Subject: Re: NAR settles realtor lawsuit
"(I’m old enough to have sold a house with a 6% commission on the first $100,000, 4% on above that to $250,000 and 3% on anything above that.)"

If my calculator serves, that is $38,500 on a million dollar property. Seems an outrageous vig, as it is no more work than to sell a home of half the value.

Oh heck, I sold a million dollar condo in Boston a couple years ago and paid the full 6% on it. I didn’t complain because the realtor set up a marketing program that got me an extra $100,000 over list. Yes, she got $60k, but she was going to get $54k anyway, so I couldn’t complain. (Additionally the property was sold under a Reverse 1031 exchange which threw lots of extra wrinkles into it all, plus it was from a past life 1,000 miles away where we could not attend and she did everything. So sometimes it’s worth it. I don’t know how you put all of that into a contract ahead of time or figure the pay for it, but she was happy, we were happy.)

It made me realize that the tiered commission I sold the Pittsburgh house under was exactly backwards. The commission should have gone up as the price increased - to incent the agent to negotiate for a better price or do things to attract “a better class of client.” I didn’t set it up, she did, and I didn’t think much about it at the time.

I am reminded of the first example in the otherwise unremarkable book “Freakonomics” that showed how Realtors are highly incentivized to get more money when selling their own house than clients’ homes. [Basically, they capture 100% of any gains on their own, just 6% of gains on clients’. Unsurprisingly sales prices of Realtor homes were closer to list, or over list far more often than for customers.] It was an interesting use of sales statistics; I read it long after the Pittsburgh house sold. That agent was ReMax, which I believe structured workers as free agents rather than employees (so they could bend whatever rules they wanted), at least at the time, hence the unusual commission structure. Maybe still is, dunno.