Why You Shouldn’t Automatically Choose the Real Estate Agent Who Charges the Lowest Commission

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Real estate agents are paid by commission, which is a percentage of the sale price. If you’re looking for an agent to sell your home, you may be tempted to choose one with a low commission to save money, but that could backfire. Here’s why:

You May Get Inferior Service
A low-priced agent may not do everything possible to attract a buyer and sell your home for a competitive price. You may save money on commission, but you may sell your house for less than you could have gotten with a higher-priced agent.

An agent who charges a low commission might not provide a level of service comparable to that of an agent who charges a higher percentage. Someone who gets paid less for each transaction will have to sell more houses to earn a living. That could mean less service and attention for you and other clients.

An agent who charges more can provide an array of services to make the process smoother for the seller. For example, the agent may arrange to have professional photos and videos taken and can schedule repairs.

A low-commission agent may not have an in-depth knowledge of your real estate market or may not have relationships with agents and other parties involved in a transaction. The agent may not be familiar with local laws and procedures and may not advertise your home in the Multiple Listing Service.

A Low-Priced Agent May Engage in Unethical Practices
Look out for inaccurate and misleading claims. An agent may advertise a low commission rate to attract customers, but that’s the rate that is charged for the seller. The agent will also charge a percentage for the buyer’s agent, which is the seller’s responsibility to pay.

An agent who is only working on your behalf can help you get the best price possible, but some agents who charge low commissions engage in dual agency. That means they represent both the seller and the buyer to earn both commissions. That creates a conflict of interest, which is why the practice is illegal in most states.

Some low-commission agents try to sell a house to a buyer they find themselves getting both commissions. An unscrupulous agent may fail to inform a client about offers from prospective buyers who have their own agents because the seller’s agent wants to earn both commissions.

An agent who charges a low commission may have relationships with a lender and other parties involved in the transaction. The agent may steer you toward specific companies to earn referral fees.

How to Choose an Agent
A real estate agent who charges a low commission most likely will not provide the same level of service as a higher-paid one and may engage in illegal behaviours or create conflicts of interest. Before you hire an agent, do your homework. Ask questions and carefully review the contract. Inquire about the services the agent and brokerage provide and check online reviews and complaints.

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