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With the advent of the
web, a lot of agents are offering "cut-rate"
commissions. Most of the time, lower commissions are
tied to a lower level of service. If all you want is to
be listed with the Multiple Listing Service and a sign
in the front yard, then a cut-rate commission may be
right for you. If you want an agent who will actively
promote your property to other agents and spend money on
advertising, then you probably are not going to get that
level of service with a reduced commission.
At other times, the lower
commissions are offered when you agree to tie in to
other services offered by the broker, such as agreeing
to use a specific lender, escrow, settlement, or title
company. The broker (not the agent) will probably have
some type of ownership or profit participation in those
businesses. The problem with agreeing to tie in to these
other companies is that they do not have to be as
competitive in pricing their products or services.
Another common practice
when you see an ad for a reduced commission is that the
compensation is lowered when you agree to buy your next
home through the same agent or broker. Usually, the
reduced commission is not really being offered on the
sale of your existing home but on the purchase of your
next one. The ads are usually unclear on this.
As a result, when you see
an offer for a lower commission, you should analyze what
you are giving up by accepting such an offer. It
probably will not be readily apparent in the
advertisement. Be sure to ask lots of
questions. |
