Sellers need a strategy when angling for lower commissions

When choosing an agent, some home sellers make rookie mistakes that can cost thousands of dollars.

“The worst thing you can possibly do is choose an agent based on the size of the commission,” Sacramento agent Elizabeth Weintraub said.

Though the warning sounds self-serving, homeowners and agents can tick off stories that underscore how true it is.

“Listings are cash cows. They bring in other listings and other buyers,” Lake Forest agent Kellie Jones said. She has seen dishonest agents offer lowball fees simply to get a sign into someone’s yard. Worse, such agents might recommend unrealistic selling prices.

“The client gets excited. They get a number in their head, and they don’t want to lower the price,” Jones said. Meanwhile, the property languishes while the agent attracts more business.

“It’s called ‘buying the listing,’ ” Weintraub said.

Home sellers also may be wise to steer clear of agents trying to represent both seller and buyer.

“For some agents, that’s their modus operandi,” Weintraub said. “Sometimes they will sabotage the listing, using bad photos or bad marketing so that other agents don’t bring in a buyer -- and they get to keep all the commission for themselves.”

Though such dual agency is legal if disclosed, it is fraught with potential conflicts. Weintraub explained what should be obvious, but is sometimes ignored: It is virtually impossible for a single agent to negotiate the highest sale price for a seller and the lowest buying price for the buyer in the same transaction.

Sellers who find themselves in such a situation are wise to extricate themselves -- or at least ask for a steep rebate on the commission they pay rather than allowing a single agent to pocket all the money.

While borrowers go to great lengths to whittle fractions of a percentage point off their mortgages, it is rare to see a seller dicker with an agent over quarter-point or eighth-point discounts on commissions. Such fractions can add up.

On a half-million-dollar home, of which there are many in Southern California, a quarter-point shave off a commission would put an extra $1,250 in a seller’s pocket.

Wise home sellers also should employ a poker strategy in their defense: Don’t reveal too much information upfront.

Savvy agents can use tax rolls and other public records to make a decent guess whether a home seller is flush with equity. Though most of a seller’s financial secrets are laid bare in escrow and loan shopping, the initial willingness of an agent to discount her commission could be affected if you blurt out how loaded you are.

Jones, who spends most of her time these days selling foreclosed properties, probes for equity information at the outset.

“I always ask,” she said. “If they have a teeny amount of equity, that might affect things.” The seller might be so financially stretched that staging and selling the house is problematic. In such a case, an agent might not even want the listing, much less offer a discount on her fees.

Most agents in California are paid no salary -- sales commissions are their lifeblood. So if you want a struggling agent to charge you less than 6%, avoid mentioning that mountain of cash equity you’re about to reap. As the process unfolds, reveal only what you must -- and only when you must reveal it.

In the end, the best defensive strategy for a home seller is to check references and performance levels. Sign on with an honest, experienced agent who’s a local area expert with a sophisticated marketing plan.

Said homeowner David Herron, who has bought and sold several properties in Orange County this decade: “I would expect someone who’s been around for more than one bubble.”