10% Commission? Another trend?

A: Thanks to Rudolph at Sellsius Blog for this tip on a 5 week old listing at 333 E 55th where the seller is offering a 10% commission to move the property! This is not a new marketing tactic, but it definitely is the highest commission I've seen in my days as a broker. Will it work? No way!

Lamb Realty has the exclusive listing where this JR4 is asking $875,000 with a 10% commission incentive offered to the brokerage community to stimulate activity. Its tough to tell how much the seller added onto the asking price to accomodate the extremely high commission offered, but here is what I can gather about sales in this building:

333 E 55th ACTIVES

Apt. 4B ---> Asking $389,000 and 580 SFT (shares N/A)
PPSF = $707
Marketed By: Rena Black of Bellmarc

Apt. 14D ---> Asking $875,000 (298 Shares)
PPS = $2,936 Price Per Share
Marketed By: Lamb Realty

333 E 55th RECENTLY CLOSED

Apt. 8E ---> SOLD FOR $575,000 and 270 Shares on 11/2/2005
PPS = $2,129 Price Per Share

Apt. 11E ---> SOLD FOR $580,000 and 290 Shares on 10/17/2005
PPS = $2,000 Price Per Share

So, it seems this JR4 which is probably the same size as the 2 listed above that closed late last year, is asking about $850 more per share in a slower market and rationalizing it with a 10% commission.

I doubt the seller's strategy will work here in a slower housing market than late last year, but I certainly will be curious to see if a broker can convince a buyer to pay this much more than recent comps, to get his fat commission check.

1 MAJOR FLAW: Even if the seller gets the higher price somehow, what happens if the buyer is financing 75% of the transaction, in which case the lending bank will send an appraiser over to verify the purchase price? How will the appraiser 'get the # needed' when the last 2 similar units sold for so much less? This broker has no answers to that one!

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