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This method takes the risk away for the agent, if they dont sell the property, they still make money for their trouble. If you incentivised the sale with a smaller commission, you are still encouraging the agent to complete the sale as soon as possible.
If the sale takes long than expected, the seller pays the penalty. If on the other hand, the property sells quickly, the agent gets lower commission.
I know this is different to the standard way that real estate works, but perhaps it is time to shake this up
Possible reasons for agents:
1) Agents could do some freelance work and earn some cash on the side, while they are working their normal jobs
2) Agencies get paid as they go, rather than working for the possibility of no reward at the end. This helps with cash flow.
3) Commission could still be paid, but at a lower amount, i.e 0.5% as a means of keeping them motivated
Possible reasons for sellers:
1) The seller wants to try to minimize costs because they believe their property is unique and will sell quickly. They take a gamble as to how long it will take for them to sell
2) The seller wants to be involved in the process, so they bring on an agent to do 20 hours work to set up the sale and help with the marketing, then to help advise on legals etc.
Does that make sense?
