You get what you pay for
Like in many fields there is a large competition between real estate agencies. In order to win a business some resort to “better offers” like “Free services for the client”. Latest example is my client who was offered to sell his house free of charge, the agency commission would pay a buyer.
Doesn’t it sound attractive to save 5% off the sale price on the agency fee?
Let’s see what it really means for the seller.
First thing that comes to my mind is to ask the seller: “Would you let the attorney paid by the counterparty defend you?”. If the agency is paid by a buyer, the point of its interest is the buyer who would bring it money. If the agency would be paid by the seller and its commission would depend on the sale price, it would be choosing a buyer who offers more. But if the buyer pays its commission, the agency would prefer the one who’d offer a higher commission, not a price. In such cases the seller would normally receive some base amount and all the rest would go to the real estate agency’s pocket.
Let’s not forget who determines the sale price of a property. Is it a seller? An agency? No, it’s a buyer who agrees to pay this price for this property. Hence it doesn’t matter how you call the party who pays the commission – the end (sale) price is always the same – the one the buyer agrees to pay. From this amount the agency would take its commission, the rest goes to the seller.
And the most important is to understand that if there is any issue with the services of the agency, it will be very hard for the seller to get any compensation from it. The insurance that the agency has would cover the services provided to the side which has paid for them, means the buyer.
So what’s the point of working with an agency who is not defending your interests, who will not earn you as much as possible and is not accountable to you for any issue during the transaction?
No wonder there is a saying “You get what you pay for”.
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