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The Importance of Commission
The marketing fee or commission is the most vital part
of the marketing plan because this is precisely what sets
the motivation and enthusiasm for cooperating brokers.
Since commissions are negotiable, let’s talk in
terms of averages. Let's say an average commission for
a certain area is 7%. The fee is normally divided evenly
between the selling office and the listing office.
Let's track the path of this 7% just for illustration
purposes. In a $100,000 home, the commission would be
$7,000 which is split between both offices - $3,500
for the listing office and $3,500 for the selling office
for securing a buyer.
This $3,500 is then divided between the office and
its respective agent. On the listing side we'll say
$1,750 (50% for illustration purposes) for the office
and $1,750 for the agent. From this the agent must pay
taxes, MLS fees, expenses incurred on advertising and
promotions, desk fees, etc. The agent that procured
the buyer would be a similar situation - where their
$1,750 would go to pay taxes, MLS fees, expenses incurred
with client, time, gas, meals, brochures, etc.
A 7% commission may likely net only 1% of the total
commission. It’s crucial to offer, at the very
least, the average commission for your area. If you
list your home for less than the average commission,
it will not get the same exposure as a comparable home
that does pay an average commission.
It is highly recommended you consider
offering a 1% higher than average commission for the
sale of your home. A one percent raise in the commission
translates into a 14% raise to the real estate agent's
paycheck. The increased incentive increases the motivation
and enthusiasm for cooperating brokers and ultimately
the offer made on your home.
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