Commission Rates and Ratchet Clauses

• Warren Alderton
• January 28, 2016

Let me talk to you about a popular strategy to ensure that you are getting absolute “top dollar” for your property.

Its with an “incentivized” commission structure also known as a ratchet commission structure.

No doubt you have heard that when an agent is negotiating a sale they get to a point where they are reluctant to “push” the buyer to increase the sale price for fear of losing the sale.

The agent on a set 3% commission often works out that an extra say, $10,000 amounts to $300 in gross commission and by the time they get there share its around $100 however the owner would be some $9700 better off!!!

I have negotiated many sales where the commission is basic, say 2% up to an agreed value

(normally a figure similar to recent sales of  similar properties) then, with anything achieved after that figure there is a higher commission rate normally 20%.

 This, I assure you, makes the agent achieve the best price possible as it is firmly in their interest. If they don’t they will may still get a sale but the commission will be not nearly as rewarding.

At the end of the day, the reason you employ an agent or negotiator is to achieve the maximum price available, if you are going to accept poor negotiation skills you might as well sell it yourself!  

 

Contact me if you like a free market appraisal on your property or just like to talk about the market.
 

Warren Alderton

0418 298 940