Tiered Commission Rates for Agents

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From: Neil Iffland


A seminar I attended suggested that when selling through an agent one should negotiate a 2 (or more) tiered commission rate with the agent. For example up to fair market value they get the usual 1 or 2%, then if they get say 10% above market they get 5% of the extra 10%. If they get 20% above market they get 10% of the second 10% above market etc.

The idea being to give them a real incentive to negotiate an above market sale price, rather than just get a quick sale at market price. Of course the vendor has to independently & accurately determine what the fair market value is for this to be worthwhile.

Has anyone had any experience or have an opinion on this ?
 
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Reply: 1
From: H T


yes ive done it a couple of times and it has been good value, of course you have to know exactly what your property is worth..

everyone likes a financial incentive.

HT
 
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Reply: 1.1
From: Lotana Von Amor


I agree, but from my experience the second tier must be really attractive. Something like 1.5% up to certain price, then 25% of the excess. And set the threshold a little bit higher than your perceived fair market value. This will work!

Regards,

Lotana
 
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Reply: 1.1.1
From: Mark Pardi


Commission tiering works well.

I have seen a lot of people adopt this method. Some agency's work almost entirely on this approach.

The key is know what your home is worth.....so do your research.....offer them a basic fee of say 2% up to the value you are happy with

and then negotiate the bonus commissions on the profit extra over your threshold.

happy selling.
 
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