“They can get me a much higher selling price for my property.”
Outside the typical negotiation margin around your asking price, no real estate broker, not even one of our member brokers, has any control or influence over what someone is willing to pay for your property. Your property will sell for as much as someone is prepared to pay for it.
Brokers can look up so-called “comparables” in your area to come up with a ballpark figure for an asking price, but any honest broker will tell you that it’s more guesswork and gut feeling than science.
If your broker is claiming that only a percentage-of-sale-price brokerage fee can properly “motivate” them to work hard to get you the best possible sale price for your property, there again you’re getting lured into an old trap.
You see, not only do brokers not have any control or influence over the sale price, they aren’t actually as incentivized to push for a higher price than the best offer on the table for your property as you might think, even if you’re paying a percentage-of-sale-price commission.
Suppose you’re looking to get $340,000 for your property. You need to leave yourself some margin for negotiation so you put it on the market for $350,000.
A buyer comes along and offers you $330,000. At 5% commission, this offer will net your broker a $16,500 brokerage fee. So what exactly is your broker’s incentive to risk delaying or losing the deal by squeezing the potential buyer to pay an extra $10,000 for your property? $500 more. If the buyer has a broker, it’s only $250. That’s before expenses and their kick up to their agency. At 4%, it’s only $400 or $200 respectively.
Don’t be fooled by the illusion that a percentage-of-sale-price broker will be better “motivated” than a fixed-rate broker to secure an improved offer for your property. Just like the rest of us, brokers want to get paid.
You should also know that a broker is legally mandated to sell your property for the target sale price agreed to in your brokerage contract. Whether they are a traditional broker or a FIXE.IMMO member broker, your broker has the legal and ethical obligation to engage in best efforts to achieve this goal.
The question is therefore not which broker is better motivated to get you the best price for your property, but at what price their efforts to achieve the same objective will come. Check out our calculator to see what we mean.