What is Real Estate

Writen by Ed Chaparro

Real estate sales commissions are a topic that garners a great deal of attention. This is perfectly understandable since sellers naturally wish to reduce the cost of selling their home. But, there is a point after which the reduction of a commission becomes counterproductive and begins to undermine the sale of your home. A significant portion of the commission you offer should be dedicated to attracting more buyers.

Commissions are comprised of three parts:

1. Advertising budget – the money spent to advertise your home.
2. Buyer Agent Split – this is the share of the commission that is offered to other agencies as an incentive to find buyers for your home.
3. Fee for Services – this is the portion of the commission that the listing agency earns for all services performed on your behalf.

A common mistake made by sellers is to think of commissions strictly as component number three – Fee for Services. They feel good about negotiating a low commission rate but fail to realize that they may have undermined the successful sale of their home. To compensate for a low commission rate agents will sometimes lower the advertising budget and commission split offered to other agents. From the seller's standpoint this is counterproductive. What good is it if you save one or two percent on the commission rate but fail to attract qualified buyers? For superior results you need to attract as many buyers as possible.

The commission is built into the price of your home. The proceeds from a sale come from the buyer. So, who really pays for the commission? You're better off raising the price of your home and offering a fair commission than setting a sub par commission rate.

At a minimum, you should negotiate a commission rate that is equivalent to the average commission rate on the MLS. Offering a lower commission rate will only result in less marketing exposure and less showing activity. The key to a quick sale at top price is getting full market exposure and leveraging the hundreds of real estate agents in your area by offering a fair commission split. A low commission is not a bargain if your home doesn't sell or you only receive inferior offers due to low activity.

Commissions are always negotiable and the real estate industry is very competitive. Although brokers and agents are permitted to establish their own business policies with respect to commissions, if you're looking for a "bargain" you can always find somebody that will accept a very low commission. But doing so will result in less activity and possibly an expired listing. The commission is more than a fee for services. Your advertising budget and buyer agent split are critical components of your marketing plan.

Ed Chaparro is a licensed New Jersey real estate agent with Prudential New Jersey Properties servicing Middlesex, Union and Somerset Counties.

Ed Chaparro has over twenty years of experience working with technology and putting it to use to help people and businesses. Ed Chaparro mixes traditional real estate marketing (MLS, signs, direct mail) with a very aggressive Internet marketing plan that maximizes the number of buyers reached.

For buyers, Ed Chaparro provides methods and communications that enable them to view their options in manner that is efficient, informative and free of any hard-sell tactics. This approach has garnered Ed Chaparro a great deal of buyer loyalty.

For more details and information please visit http://www.EdChaparro.com