Net Commissions

This is mind-blowing to me; over the last 14 years we have had only ONE seller ask for a “Net Commission”.   What is a Net Commission?  If you don’t know, you aren’t alone, I had to ask as well.

It is very common to have Sellers contribute to their Buyer’s Closing costs as a sales incentive.  Unfortunately, Sellers are also still forced to the pay the commission of their Buyer’s agent as well.  That commission is based on the sale price of the home. 

But shouldn’t that Buyer’s agent commission be paid on the price, LESS the money the Seller had already giving away to the Buyers themselves?  As a Seller recently put it; “I am paying on both ends of the equation, the least you could do is be fair about it”.   Well, he’s right!

The Seller makes a concession to the Buyer that helps pay the Buyer’s Closing costs.  This benefits the Buyer’s agent as well.  It helps move the deal along.    The Buyer’s agent could say “thank you” to the Seller for helping their clients move.  You would think a Net Commission would be the least they could do.  Well, think again.

Net commissions never come up.  Why?  Because Its peanuts in terms of money.  In our recent example the difference came to $300 dollars. Ten thousand dollars was being contributed to Closing costs.  Three percent (3%) of $10K is $300.00 dollars.   Not much money and hardly enough to get upset over.

Still, considering most every sale includes Sellers paying some portion of Closing costs AND the commission of the Buyer’s agent this money could really add up.   Consider thousands of transactions?  Tens of thousands of transactions? 

It’s kind of like a running toilet.  You don’t want to hassle with it even though you know it’s costing money.  Net commissions are another example of a poorly designed business model.  The traditional real estate business model “leaks” money!  And everyone knows it.  How is this allowed to continue?

You would have thought an organizing Board, who claims to have high ethical standards, could have/would have fixed this decades ago.   Then again, it’s not like the organizing Board ever cared much about home sellers in the first place.  Sellers have always been dealt a raw deal.      

“…the least you could do is be fair about it”

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