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by Thomas Scanlon, CPA, CFP®

landlord helpThe difficulties in the housing market have been well documented. If you have been trying to sell your home and have been unsuccessful, here’s a tip.
Don’t reduce the asking price (again)¦raise the commission!Realtors will generally charge 6% to list a home. I’m suggesting you increase this to 7%. Will it work for you? I don’t know. It did, however, work for me.

It was late 1993 and the real estate market was neither the best or the worst. We were having difficulty selling our house even though it appeared the asking price was reasonable. Our home was very small and our son was getting bigger. It was time to move on. But there were very few showings and no offers. The realtor suggested we drop the price. I knew I didn’t want to do that, so I told her I would get back to her. I called her the next day and told her I wanted to tear up the existing contract. She was taken back until I told her I wanted to increase the commission to 7%. She said she would be right over. What should be a 30 minute ride took her about 15 minutes. Within 48 hours, we sold our house for the asking price.

While we paid an extra 1% in commission, this was far less than dropping the price to the amount the realtor suggested. And, oh yeah¦we sold the house! Apparently the increase in commission motivated other realtors to show our house. Evidently, our asking price was reasonable as someone made the offer.

However, this strategy won’t work if you are currently underwater (the mortgage exceeds the value of the home), or if you have no equity in your home.

Homeowners, will you increase the realtor commission to sell your home?

Realtors, will you suggest this to your clients?

Thomas F. Scanlon, CPA, CFP®.  is with Borgida & Company, P.C.,  Certified Public Accountants in Manchester, Connecticut, celebrating 44 years of tax, advisory and accounting services.  Call 860.646.2465 for more.
For tax advice from Mr. Scanlon, see  Landlord Quick Tip.
American Apartment Owners Association offers discounts on products and services for landlords related to your rental housing investment, including rental forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.

  • Colorado

    Of course it’s lowering the price; you net out less. It is just a matter of deciding where the greater motivation is, with the Realtor or with a lower price for the buyer. As a buyer I figured I really paid the commission anyway. I was the only guy in the room with cash.

  • Anthony

    Interesting take, although I figure that in the current market lowering the asking price is probably the more effective motivator.

  • Paul

    As a Real Estate Agent I can say that your assessment is correct. I can produce more showings from other brokers by raising the commission. While we don’t look at the commission first, noticing an increased fee will bring your property to the top of the list. Good call!

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