The Los Angeles Times business section featured a story Sunday about the declining ranks of real estate agents, Realtors are Abandoning a Listing Ship. Amongst other items, the article details conflict of interest concerns, whether agents push more expensive product to secure richer commissions. I'm sure it happens--all things happen, but I don't believe it's prevalent. Moral and ethical obligations aside (and those aren't easily hopscotched for living, breathing, licensed,
regulated professionals), practice of the sort would be a bit uncomprehending.
For starters, commissions are not fixed. Sometimes a lower priced property compensates more amply. For example, a three percent sales commission on $500,000 bears a greater sum than
2.5% of $585,000. Some listings even offer bonuses to the selling agent, further complicating the assumption. (As an aside, I showed over 30 properties last weekend and I haven't the
slightest sense of what was offered by whom.)
But perhaps what derails the conceit altogether: the difference in the numbers is de minimus, because buyers usually court properties in a fairly narrow price range, plus/or minus 5-10%. Supposing all things equal, commissions of 2.5%, and a 75/25 agent/brokerage split, consider the following scenarios:
Property A: Sales price $330,000.
Property B: Sales price $300,000.
Brokerage commission Property A: $8250.00
Agent take home: $6187.50
Brokerage commission Property B: $7500.00
Agent take home: $5625.00
The pre-tax difference is $562.50. Would anyone really
jeopardize a client relationship, in a highly competitive marketplace, for 500 smackers? That's just crazy talk. Sure, as the numbers get higher the spread increases, but so does the payday.
I always want my buyers to get the best deals and the best properties, regardless of the remuneration. In part because I want to be affiliated with the best houses and potentially represent them at a later date; but, also because I'm highly competitive, desire to be liked, and have a big ego. Ahhh, but you readers already knew about the ego part.