Q: We are getting ready to sell our house, and have been interviewing real estate agents to try to find someone to sell our house.

The first agent we met with wouldn’t give us a recommendation on what price to sell our house, until we told her what our mortgage payoff was. She also said this would be a factor on the commission we are charged by her.

I hesitate in revealing our mortgage payoff to her as I don’t understand why that should matter. Is this normal? And why would she base her commission off of that?

Thank you. By the way, I’m enjoying your Sunday radio show via the podcast. Keep it coming!

A: I hadn’t heard of agents asking how much equity a seller has in the house before. So, I called Rick Druker, managing broker of Baird & Warner’s office on Michigan Avenue in Chicago (BairdandWarner.com). Druker manages nearly 150 agents who sell property in Chicago’s priciest neighborhoods, and has been in the real estate business for more than 25 years.

“The agent probably wanted to know whether the house was underwater or not,” Druker explained. “With so many homeowners tapping into their home equity, it’s possible that on a $1 million house, there’s a million dollar mortgage. When you sell, it’s possible that the seller will have to come to the table with $50,000 in cash, but then there is no cash left to pay the agent.”

“In that situation, the agent is probably wondering how she is going to get paid,” he added.

But Druker has no idea why the agent would base her commission on the equity you have in the property.

“Standard procedure is to charge the broker’s commission on the sales price, not on the equity the homeowner has in the property,” he explained.

While many housing markets have increased rapidly in value over the past decade, Druker believes that the current slowdown in the real estate market means more homeowners could be underwater by the time they get to the closing table.

“It’s about how much you’ve borrowed against the equity in your home,” Druker says.

Druker recommends asking the agent why she wants to know such sensitive information. Perhaps she’s been burned recently by a seller who didn’t pay her commission.

But other than assuring her that you have plenty of equity in your home, I wouldn’t tell her anything about your personal finances. It’s simply none of her business.

Clearly, you’ll need to shop around to find other agents to come in and work with you on doing a comparative marketing analysis for your property. A proper CMA will give you a suggested list price for your property, a sheet with prices of homes that have recently sold in the neighborhood that are similar to yours (called “comps”), and the strategy the broker or agent has decided to use to market your home.

The right agent will listen to your concerns, offer excellent advice and strategy, and will work to earn your trust — without you disclosing your private financial information.

I’m glad you’re enjoying my radio talk show. The podcast version of the Ilyce Glink Show is available for free downloading at www.itunes.com.

March 28, 2006.