agents to offer creative hybrid listing contracts that are negotiated between the seller and the real estate broker.
Where to Find an Open-Minded Agent
A recent phenomenon is the 100% agent commission agencies. These are the Re/Max and Realty Mark franchises among others. The agent receives 100% of the real estate commission for each transaction but pays a monthly desk fee to their company. Even if the agent has not sold a home in six months, the agent continues to pay a desk fee. The agents who choose to work for the 100% commission split companies tend to be more open-minded to a creative hybrid listing contract since their overhead is fixed each month. Additionally, they keep 95 to 100% of the commission on all transactions. This allows them to negotiate more creatively, achieving a win-win listing agreement with sellers. Their flexibility lies in the fact that they have 100% of the commission with which to negotiate.
As a seasoned Realtor, Jim, Sr. worked for a 100% company for approximately 18 years (Re/Max) and now works with Realty Mark. Realty Mark encourages agents to be creative problem solvers in their transactions and they offer a high tech paperless office environment, passing on the overhead savings to their agents in the form of lower monthly desk fees.
How the Internet Changed Real Estate
We’ve seen agents in both commission environments offering creative solutions to sellers. The new internet-driven real estate environment, where home sellers have unlimited access to real estate information, has left many agents realizing that they have to be flexible and creative in order to continue to be successful. Agents are going to have to give sellers more options at lower costs than the traditional 5% to 7% real estate commissions that are still being offered nowadays. Some agents have already adopted new options. In addition, they are going to have to get even more specialized, focusing on the things that great agents can do that home sellers cannot do themselves.
See our article on today’s buyer for more information about how the internet has changed real estate.