In their hit book Freakonomics, Steven Levitt and Stephen Dubner posit that real estate agents don’t have the incentive to push for the highest sales price for homeowners. On the sale of a $300,000 house, for instance, after splitting commissions with their agency as well as the buyer’s agent, a selling agent pockets 1.5% of the selling price ($4,500). Selling agents have little reason to hold out for the best price, say $320,000, because their incremental commission is minimal—an extra $300. This results in complacency—it’s best to take the sure sale at 300K and run. Levitt and Dubner bolster their claim by citing research that reveals when realtors sell their own homes, they remain on the market one week longer and sell for 3% more.
How Your Sales Force Can Fight for Maximum Profit
In their hit book Freakonomics, Steven Levitt and Stephen Dubner posit that real estate agents don’t have the incentive to push for the highest sales price for homeowners. On the sale of a $300,000 house, for instance, after splitting commissions with their agency as well as the buyer’s agent, a selling agent pockets 1.5% of […]
October 10, 2011
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Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Marketing Essentials. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Learn how to communicate with your customers—strategically.