What is a sliding scale commission?
First, I don’t recommend offering a sliding scale compensation system through any MLS listing. (The only possible exception would be an auction) Sliding scale commissions base the commission amount paid to the buyer broker upon the final agreed sales price. Here is an example, if the listing price is 500k, the seller might offer 3% to the buyer broker for a closed sale at 480k and up, 2.5% to the buyer broker with a sale of 460-480k, and 2% for anything below 460k. Basically, as the price goes down, so does the buyer broker’s commission.
Here is the problem with this system. The buyer broker has an obligation to try and acquire the best possible price for his client, not the seller. By offering a sliding scale commission, the seller is putting the buyer broker in an awful situation. Essentially, if the broker tries to do what is best for his client, he/she hurts himself. The risk the seller takes in offering a sliding scale system is the broker may simply skip the property in order to avoid the future potential problem.
Tags: Sliding Scale