Can Low Commission Hurt Your Chances of Selling Your Home?

Steve, a home seller in Williamsburg, VA posted the following question on Trulia, “Can low commission hurt my sale?” It’s obviously a hot topic because there have been 506 responses (and counting) since June 4.

Here’s my answer:

No agent/broker should ever “steer” or “sort” listings by commission amount. That harms the buyer and is therefore unethical without the expressed permission from the buyer client (in writing).

Buyer’s agents who take it upon themselves to shy away from listings that are offering less than what is written into their Buyer’s Agency Agreement with their buyer clients,

1) don’t have a Buyer’s Agency Agreement signed in the first place

and/or

2) haven’t spoken in detail with their buyer clients as to what happens when a seller/listing broker is offering less than what is agreed upon in the Buyer’s Agency Agreement.

There are plenty of ways to legally and ethically negotiate a contract to cover the difference in commission between what is being offered by the seller/listing broker and what is in the Buyer’s Agency Agreement prior to contract ratification (with the buyer via seller subsidy). Unfortunately, not many agents know how.

And if you’re wondering why many consumers don’t like Realtors, answers such as, ” Many people look though MLS email updates. Some agents secretly filter their searches so that the automated service won’t send their clients listings unless they are 3% listings. “ is one reason why. Those agents should all have their licenses revoked immediately.

Since I spoke a bit about what a Buyer’s Agent should not do, I’d also like to talk about what a Buyer’s Agent should do…

A Buyer’s Agent should be looking through every property on the market for a property that meets their buyer client’s needs regardless of the commission amount being offered by the seller. This includes properties that are “For Sale By Owner” (FSBO).

I have been asked by my buyer clients many times if they could look at FSBO properties and if I could represent them on the purchase of a FSBO property. The answer is “yes.” There plenty of ways to deal with the issue of commission and they’re all pretty simple, straight-forward and easy if you ask me.

So what’s  your response to Steve’s question, “Can low commission hurt my sale?”

Sellers - How Do Buyers Search For And Find YOUR Home?

Most sellers in Loudoun County, as well as neighboring counties and everywhere else in the world, wonder how and where today’s buyers search for and find their new home. Why? Because they want to know how today’s buyers will find their home (and buy it, of course). If you do not market in the places where today’s buyers search for homes, you will lose very valuable exposure and have a very tough time selling your home. Savvy sellers and real estate agents will know the answer to this million-dollar question and will focus their marketing so that it’s appropriate to today’s buyer’s search methodology.

So how and where do today’s buyers, in general and specifically in Loudoun County, Virginia, search for and find their new home? Here are some stats based on our research and that from other sources:

• 85% of home buyers used a real estate agent to search for a home
• 80% used the Internet to search for a home (up from 77% in 2005 and steadily growing)
• 22% used the Internet to get neighborhood information (a key component in a home search)
• 47% found the home they purchased through a real estate agent (we still have some value)
• 25% found the home they purchased through the Internet (and rising)
• Two of the most important features while browsing for homes on the Internet are photos and property information (why it baffles me that some listings still have no pictures or incorrect/incomplete information)
• 72% actually drove by or looked at a home they found online (they weren’t stalkers after all)
• 46% walked through a home they found online (Internet marketing actually works)
• Only 47% of buyers found a virtual tour helpful (mental note - "make virtual tours better")
• Less than 15% found their home through a sign in the yard (and the number is declining)
• Less than 5% found their home in print media (and the number is declining as well)

(Check out "Related Articles" at the end of the post for the full set of stats)

As you can see, the majority of today’s buyers utilize the Internet to search for and find information on properties as well as to research neighborhoods.  And a growing number found the home they ultimately purchased online. If your home does not have adequate Internet/web exposure, you may lose potential buyers to your competition.

And just placing your home on the local MLS, Realtor.com and Homesdatabase.com no longer works. There are a growing number of listing sites such as Trulia, Zillow, Google Base and others that buyers are using to search for homes. If you’ve never heard of these names, you should start checking around. Trulia already has over 1 million listings, Zillow’s listings are growing daily and Google Base has tons of listings and is expected to release their Google Real Estate beta site shortly.

And if you think that just listing you property on those sites will do the trick, think again. Make sure that you and/or your agent focus on Search Engine Optimization (SEO) for your/their personal real estate site/blog as well as their listings. Where your property comes up in a search for homes with your county, city, zip code, community, street and actual address as a key word makes a huge difference. There are many ways to achieve SEO, but that’s a lengthy discussion for another day. 

Now let’s not forget the stats about how only 47% of buyers are happy with the virtual tours and that the top two things that make a difference to them are photos and property information. Make sure that you have as many pictures up as allowed by each site, that the pictures are of decent quality, that the information on the property is complete and accurate (buyers hate sellers and agents who lie or stretch the truth) and that you have a good virtual tour and/or video tour of your property. There’s nothing worse for a seller than having a buyer find their home online, but click right past it because some or all of these things are lacking.

So now that you know how today’s buyers are searching for and finding their new home, analyze what you’re doing to get in front of them and get their attention.

1. How does your marketing plan stack up against that of other properties/your competition?
2. If you’re using an agent, what are they doing to get maximum Internet/web exposure for your property?
3. Does your agent have your home uploaded on all the currently available sites such as Trulia, Zillow, Google Base and the twenty-some others?
4. Does their site/blog rank anywhere on the first page of results if not the very top 3 to 5 results for real estate property searches in your area/community?
5. How do your pictures, information and virtual tour stack up against your competition?

If you’re a seller with a home currently on the market, you’ll either be patting yourself on the back and/or applauding your real estate agent for being on top of all these items or your scrambling around to do them or you’ll be calling your agent as soon as you finish reading this sentence. Hopefully, it’s the former…

For the full set of buyer and seller statistics, check out - Statistics About Home Buyers, Sellers, Blog Readers and Bloggers

Related Articles: Just How Important Are Property Pictures