Variable Rate Can Save You Thousands!!!
Dated: February 20 2019
Variable Rate Commission…
Most people don’t have any idea what variable rate commission is. Arguably there are Realtors out there that don’t know what it means either or how to leverage the knowledge it provides.
In a nutshell, variable rate commission simply means that the commission rate charged to the seller will change based on the variables with in the deal. For example. Lets use us, the Shurtz Teams commission rates. We charge no more than 4.7% ever. That’s 4.7% total commission. Of that 4.7% we have an agreement with the sellers and the cooperating brokers to offer 2.7% of the 4.7% to an agent (buyers agent) that brings a qualified buyer to the table and successfully closes on the sale. In this situation the whole 4.7% is charged to the seller.
But what happens if the “listing agent” finds a buyer without representation (without a buyers agent). In this situation The Shurtz Team agrees to a “variable rate commission”. We have it written in our agreement with the sellers to reduce our commission by 2.7% if the buyers are unrepresented. This saves the seller 2.7% immediately. On a $300,000 home, that’s a savings of over $8,000! That’s an incredible savings that can either go back in your pocket or give you room to negotiate a deal that both sides can be comfortable with. There are several ways a Realtor might find a buyer with out their own agent. Some of the most common ways are through open houses, sign calls, social media contacts or website hits.
As a buyer it is important for your Realtor to always look at the part of the MLS in the picture above to see if the agent is variable rate. For the buyer, this portion really only applies in a multiple offer situation. If there are multiple offers, the listing agent is required to disclose if any of the other offers fall under variable rate circumstances and how much the difference the variable rate is….but only if they are asked. If the variable rate is 2.7%, that means that any other offer with a represented buyer is automatically at a disadvantage and that the exact same offer price is actually worth 2.7% less. THIS IS VERY IMPORTANT TO CHECK in a multiple offer scenario!
Bottom line…if your agent doesn’t have a variable rate in your agreement, you have essentially agreed to let them double dip for the full commission should an unrepresented buyer come to the table. NO DOUBLE DIPPING HERE!!!
Transparency is key!!!
The Shurtz Team.