Hawaii Real Estate Reporter

The former National Association of Realtors President and current CEO of Prudential Locations answers some Real Estate questions.

Question: 4% Comission or Price Reduction?

Aloha Bill,

My client is very frustrated that his property is not selling. He is currently priced above market, but is asking if whether offering 4% commission or reducing his asking price would be more productive in today’s market. Do you have an opinion?

Anonymous (to protect client privacy)

RE: 4% Comission or Price Reduction?

Aloha Anonymous,

Great question. The price reduction is probably better. The 4% commission is designed to attract more attention to the property, and it may generate more activity (calls, showings etc.). However, activity doesn’t always translate into a sale.

When you’re selling a lower-priced product, there is a very strong relationship between “foot-traffic” and purchases. If more people walk into the The Gap, they are going to sell more sweaters. This principle doesn’t apply well to overpriced homes because people are much more serious about getting a good deal on a home than they are on a sweater.

The 4% commission is also often interpreted as a sign of weakness by buyers.

Thanks for the question.

Bill