SKYROCKET Your Real Estate Commissions in a Soft Market with this Red Hot Concession Strategy!

Here’s a great way to enhance your reputation as a superstar Realtor.  You’ll sell more homes, make larger commissions, WOW your clients and get more referrals! 

This was written in a soft seller’s market, and the scenario  below illustrates how you and your client benefit if you are the listing agent. HOWEVER, when reading it please flip it on it’s head and see how you and your client can benefit if you were acting as buyer’s agent.  As always, the best scenario’s are when everyone wins!

Let’s dive in:

You get a new listing. Market value and listing price is $1M.

At the time of the listing the market is soft, and of course you want to sell it as soon as possible so you get paid sooner and further solidify yourself as a superstar realtor who knows how to get things done!

A week into the listing you get an offer for $950K. Some listing agents may advise their client to counter back with, let’s say $960K – which may or may not fly. But your client is working with YOU – not some ordinary agent!

You present the offer to your client with a recommendation.

Here’s how it works;

You tell your client: “If you counter at $960K the buyer’s monthly mortgage payment with, based on 20% down payment and no lender points at current rates would be $4,854.  HOWEVER – I have a much better idea: Instead of countering at $960K you counter at $1M  – WITH A 4% ($40K) SELLER CONCESSION. What’s amazing about this is that not only will you net more money ($960K versus $950K) but the buyer will be much more likely to accept your counter-offer! 

Why? Because if you do a price reduction to $960K the buyer’s monthly payment will $172/month less than their original offer. Not bad.

HOWEVER – if you use this advanced SELLER CONCESSION strategy the buyer will be able to buy-down the interest rate with sellers concession and their monthly payment will be $620 a month less.

That’s a difference of $448 a month $5,376 a year!”

At this point you may be thinking that it all sounds great – but isn’t there a limit to how many points lenders and mortgage brokers can charge,  and that, even when including all the fees including the rate buy-down cost isn’t $40K too much money to be “used up”? The answer, in a scenario like this is most likely “no”.

What you may be missing is that buy-down costs can be significant. This won’t matter to the buyer of course because they are getting a much lower rate and the seller’s concession will pay for most, if not all of their fees.

You may also be thinking that, once learning of your counter offer, the buyer could decide to NOT counter and use this newly learned strategy on another listing.  The answer is “yes” and “no”.

Think about it: to use this strategy on another listing the buyer would have to find another seller who was willing to do the same thing. This might sound like a no-brainer. But not every seller will be working with a super savvy listing agent like you, and not every buyer will be working with a loan officer who would be willing to structure the loan this way because it could cut into their income. So there’s a good chance that might not work.

And you, being the consummate communicator are able to explain all this to your client after you’ve learned more about it. It’s a win-win for the buyer, the seller and both agents!

In closing, please know that there are many nuances on the loan side of this strategy and you’ll definitely need to consult with myself or another seasoned mortgage broker before placing any offers using it.

If you’d like to know more about this strategy, flipped either way, please call or text me on my cell: (408) 533-2467.

See you at the top!

Howard Davies
NMLS: 274558