Commission Confusion: Why Cutting Corners Could Cut Your Profits

Choosing the Right Agent: Why It’s About More Than Just Commission

The recent settlement involving the National Association of Realtors (NAR) has sparked plenty of conversation about real estate commissions. A growing misconception is that sellers no longer need to offer a buyer’s agent commission. While that may technically be true, the reality of navigating today’s market tells a different story. Let’s break down the key points and why hiring the right agent—even at a competitive commission—can make or break your home sale.

Commission in Context: Understanding the Seller’s Market vs. Buyer’s Market

Real estate markets vary widely. In a strong seller’s market, properties often attract multiple offers quickly, and the need for heavy incentives (like higher buyer’s agent commissions) may diminish. However, in a balanced or buyer’s market, offering a competitive buyer’s agent commission can make a significant difference.

Why? Buyer’s agents play a pivotal role in bringing qualified buyers to the table. With buyers now required to sign a buyer broker agreement, which outlines the commission they owe their agent, the dynamics of property searches have shifted. This commission isn't owed by the buyer if the seller offers it, meaning it's in the buyer's best interest to focus on properties that include a buyer's agent commission. By offering a fair commission, you ensure that your property remains competitive and visible to buyers and their agents. Removing or slashing this commission could drastically limit your home’s exposure. Buyers now have control over the properties they view based on the commission offered, and properties without competitive terms are at a disadvantage.

Marketing Matters: The Cost of Going Cheap

A professional agent’s value isn’t just in their ability to negotiate—it’s in the upfront investment they make in marketing your property. High-quality photography, videography, targeted online ads, open house events, and custom brochures all cost money.

Here’s the kicker: agents bear these costs before the home sells, taking on significant financial risk. If the property doesn’t sell, they don’t get reimbursed. When an agent is willing to invest in showcasing your home, it’s a clear demonstration of their confidence in the property’s value and their ability to get it sold. This same ability translates into proving your home’s worth to buyers—a critical factor in achieving top-dollar offers.

Conversely, a “discount agent” who cuts corners on marketing puts your property at risk of languishing on the market. Poor exposure, low buyer interest, and weak negotiating skills often lead to price reductions and missed opportunities, costing you more than any commission savings.

The Real Risk: What’s at Stake with the Wrong Agent

Choosing an agent solely based on their commission rate can actually cost you money in the long run. Here’s how:

Time on Market: A poorly marketed property takes longer to sell, which can lead to price reductions and a loss of momentum.
Negotiation Skills: If your agent can’t effectively convey the value of your home, buyers and their agents will pick up on that weakness. The result? Lower offers and less favorable terms.
Missed Opportunities: In real estate, first impressions matter. Skimping on marketing and buyer incentives can drive potential buyers to other listings, leaving your home overlooked.

Proving Value: The Agent’s Role in Showcasing Your Property

A skilled agent does more than list your home—they position it as a premium offering in the market. This involves:

Accurate Pricing: Using in-depth market analysis to price your home competitively.
Comprehensive Marketing: Leveraging professional tools and platforms to maximize visibility.
Artful Negotiation: Highlighting your property’s unique features and benefits to justify its value to buyers.

When an agent can demonstrate their value through these efforts, they’re also demonstrating the value of your property to prospective buyers. This alignment ensures your home stands out and attracts offers that reflect its true worth.

The Bottom Line: You Get What You Pay For

The old adage rings true in real estate: you get what you pay for. Cutting corners on commission or choosing an inexperienced agent may seem like a way to save money, but the long-term costs often outweigh the short-term savings.

A good agent doesn’t just earn their commission—they justify it. Their expertise, marketing investment, and negotiation skills work together to maximize your home’s exposure and value. In contrast, the wrong agent could leave you with an unsold property or a sale price well below its potential.

As you navigate the current real estate landscape, remember: the goal isn’t just to sell your home—it’s to sell it for the best possible price and terms. Choosing the right agent is your first step toward achieving that goal.

Posted by Kevin E Yankow on January 24th, 2025

Why maximizing proceeds doesn't always mean low commission