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Margin-based real estate commission

Incentive for agents to push for that extra $10k
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A real estate agent selling a home in the US typically gets 2% or 3% of the value of the home. This practice leaves little incentive for the agent to push for that extra $10k because it adds up to only a few hundred bucks, hardly compensation for the extra few weeks of work that it takes to find that special high-dollar buyer.

Maybe what we need is a contract that stipulates that the agent gets only a nominal amount if the house sells for a low-end value but that stipulates a higher margin, say, 10%, of the amount above that low-end value. So suddenly, that extra $10k is now worth $1k or $2k to the selling agent (instead of $200 or $300), plenty of incentive to beat the bushes for another month looking for Mr. and Ms. Deep-pockets.

The sticking point will be, how do you determine the low-end value that defines the margin? Where I live, at least, the local tax appraisal district evaluates things on the low side, so their figure could serve as a standard basis. Or the value of comparable sales in the neighborhood could serve as a basis.

luxlucet, Mar 20 2005

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       Thus driving inflation, unsustainable property values and eventually a crash in house prices, at which point they have to pay you due to the negative margin.   

       I like it!
scubadooper, Mar 20 2005
  

       I'm gonna run this by my daughter, who just got her license, and her fiance who is a real estate agent. I'll get back to ya.
blissmiss, Mar 20 2005
  

       luxlucet: your reasoning is off: brokers have every incentive to get as high a price possible for the properties they are selling. Moreover, sellers may actually be penalized by holding out for the last $10,000: they may lose the only interested buyer, they may lose the new house they were going to buy, or it may go up more than $10,000 itself, and there is the whole time value of money thing - $260,000 six months from now may be worth less than $250,000 today.   

       However, there's nothing wrong (or new, for that matter) with incentive fees in contracts. The listing contract is negotiated between seller and broker - see if you can get a tiered commission built into your next contract.   

       (For the record, my wife is a licensed, and extremely good, real estate broker.)
DrCurry, Mar 20 2005
  

       And she gets her commission paid in margarine?
Ian Tindale, Mar 20 2005
  

       Nope, but it does help pay for it.
DrCurry, Mar 20 2005
  
      
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