Question: I saw an advertisement quoting a listing commission amount of 1% which seems very low. Is that actually what it costs to sell my home?
Answer: That question is a great one! I see the advertisements as well and I hope that no one gets taken advantage of with this program. There is an asterick on the advertisement where it states in the fine print that it is nowhere near close to the 1% to sell your home. It is actually 4% and not only that, the agent that lists homes for this little of an amount are selling the homes at least 10% under the market.
But then you would ask yourself, why would they list a home for so low? The answer is simple, they are going to spend no money or expertise in selling your home. They don't utilize a documented approach, like we use and illustrate in our Book "The Value Driven Approach to Selling Real Estate". Instead the agents promoting this gimmick are doing it for 2 reasons. First to get you to call them and they can upsell you to a normal commission rate, or they are going to do no marketing of the home, price it low and just give it away.
Just for the heck of it, let's put some numbers on this.
If someone like this takes a listing at 4% on a $500,000 the agent will earn $5,000 for listing the home. If they spend $0 on your home they just made an easy $5,000. If they did a full listing and do staging, marketing, etc they have to pay out up front over $5,000 in fees and costs. At the end of the transaction they will clear $10,000 but the agent will actually have to work, and do their job. However, if they use a value driven approach, the seller can get $530,000 for the home. So the seller is getting $30,000 more in sales price by paying $10,000 more in commissions. A win-win scenario that works every time.
If you are enticed by such a gimmicky program, then ask to see the agents most recent listings. Look at the same listings online (Zillow, Trulia, Redfin), look at the list price vs. the sold price. Also, check the cancellations and expired listings - they probably have a lot. Then look at online reviews, that will really tell you clearly how they operate their business.
There is one agent that we see that lists a lot of homes. Funny thing is their cancellation rate is almost 90%! 90% is unbelievably high! Mark always says to me when we see her sign her slogan should be, "If you don't want to sell your home call her!"
Who you hire does matter. To learn more about our approach as well as the gimmicks in the world today please order a copy of our book: www.Book4FreeHelp4Charity.com