A Tip For Selling Your Home: Even Commission Splits

When you hire a real estate agent to sell your home one of the things you discuss is the commission and the split that is going to be offered to the buyer's agent and listing agent. 

As the seller you are already very concerned about the bottom line—How much money am I going to make selling my home? Or, how much money am I going to lose selling my home? Knowing the bottom line is extremely important to you, it should be extremely important for me to make your home is as marketable as possible.

There are two types of common commission splits that are offered. A commission split at

• 7% or a 7/5 split divided equally between the buyer’s agent and listing agents, 3.5% on the first $100,000 and 2.5% on the remainder.
• Adverse commission split at 7% or a 6/4 split which offers the buyer’s agent 3% on the first $100,000 and 2% on the remainder.

So...Pretend you and your next door neighbor are going to sell your homes. For the purpose of this example, both homes are EXACTLY the same. Literally. Everything about your house and your neighbor’s house is identical. Ready? Here is why you do not ever, under any circumstances, allow your real estate agent to offer adverse commissions... 

Both Homes are listed at $250,000.

You meet with your real estate agent and you discuss a 7% commission with a 6/4 split. What does that mean? It means that the total commission is 7% of $250,000 which is $17,500. The buyer’s agent would make $6,000 in the sale of the property.

Your neighbor meets with me and we discuss a 7% commission with a 7/5 split. What does that mean? It means that the total commission is 7% of $250,000 which is $17,500. The buyer's agent would make $7,250 in the sale of the property. 

So now that both homes are listing in the MLS and are being marketed, a buyer's agent takes their buyers into your house and explains all the details to the buyers and they begin to really like the house. Before they leave though, the buyer's agent tells the buyers that if they "really like this house, they are going to love the next house!"

Off to the next houses they go. The buyer's agent explains all the details about the home but takes a bit more time in this home pointing out some of the finer details that he didn't point out while they were in your home. 

The buyer’s agent takes the buyers back to their office to compare the two homes they saw. The buyer’s agent talks about how nice your house was but again leaves out some of the finer details. When describing your neighbor's house though the finer details are brought up and the buyers begin to really fall in love with your neighbors house so much they decide to write an offer, accept the offer and move in...While you are still trying to sell your home. 

So what happened? The buyer's agent realized that both homes were identical, listed at the same price, offered the same amenities as each other and each had a different commission structure. Why would a buyer’s agent sell your home and make $1,200 less than if they had sold your neighbor's? I don't know either. 

Here are some more examples of commissions splits at different price levels:

$150,000                 $175,000

6/4 - $4,000            6/4 - $4,500

7/5 - $4,750            7/5 - $5,375

$200,000                 $250,000

6/4 - $5,000            6/4 - $6,000

7/5 -$6,000             7/5 - $7,250

$300,000                 $350,000

6/4 - $7,000            6/4 - $8,000

7/5 - $8,500            7/5 - $9,750

Doe it really make sense to short change the buyer's agent when they are the ones bringing the buyers into your home? 

Rich Ganim is Cleveland's Real Estate Guy with the Ohio Real Estate Group at Keller Williams Greater Cleveland West. If you have questions about how the home selling process works or if you would like a free market analysis of your home, do not hesitate to contact me at 440-794-1450 or Rich.Ganim@gmail.com. Be sure to also check out my blog for all things real estate and other random musings.