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Seller Comparison:
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Traditional Full Service model
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Fixed Fee Full Service Model
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Savings
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| Seller pays a percentage rate of the sales price, e.g. 6% (rate can vary, usually not under 4%) |
Seller pays pre-set $ amount plus 3% (example rate)of the sales price |
3% minus $ amount |
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Distribution of commission:
3% to listing broker
3% to buyers' broker
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Pre-set $ amount to listing broker 3% to buyers' broker |
3% minus $ amount |
So far there is not that much difference, other than that in our Fixed Fee model, the pre-set $ amount is in general considerably lower than 3% of the list price. The difference for you, the seller will occur when the listing broker also finds the buyer. At that point the following happens:
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Distribution of Commision
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| 6% to listing broker |
Pre-set $ amount to listing broker |
6% minus $ amount |
At a median price of $209,900 (July 2010) your savings would be well over $6,000.00!!!
Buyer Comparison:
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Traditional Full Service model
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Fixed Fee Full Service Model
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Savings
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Buyer pays 3% (example rate) of purchase price, usually waived as seller picks up this expense
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Pre-set $ amount (in general lower than 3%) of purchase price, usually waived as seller pays 3% (example rate). Anything over pre-set $ amount will be rebated to Buyer at closing or donated to charity.
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3% minus pre-set $ amount |
The savings here are not as apparent as in the Seller model. However, the real savings here occur, because, as we
charge a pre-set $ amount, our agents are not influenced by considerations about the amount of commission earned based on the final purchase price. Thus they are able to take a harder stance in negotiations and offer at sharper prices.
Example: the traditional buyer broker is paid by the seller as a percentage of the purchase price, thus taking away the incentive to negotiate as hard as possible for you, the buyer, who hired that broker. Assume a purchase price of $209,900 (median price July 2010). The buyer broker would receive an amount of $6,297.00 at an accepted full price offer. An accepted offer of 10% under asking price (209,900-20,990= $188,910.00) would cost the buyer broker $629.70 in income. No doubt that a percentage of brokers are not motivated by dollars alone, but if you really want the best results in negotiating an offer, there is no question that you will get better results when your broker is truly standing by your side, instead of being tempted by seller incentives.
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