Riverside Realtor Blog - Alma Dizon

Alma shares her experiences and observations as a Realtor in Riverside California.

Friday, October 05, 2007

30% off of WHAT?

There's a house for sale in Riverside that has extra red lettering on the sign, stating in big letters 30% REBATE. However, when you look more closely, there are smaller letters in-between that explain "off commission." So it's not 30% off the sale price, but rather the agent is promising to put 30% of her commission toward the buyer's closing costs. This means that it's not even 30% of 3% off of the sales price. The sales price is the same, but assuming that the buyer has to get a loan, the agent (not the seller) will help with closing costs. It's an expensive house, so this comes out to about $8700, which is a lot of money to the agent but not actually so much for the seller and definitely nothing for the buyer, who wouldn't have to pay the commission anyway.

Is this a good tactic? Well, it gets attention at first, but then buyers immediately feel put off that it's not a significant amount and doesn't affect the price. Buyers' agents might assume that they'll be asked to throw in 30% of their commission (after all, it's not clear who is supposed to do it, and it may in fact be 30% of each agent's commission...).

In the end, the only way to get serious attention that might result in some offers would be to lower the price in a meaningful way. But for whatever reason, the sellers have chosen to pay the mortgage on a house that has sat empty for about a year. The only way I can make sense of this is to think that the sellers must have tremendous pride of ownership and don't want to sell their house for a penny less than what they think it's worth. Certainly, the listing agent wants to get rid of it if she's willing to give up nearly a third of her commission...


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