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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
  

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