A transformational shift is underway in the real estate industry, as the consideration of offering a 0% commission to the selling agent gains traction. This change might seem alarming at first glance, but it opens the door to a new and innovative approach to commissions that can bring benefits to all parties involved.
A new approach to commission structure
Traditionally, commission fees have been split between listing and selling agents, often leading to a total commission of around 6%. The new proposal suggests that the listing agent could ask the homeowner to pay only for the listing agent’s side of the commission, which could be around 2% to 3%.
But how does the selling agent get paid? The solution is simple: add the selling broker’s commission to the negotiated price, which will then become the contract price. This allows the selling broker’s fee to be part of the buyer’s financing instead of an out-of-pocket expense.
Benefits of this model
- Transparency and clarity: This model promotes openness about how commissions are structured and paid. It makes the process more transparent to both buyers and sellers, as the commission is clearly defined in the contract price.
- Ease of obtaining listings: By offering a reduced commission for the listing agent’s side, agents may find it easier to obtain listings. Sellers might be more inclined to agree to a lower commission, thus making the process more appealing.
- Flexibility for buyers: Buyers have the flexibility to finance the selling broker’s commission as part of their mortgage. This eliminates the burden of an expensive out-of-pocket bill, and allows buyers to manage their finances more effectively.
- Potential savings for sellers: Sellers might save money by agreeing to a lower commission on the listing agent’s side. This could make the selling process for a property more financially attractive.
- Empowering the buyer-agent relationship: With the buyer directly financing the selling agent’s commission, it enhances the buyer’s role in the relationship, fostering greater collaboration and alignment with their interests.
The idea of a 0% commission for the selling agent coupled with adding the commission to the negotiated price, which then becomes the contract price, may seem unconventional. However, this model offers several compelling benefits that align with the evolving needs and expectations of buyers, sellers and agents alike.
More transparency, flexibility and a potential reduction in costs create a win-win scenario for everyone involved. As the real estate industry continues to innovate and adapt, this approach could pave the way for a more efficient, transparent and client-centric future.
Embracing this new commission structure could redefine how we think about real estate transactions, promoting greater trust and cooperation within the industry. The potential benefits are clear; now it’s up to the real estate community to explore and adopt this promising path forward. Let’s keep moving forward with less fear, more skill and a lot more to smile about.
Darryl Davis has trained and coached more than 100,000 agents globally.
To learn more, visit http://www.DarrylSpeaks.com/Online-Training.
