My colleague is selling his San Mateo home. It's a 3/2, basically sells itself. Any realtor would beg to have this account.
In any case, we were brainstorming some ideas during lunch. One of my idea instead of a standard 3%/3% split, we were wondering if it is possible to set up an incentive structure that maximize sales price.
For example, if the home is expected to sell for 1.2M, the first 1.1M in sales price will result in 0 commission.
everything thereafter is 50%.
So if the home sells for 1.2M, then commission is 50% of 100K or 50K.
If the home sells for 1.3M, then the commission is 50% of 200K or 100K.
The value of selling a home is maximizing the price at the margin. The incentive structure is meant to motivate the selling agent to do the extra steps to stage the property and market it to as many people as possible. Too often, a cash offer is accepted because it is the easiest path but not the best. But with the incentive, the selling agent can push for the conventional loan or go through several rounds of bids to maximize price. Afterall, a 50K extra bid is 25K in commission so the agent is working for the margin. The dual agency crap doesn't matter because a lower selling price will hurt more than double dipping. He doesn't mind the extra commission since the increment was going to be taxed anyway. I imagine if the selling agent is good, they would love to take on the upside.
invite response
My colleague is selling his San Mateo home. It's a 3/2, basically sells itself. Any realtor would beg to have this account.
In any case, we were brainstorming some ideas during lunch. One of my idea instead of a standard 3%/3% split, we were wondering if it is possible to set up an incentive structure that maximize sales price.
For example, if the home is expected to sell for 1.2M, the first 1.1M in sales price will result in 0 commission.
everything thereafter is 50%.
So if the home sells for 1.2M, then commission is 50% of 100K or 50K.
If the home sells for 1.3M, then the commission is 50% of 200K or 100K.
The value of selling a home is maximizing the price at the margin. The incentive structure is meant to motivate the selling agent to do the extra steps to stage the property and market it to as many people as possible. Too often, a cash offer is accepted because it is the easiest path but not the best. But with the incentive, the selling agent can push for the conventional loan or go through several rounds of bids to maximize price. Afterall, a 50K extra bid is 25K in commission so the agent is working for the margin. The dual agency crap doesn't matter because a lower selling price will hurt more than double dipping. He doesn't mind the extra commission since the increment was going to be taxed anyway. I imagine if the selling agent is good, they would love to take on the upside.
Is this legal, possible?
#housing