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A cut-rate listing is when a Realtor lists a property for less than what is standard in their area. There are two main reasons this happens:
- The Realtor is inexperienced or isn’t local.
- The Seller is trying to save themselves money.
Why is this a bad thing for a seller? Consider this, a Realtor who cannot negotiate their own commission is not going to negotiate the best deal for you. As a seller you will save a few dollars on your listing commission but you are definitely going to lose more in sales price and most likely repair costs because you chose to work with someone who is starting the relationship off proving to you that they can easily be pushed around with a “something is better than nothing” mentality.
Cut-rate listings are also a prominent red flag to buyers. Why? Cut-Rate listings will require the buyer to pay the extra in commission that the seller isn’t willing to do. That makes the house cost more for the buyer. Someone not willing to pay the standard rates is also not as likely to provide any seller concessions to help you pay for closing costs. Additionally, when it comes time to deal with inspection requests, they are notoriously less willing to negotiate repairs. These all add up to more failed transactions and frustrations for you.
Have you never worked for less than the standard rate? I have when I was newer, but I NEVER. I repeat NEVER passed on the cut to the buyer’s and their Realtor. I used to have a policy that if a client purchased a property from me personally and had a circumstance that required them to relocate within the first year that I would list the property for less than the standard rate on my side only. I have never imposed my discount on buyer’s or their Realtors. I have too much respect for others in my profession.
Cut-Rate listings can only be achieved ethically when the Realtor is cutting their own commission for whatever reason and it does not affect any other person involved with the transaction.
