Hacker News Reader

> So, for example, they'd get 1% if they sold it for $500k because even a "for sale" sign written in crayon in front of the house would sell it, but then 6% on the amount between $500k and $750k, and a juicy 18% or whatever on the price above $750k. But does anybody actually do this?

The problem is that doesn't really fix it. You want them to get the $800K even though the $750K offer walks in the first month. But the $750K offer nets them $20,000. The $800K offer nets them $29,000 -- 45% more to get a ~7% higher price, but for doing 500% more work. So they still take the $750K the first month and then spend the other 5 months selling five more houses for $750K each.

In theory you could make the math severe enough work out the other way, e.g. they get 0% for the first $750K and then 50% of anything over it. But then the problem you have is valuing the base price appropriately. If you set it at $800K then they don't even bother trying to sell your house, but if you set it at $600K then they're back to being better off to sell six houses in six months for $750K each instead of one for $800K, and you end up paying them a very large commission for the privilege.

I've sold twice, and both times the agents gave me a range to offer at based on how long they thought it might take to sell. They were very much "on my side" so to speak.

I think the thing your example overlooks is the power of referrals. The happier you are with them, the more likely you are to refer friends and family to the agent when they ask you for a trustworthy recommendation. Like any sales gig, a network of happy customers takes time to build and is where the real money is at.

This. REAs live and die on referrals.

> "That is, the agent will happily encourage you to sell it at a lower price because she wants her commission now, rather than a very slightly greater commission 6 months from now?"

The listing agent is incentivized to price your house as highly as possible while still selling it quickly.

Under most normal circumstances this aligns exactly with a seller's best interests.