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Thursday, April 21, 2016

Variable Commission Can Benefit Sellers

One important question any seller should ask their listing agent is, “Will you reduce your commission if you don’t have to split it with a buyer’s agent?”

This is known as a “variable commission.”  My listing agreements usually include a one percent reduction of my commission when I do not have to compensate a buyer’s agent — in other words, when I produce the buyer.

When a listing agent doesn’t have to split his commission with a buyer’s agent, he earns about twice the commission.  I think that windfall should be shared with the seller.  That’s why I don’t wait for a seller to ask me to reduce my commission if I sell their home myself.

The existence of a variable commission must be disclosed in MLS listings so buyer agents know whether a contract they submit is at a competitive disadvantage to a contract from an unrepresented buyer.
In the event of multiple offers, a listing agent who has disclosed a variable commission must also disclose, when asked by another agent, whether any offers are from the listing agent’s own buyer and the percentage differential. That helps the other agent craft a competitive offer.

Since variable commission is a searchable field on the MLS, I ran a search and found that fewer than 25% of agents are reducing their commissions when they “double-end” their listings. Make sure a variable commission is part of your listing agreement.

Published April 21, 2016, in the YourHub section of the Denver Post and in four Jefferson County weekly newspapers.

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