Alternative Broker Fee Structures

Have folks on this board used non-standard broker fee structures, especially for apartments in the $5 million+ range? The problem I have with the standard fee structure is that it incentivizes the broker to transact vs. maximize value for the owner. And lest this become yet another "brokers are greedy" thread, let me say that in my opinion it is less about that but more from pressure coming from... [more]

Have folks on this board used non-standard broker fee structures, especially for apartments in the $5 million+ range? The problem I have with the standard fee structure is that it incentivizes the broker to transact vs. maximize value for the owner. And lest this become yet another "brokers are greedy" thread, let me say that in my opinion it is less about that but more from pressure coming from the brokerage firm the work for. Say I think my apartment is worth, conservatively, $5 million. By conservatively, I mean that at that price it is so attractive that a monkey could sell it. Say its actual market value is $5.5 million and you would be ecstatic if you could get $6 million. I know that there are costs incurred by brokerage firms (staging, professional photography, marketing materials, website hosting, time/labor to show the apartment) to list your property, but these costs are relatively fixed and there will not be a 5x difference between a $5 million apartment and a $1 million apartment. If you can accept a $30,000 fee (3%) on $1 million that is suffficient to cover these fixed costs, then capitalism dictates that you would be happy accepting a $50,000 fee (1%) doing a bit more work, using better photographers, better staging etc. I think any broker worth his salt should be able to get you the market price. Where I think he should be paid is getting you from market price to a great price. And I would be willing to incentivize them for this. For example, a structure I had in mind was to set a baseline fee of 1%, mainly to cover fixed costs for an apartment I think is worth $5-6 million and then add on rising incentive payments that rise as the price goes up. So say, an extra 5% from $5 to $5.5 million ($25,000), an extra 10% from $5.5 to $6.0 million and say 20% for anything beyond that. So if they sell it for $5 million, they get $50,000 and certainly more than cover their fixed costs but don't make much more than what they'd have done selling a $1 million apartment, because, frankly they've done a poor job. If you sell it for $5.5 million, you get the $50k plus another $25k. You don't get rich by selling stuff for the market price. But if they sell it for $6 million, now you've made $125k and if you sell it for $6.5 million you are talking about $225k which is now more than 3% and not a shabby pay day for a broker but also one that is well deserved. Has anyone tried this before? [less]