A vendor recently asked me, “What would you do as a commission scheme if you were selling your house?”

Here’s how I’d approach it.

I’d ask the agent, “What do you reckon you’ll get for me?” Let’s say they respond, “We’ll get you \$1 million.” Now, I know agents tend to be optimistic when trying to win your business. So I’d say, “Alright, you reckon you can get \$1 million? I’ll pay you a 1% fee up to \$1 million. But anything over \$1 million—I’ll give you a bonus. I’ll pay you 10% of anything over that amount.”

Then I’d watch their reaction. If the agent is confident in their ability to get that price or more, they’ll say, “I’ll take that.” But if they hesitate or try to haggle the 1%, that tells you a lot. A confident, capable agent won’t shy away from that structure. That’s the kind of agent you want.

If you’re using a bonus scheme, it’s crucial that it’s agreed to at the time you sign the listing agreement. Why? Because I’ve seen agents try to introduce a bonus scheme on the morning of the auction—after weeks of “vendor management” (a polite term for conditioning, which I find disgraceful). Over those weeks, they’ve often chipped away at the vendor’s expectations, only to then push for a bonus at crunch time. That’s not fair. If it’s agreed up front, you can say, “No—we set the bar at \$1 million.”

Now let’s talk more broadly about commission. If you’re a vendor, be very wary of an agent who drops their fee during the listing presentation just to win your business. Why? Because if they cave on their own fee with you, they’re likely to cave again—this time with the buyer. That’s not someone you want negotiating on your behalf.

Let’s put it into perspective. Say the standard commission is 2%, and they offer to do it for 1.5%. That’s a 0.5% drop—but it’s actually 25% of their entire fee. Now ask yourself: if they’re that quick to discount their value, how strong will they be when negotiating hundreds of thousands of dollars with buyers?

In my experience, many buyers are *better* negotiators than the agents themselves. So as a vendor, you need someone who knows how to hold their ground. One of the biggest signs of an agent’s skill is how they handle their own fee at the time of securing your listing.

I’ve seen vendors lose tens of thousands of dollars at the point of sale—just because they tried to save half a percent when they signed up the agent. Be aware of this. Hiring the cheapest agent could end up being the most expensive mistake you make.