Deal Me In! – The Sales Agent Co-op Fee
A gambler would never go, “all in”, before they saw all their cards. Betting in that style would be wildly irresponsible. That, and the odds of losing money would be almost certain. Generally speaking, card players don’t lead with their highest trump unless they are forced to do so. The strategic rules of card games are pretty easy to understand once you get the hang of them.
What if real estate were a card game and your home was the hand you were dealt? What would you do? And, to give this game a way of keeping score, let’s say the object of the game is to significantly reduce the costs homeowners pay when selling their home(s).
The most logical first step would be to assess your hand and your chances of success against others at the table, or in this case, your neighborhood. Let’s use the Inman Park Village Lofts as our example. Sales history shows 6 of the last 7 properties sold with a “days on market” of less than 10. (The area average is 10X that)
Days on market under 10 tells us two things. Inman Park is popular and people are “watching” Inman Park for listings to appear. This is particularly true for Condominiums buyers. Buyers know the area, and, more often than not, have already made their decision on the Building. So, if you have a “move-in” ready home in Inman Park Village lofts, you have what is undeniably known as, a very strong hand!
Yet, despite having one of the best hands in all of real estate, every homeowner in the last 7 transactions in the Inman Park Village Lofts, may have unnecessarily led with their best offer, leading many of them to a certain loss of thousands of dollars.
The traditional chain-store sales format identifies, in the Listing Agreement, how much of the seller’s money will be given to the agent who is representing the buyer. And yes, the homeowner is paying the commission for the sales agent who is negotiating against them. It’s a silly system that isn’t going to change anytime soon. That said, the most obvious way you can reduce cost is to, “manage” this silly system.
In every instance, of recent Inman Park Village Loft sales, the homeowners agreed to pay the Buyer’s agent a 3% sales commission. Why is the homeowner leading with their best offer? Every one of these properties would have sold just as easily by paying a 2% commission. A case can also be made, based on the strength of the Inman Park hand, every one of these properties would have sold with a 1% commission. The difference between a 1% and 3% commission on these 7 recent sales equates to over $44K in lost money. Well, not really lost, but rather misplaced in other people’s pockets. Not exactly the object of our game!
Why did the homeowners of Inman Park Village Lofts, knowing area demand and the extremely low average days on market, agree to give away 3% so readily? Were they told they had no choice? Did anyone ever discuss a sales strategy with them? What are other ways a homeowner can save costs when selling a home?
At Inman Park Realty, we don’t have the chain-store mentality. We are a real estate service for the homeowners of Inman Park ONLY. Every client and every home is different and deserves its own strategic assessment. Even if you are not in the selling market today, we would love to hear from you and discuss our approach.
Let’s stop overpaying.