What is a commission split?

In order to help you truly understand where your commission dollars are going, it is essential that you grasp the concept of commission splits. As a seller listing your home with a real estate company, you are being charged a "total" commission. That "total" commission is then split, thus compensating both your listing agent and the agent working with the buyer. For example a common scenario might be: A total commission of 6% is charged to sell your home. The listing agent would receive 3% and the buyer's agent would receive 3%. Note: not all commission splits are necessarily split evenly between listing and selling agent (buyer’s representative). Regardless of our example, the important concept to grasp is the commission you are being charged is actually paying for two sides of a transaction to be represented, seller and buyer.

Is the commission split important?

Actually, the commission split has become less important than in years past. Today’s technology allows the buyer to shop to their hearts content, 24/7, 365 days a year via the internet. Agents working with buyers are rarely the ones introducing buyers to property that is currently for sale. The MLS system and modern real estate practices have given almost all property information to buyers through hundreds of resources online. Based on over 1300 transactions we have performed in the past 10 years (2002-2013), the commission split appears to have no impact on a buyer’s decision to either see certain properties or make offers on them.

Some of our clients have tried offering the “buyer’s side” commission higher than the 2% we recommend. Some have even offered buyer agent “bonuses” and a higher commission as an incentive to help sell their property. Results of the time on market and selling price don’t appear to be affected by these strategies. The reality is simply that the buyer doesn’t care what their agent is being paid! Buyers are shopping for the home or property that best fits their needs and appears to be one of good value in the market in which they are currently shopping. Wouldn’t you be doing the same thing if you were buying?

So, if your concern is whether or not the 3.5% rate we charge will negatively impact your selling process, the ultimate selling price of your property or an agent’s willingness to show your property to their buyers, there just isn’t any evidence that is true. To the contrary, our services and selling system have proven over time to be as effective as other companies that charge more for a fully serviced, fully marketed and professionally managed home sale.

Luke Real Estate’s 3.5% Commission Structure

Over 1300 clients have trusted our commission saving business model and saved literally thousands of dollars in unnecessary commissions and fees.

How Can We Provide This Complete Selling Package At Such Money Saving Rates?

The answer is actually quite simple. Our company overheads are carefully managed and the business model we have created was designed to help you save money when you sell your property. There are no corporate or franchise affiliations that need to be compensated with your commission dollars. Our experienced staff and specialized systems allow us to service more clients more efficiently than most other brokerages & real estate companies.

Large offices, corporate & franchised affiliated brokerages, are designed to support a business model that is expensive to operate. These overheads need to be supported in order for the company to survive. So yes, it is part of the commission dollars you are charged that provide the revenues to operate these types of offices.

  
Technology has also played an instrumental role in the evolution of our business model. Without getting into all the details of how technology has impacted the real estate industry and our operating systems, it just allows us to do more. We use exactly the same operating and marketing systems that the “large offices” use including of course the same MLS system. We have always invested heavily in technology and will continue to do so. The costs of the systems available to the real estate industry are more affordable than ever so we pass those savings along to you.

Commission Rate Myths

“Commission rates are all the same”

Commission rates are NOT all the same. Real estate companies charge different rates based on their company or corporate policies. Some rates can even vary within the same company based on a property’s value, whether the listing and sale is performed within the same company or even by the same agent. There is NO set rule. By law, each company sets its’ own fee structure.

“Agents don’t show properties that offer a 2% buyer agent commission”

Not only do they show them, they sell them. 94% of the properties we list for sale are sold to buyers working with agents from other companies. This is referred to as a “co-broke” (two different brokerages involved is the sale of a single property).

Many builders offer 2% commissions to an agent who sells one of their properties. Agents working with buyers want to find them a property, sell it, and move along to the next opportunity.

Agents show the properties their buyer(s) want to see. With today’s technology, most buyers find properties on their own via the internet, then contact their agent to see the listing. If the buyer expresses an interest in a given property their agent is quick to contact the listing office for answers to buyer’s questions and availability of the property.

Agents write offers on properties their buyers want to buy. Agents get paid on a transaction when it goes to settlement (“the closing”). If a buyer agent shows a property to a client and the client (buyer) likes it, what would be the incentive to the agent to discourage their client from making an offer and trying to get a transaction to settlement? 

Related Pages:

What You Can Expect From Us

Marketing Your Property

What is the MLS?

The Commission Split

Real Savings

Save Thousands on Commissions

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