4%!!

Realtor Pay-Out's Rise with Inventory

No, mortgage rates didn't hit 4% over the weekend.

Rather, that was the pay-out being offered on not one but two of the homes I showed over the weekend.

In fact, out of 8 homes I showed, fully half offered above the standard 2.7%.

Commission Primer

For those who don't know, "pay-out" refers to the commission offered to the Buyer's Realtor. By contrast, the listing commission is what the agent representing the seller gets.

In both cases, the Realtor further splits their half of the commission with their broker.

In fact, the convention -- at least in the Twin Cities -- is to split the commission 55-45 between the Listing Agent and Buyer's agent.

On a "full service" 6% commission, that works out to 2.7% for the "buy" side.

Fatter Carrots

So offering 4% instead of 2.7% is certainly attention-getting.

Why do that?

Most frequently, it is Sellers whose homes have lots of competition.

If your home is one of dozens that prospective Buyers are considering seeing, offering a fatter carrot to the Buyer's agent is one way to ensure that the Realtor shows your home instead of a competing home.

Does it work?

It can't hurt.

However, a scrupulous Realtor takes care to show the homes that offer the most to their clients -- not the ones they stand to make the most selling.

Just so my clients know that I'm "putting my money where my mouth is," my policy is to always provide them with what's called the MLS "Property/Agent Full" report.

Unlike the more abridged reports, the "Property/Agent Full" version shows everything that the agents see -- including the payout commission being offered to Buyers' Agents.