Day 11- Agent Fees and Pricing

11 Oct

Wow- How can it already be Day 11!?  This month is flying by! 

Yesterday we talked about selecting the right listing agent and the interview process.  In addition to what I said yesterday about interviewing, I thought I would add one more thing.  Many times, the agent will have already toured your home and prepared a suggested list price to include his/her schpill.   So, it is good to be prepared to discuss the list price on the initial meeting/interview.  You will want to look at all the data that the agent reviewed in making the determination and ask questions as to how the agent came up with the number.

The list price is obviously a critical decision. The best time to get an offer is during the first 30 days on the market.   If you set the price too high, you won’t get traffic that you need, which will result in a price reduction.  Price reductions can sometimes make Buyers wonder what is wrong with your house.  Buyers may also lower their offer because you look desperate or soft on the price.  It is much more advantageous to set the price right the first for a quick sell and a higher sales price! 

How do you determine what the list price should be?  Your agent should guide and advise you based on their knowledge of the market and your neighborhood, but ultimately YOU determine the price, not the agent.  Your agent should provide you with comparable sales (or “comps”) for recent sales and pending sales in your surrounding neighborhood.  You should look at the list price versus sales price data, days on the market, price per square foot (is lower the larger the house), and amenities on the property to adequately compare your house to the comps.  You also need to evaluate your competition.  You want your price to be competitive with the other houses for sale in your area.   

Other information to analyze includes the general market.  How stable is the market?  Is the market trending up or down?  If the market is trending down, new competitors will enter the market with lower prices than yours, which may lead to them selling faster and you reducing your price to stay competitive.  We’ve already discussed how price reductions can be detrimental, so you want to price the house with the trend of the market in mind. 

Let’s move on the agent fees.  The standard fee is 5-6% of the sales price.   I saw a stat online that 41% of people attempted to negotiate the agent’s fees.  Of those, 71% were successful in getting a lower fee and all of those people were satisfied with the agent.  If it makes you feel better, by law, the commission rate is to be negotiated.  

You can just straight up attempt to negotiate the fee or by using the strengths of your particular home (condition, location, etc) which will make for a quick sell.   The better your house (which is why we are sprucing up, purging, and staging), the faster it will sell and the easier it is on the agent!  

You can also negotiate using the competition.  This is why talking to a few agents is a good idea- so you can compare fees and use the other agent’s fees as a negotiating tool.  Competition is fierce in the real estate market and you may be able to use that to your advantage in negotiations. 

If you are using the same agent to sell your house and buy another house, then you should definitely get a discounted rate. Other negotiation points include, giving referrals, reducing the marketing plan, or even doing some of the marketing work yourself (take great photos, print up brochures, etc.).  Another idea is to get a lower rate, but offer a “bonus” if the house sells in a certain number of days and/or at a certain price. 

Obviously, there is a lot to be considered when it comes to the money end of things.  You want to get as much money for your house as possible, without setting the list price too high, and to keep as much of that money in your pocket, instead of paying high fees to your real estate agent.   With these tips, I think you can accomplish all your goals!

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