Does a Lower Commission Save You Money?
Posted by Help Now on Friday, February 6th, 2009 at 3:42am.
You have seen the headlines "Why Pay 6%? Save $2,000 to $4,000!"
Did you really end up saving? Lets take a look at a couple scenarios.
Sometimes its tough to really know, many times you will never know. Why? Because there rarely is the exact same home for sale at the exact same time as each other listed with different brokerages. But we found some for you to look at. These two homes were on the market at the exact same time and were considered competition as they were exact comparables.
EXAMPLE A:
This home was listed with a discount brokerage, and 2 different nation wide traditional brokerages.
Time on market: 470 Days
Net to seller after paid closing costs: $206,200
EXAMPLE B:
This home was listed with a Discount Brokerage for 6
months before we took it over. Utah Dave Sold within 120 days
Net To Seller: $295,000
These two homes were exact comparables. These two homes had the same finishes and should have sold for relatively the same price and within the same timeframe.
The seller A and B first tried to utilize discount services. But look to what happened to SELLER A! Seller A lost $90,000.
The seller could say to their neighbor, "I saved $2,000 on commissions when I sold my house." But what he really doesnt know is that he lost $90,000 in trying to save on commissions.
Is this a one time deal? No, it isnt. I will be uploading about a dozen of these that I have found.
CONCLUSION: What do we learn from it?
The Biggest Mistake Sellers make is when they pick an agent based on commissions or based on the price of their home the agent thinks it will sell for If you pick an agent based on commissions, it could cost you not save you. Pick an agent based on the agent's results, not cost. How do you know what their results are? Try asking them for a list of homes that they have sold and show comparables that they outsold. If they are results oriented, you will get the list! Heres a list for you regarding our sales.
More Case Studies: What do we mean by Traditional or Nationwide Brokerage? Many of these homes that were being sold were listed with a Coldwell Banker/ReMax/Exit/Century 21 or discount brokerage type. These case studies use comparisons of homes that are almost exactly alike. Prices and timeline to sell should be equal if you base it on the home. Most people believe their home is better than everyone elses. Most people believe their home will sell for a certain price no matter who helps them. Some people believe that the MLS System sells 90% of the homes. Well if the MLS were to sell the homes, why would certain agent's listings take longer to sell? Why do certain agent's listings not sell? Why do certain agent's listings take longer? Take a look at these case studies and see for yourself that it matters who lists your home. People who base choosing an agent off of commission or choose an agent based off them being someone they know or based off of a promise of a quick sell at a certain price end up losing in each of these scenarios. How do you choose your agent? Hopefully, its off of the agent's results.
UTAH DAVE SOLD:
Time on Market: 75 Days
Sold net to seller: $294030
Traditional Brokerage:
Time on Market: 319 Days
Sold Net to Seller: $293,000
UTAH DAVE SOLD:
Time on Market: 2 days
(A Nationwide brokerage listed for 6 months and could not sell it.)
Net to seller: $290,000
Traditional Brokerage:
Time on Market: 275 days
Net to Seller $251,000
UTAH DAVE SOLD:
Time on Market: 4 days
Net to Seller: $410,000
Same Home except this is .17 acre (smaller lot)
Traditional Brokerage:
Time on Market: 120 days
Net to Seller: $370,000
This home had a .27 acre lot. (larger lot)
UTAH DAVE SOLD:
Time on Market: 44 Days
Net to Seller: $285,000
(This home backed a busy main road.)
2200 sq ft with a 2 car
Traditional Brokerage:
Time on Market: 1.5 years
Net to Seller: $245,000
This home was in the same neighborhood but newer, 2800 sq ft and a 3 car garage.
UTAH DAVE SOLD:
Time on Market: 1 day
Net to Seller: $327,750
Condition: Fixxer Upper, Poor condition.
Traditional Brokerage:
Time on market: 529 Days!
STILL HASNT SOLD Listed at $325,000
Totally Remodeled with a 5 car garage.
(These people listed with another brokerage because the other brokerage promised them a higher price and a lower commission than us.)
UTAH DAVE SOLD:
Time on Market: 3 Months
Net to Seller: $290,000
Traditional Brokerage Sold:
Time on Market: 464 Days
Net to Seller: $249,000
UTAH DAVE SOLD:
Time on Market: 4 days
(Previous Nationwide Brokerage listed for 6 months and could not sell.)
Net to Seller: $224,000
Traditional Brokerage:
Time on Market: 240 Days
Net to Seller: $219,200
This home also had a partially finished basement that the other didnt.
Another Traditional Brokerage Sold:
Time on Market: 4 months
Net to Seller: $210,000
UTAH DAVE SOLD:
Time on Market: 21 days
Net to Seller: $255,000
Traditional Brokerage Sold:
Time on Market: 171 Days
Net to Seller: $243,000
UTAH DAVE SOLD:
Time on Market: 74 Days
Net to Seller: $259,600
Traditional Brokerage:
Time on Market: 180 Days
Net to Seller: $236,000
UTAH DAVE SOLD:
Time on Market: 61 Days
Sold at $255,000
Traditional Brokerage:
Time on Market: 150 Days.
NEVER SOLD at $250,000
(Had $30,000 in upgrades too!)
UTAH DAVE SOLD:
Time on Market: 1 Week
Sold $375,000
Invested $15,000 to finish basement.
Total sq ft 4653
Traditional Brokerage Sold:
Time on Market: 447 Days
Sold: $330,000
Sq ft at 4955
UTAH DAVE SOLD:
Sold in 28 Days
Price: $499,000
4200 sq ft fully finished
Traditional Brokerage:
Time on Market: 2 years!
STILL HASNT SOLD Listed at: $449,000
4966 sq ft Fully Finished
UTAH DAVE SOLD:
Time on Market: 1.5 Months
Sold for $255,000
Basement was unfinished.
(Previous Discount Brokerage attempted to sell for 3 months)
Traditional Brokerage Sold:
Time on Market: 6 months!
Sold for $240,000 (They also fully finished their basement)
On market the same time but estimated losses on this is $30,000. Looks like even if they paid twice the amount of commission they would have saved more money.
About the Author:
Utah Dave - Daybreak Neighboorhood Expert and Local Resident
My friends nicknamed me Utah Dave in high school because they said it didn't matter where we went in Utah, I would know how to get there and who we needed to talk to. The name sticks today as UtahDave has formed into a professional real estate network of Neighborhood Experts all across the state. I live in Daybreak with my wife and 4 amazing children. I enjoy dancing (which is how I met my wife Dawn) as well as traveling, coaching, and learning.
