In a recent blog I wrote about the ways in which a less than full commission negatively affects a home seller’s bottom line. Today’s blog graphically illustrates that the same holds true for a Realtor. Below is a list of 18 properties that have sold during one month at Al Filippone Associates along with the commission percentage, company dollar and what the company dollar would have been with a different commission fee for the same properties.
- Price Comm. % Total Co. $ At 3% At 2.5% At 2%
- $550,000 3.5 $19,250.00 $13,750.00 $12,375.00 $11,000.00
- $1,200,000 3 $36,000.00 $36,000.00 $30,000.00 $24,000.00
- $655,000 2.5 $16,375.00 $19,650.00 $14,737.50 $13,100.00
- $334,000 3.5 $11,690.00 $8,350.00 $7,515.00 $6,680.00
- $881,000 3 $26,430.00 $26,430.00 $19,822.50 $17,620.00
- $292,000 3 $8,760.00 $8,760.00 $7,300.00 $5,840.00
- $1,390,000 3.25 $45,175.00 $41,700.00 $34,750.00 $27,800.00
- $1,200,000 4 $48,000.00 $36,000.00 $27,000.00 $24,000.00
- $230,000 3.5 $8,050.00 $6,900.00 $5,750.00 $4,600.00
- $547,900 2.5 $13,697.50 $16,437.00 $13,697.50 $10,958.00
- $725,000 3.5 $25,375.00 $21,750.00 $18,125.00 $14,500.00
- $675,000 2.75 $18,562.50 $20,250.00 $16,875.00 $13,500.00
- $1,540,000 3.2 $49,280.00 $46,200.00 $38,500.00 $30,800.00
- $1,680,000 3.2 $53,760.00 $50,400.00 $42,000.00 $33,600.00
- $1,010,000 3.5 $35,350.00 $30,300.00 $25,250.00 $20,200.00
- $475,000 3 $14,250.00 $14,250.00 $11,875.00 $9,500.00
- $1,700,002 3.2 $54,400.06 $51,000.06 $42,500.05 $34,000.04
- $1,195,000 3.2 $38,240.00 $35,850.00 $29,875.50 $23,900.00
TOTALS $522,645 $488,397 $406,998 $325,598
The above list of homes represents over $16M in sales volume. There are single agents who close that much volume, and then some, over the course of a year. Notice that there is more than a $150K differential in the gross commission dollar between a commission fee of 3% and 2%. Something to think about.
The Shame Of it All
Reducing commissions is disappointing on many fronts. It of course means less revenue that a Realtor or Broker has to invest in marketing the seller’s property. Additionally, some of the agents or agencies that have become known for reducing fees are firms that have commanding market share. Rather than working from a position of strength, they compromise and work from a position of weakness. Imagine what happens to the home seller’s equity during negotiations with a buyer.
What makes a realtor feel the need to reduce their commission?
What ways does that practice affect your bottom line?
Please let us know in the comment section below.
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