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(English) Real Estate Commissions: You Get What You Pay For

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29 comentarios
  1. Justin in AZ
    Justin in AZ Dice:

    I agree in principle with you Blog today and enjoy then when I get them daily. I do have an issue with the phrasing “full fee”. Here in AZ, all commissions are negotiable, so Full Fees or Standard Fees are dangerous words to use as each Agent is worth what their skill level is – hence there is no “full fee” as we Agents are not all the same nor are we all equal. There are some better than me and some worse than me and we should all be paid accordingly. Thanks for fighting the good fight KCM – keep it up!

  2. real estate consultant
    real estate consultant Dice:

    The Stanford “study” is a microcosm of the real estate industry dealing with only 800 houses in a very select and defined market. Even so, the Stanford paper points out one of many advantages of an agent: time on market. Time nor room allow for an adequate response but the NAR website has tons of data available.

  3. KCMcrew
    KCMcrew Dice:

    Sorry for the late reply but we wanted to review the Stanford paper before we
    commented. The Stanford study did not compare different commissions. It instead questioned the value of using a broker at all. The study most often used to quantify the difference garnered by using a broker is the National Association of Realtors’ (NAR) Annual Survey of Buyers and Sellers. The Stanford paper acknowledges that, according to the NAR study, the median price of homes sold without a broker is “27% lower than the median for homes sold by agents”. The authors of the Stanford paper immediately dismiss NAR’s findings on two grounds:

    1.) The FSBO sample in the NAR report is too small.
    “Approximately 83% of sellers use an agent (National
    Association of Realtors, 2003). FSBO sellers are therefore a small, highly
    selected group.”

    2.) The sample is different than the average seller.
    “…potentially unusual characteristics and inclinations; for
    example, they tend to be older and less wealthy.”

    We don’t understand the above reasons for dismissal considering:

    – The NAR sample of FSBOs amounts to hundreds of thousands of
    houses. The Stanford study’s sample was just 800 houses.

    – The sample used in the Stanford study was definitely a uniquely
    different sample than the average seller as it was limited to“Stanford
    faculty and a limited number of senior staff.”

    We hope this answers your question.

  4. KCMcrew
    KCMcrew Dice:

    We believe that a good negotiator in any field gets more for their clients. The post IS NOT about the commission percentage any agent charges for the services they offer to a homeowner, as these services can differ dramatically from one agent to another. It is about their ability to negotiate. If they can not negotiate their own commission (whatever the percentage), we believe they will also be weak negotiating an offer with your buyer.

  5. Tammy Benkwitt
    Tammy Benkwitt Dice:

    What is not discussed is how much of ourselves we give away free of charge every day.  How many buyers want to look and then not buy.  How many sellers ask us to come to their properties wanting to know how much it is worth – without listing.  Every agent experiences this and accepts these appointments as an opportunity and part of doing business.  But it’s unpaid work just the same. 

  6. Shaynemc
    Shaynemc Dice:

    I won’t budge on my commission (including dealing with banks on short sales) and also consider myself a good negotiator.  This means I also work hard for my clients as I know how to get them the best price on either side of the deal.  Obviously, agents need to be paid.  I have no trouble being paid hourly rather that on commission – imagine all those people who end up wasting hours of your time will now suddenly move a little bit faster when they’re paying you $20 an hour for your time. 

  7. JT Properties
    JT Properties Dice:

    As elsewhere in life, higher price does not always equate with highest value.  The top agent in our area (and probably one of the top in the country by total $ sales) charges only 3.68%.  He does 3x the volume of any other agent in the area and thus his knowledge of the local market is unsurpassed.  His houses move just as quickly as that of other agents.   

  8. Ruthmarie Hicks
    Ruthmarie Hicks Dice:

    One of the problems here is that sadly, there are plenty of terrible agents that somehow have made a name for themselves.  They can charge a hefty fee and do almost nothing of value.  In some cases they do more harm than good with their confrontational style.  I know agents that other agents avoid wherever possible. How does this help the seller sell a home or a buyer purchase a home?   When I see some of the listing photos and pathetic promotion for homes worth a great deal of money, I have to ask “What are they thinking?”  An amazing presentation helps move a home and increases showings.  More showings, more offers.  More offers = higher sales price….Yet there is no video or slide show and the photos look like they were taken with a clamshell phone from 2005. 

    On the flip side –  agents who do their job do a ton of work gratis, and that is why the fee is so high.  You want to see homes?  Its FREE!  You want a CMA?  It’s FREE!  You want me to send you listings within your working parameters?  Its FREE!  You want to list your house? Its FREE!  Its all absolutely 100% free with all the risk being taken on by the AGENT in terms of time and money (which can be considerable) until something is actually SOLD.  Don’t get me started on the clients  (and agents) that snake you.  Happens all the time. Bottom line: the consumer holds a good deal of culpability regarding the high cost of doing business. 

    • Robin
      Robin Dice:

      Amen – and thank-you! My favorite photos? The one with the camera flash in the bathroom mirror with the agent’s body underneath the flash next to the toilet (with the lid open of course…) And to realize sellers actually HIRE these people to handle the sale of their single biggest asset.

  9. Beverly
    Beverly Dice:

    I agree that $20 is unrealistic, however I have long believed that an hourly fee structure would raise our profession – more in line with any other professional (lawyer, accountant, plumber) who provides valuable services. It also seems more fair to the consumer – as everybody would pay for what time they use…instead of the current model, where only “successful” sellers pay us. I think right now they’re paying an unfair portion. Realistically, why shouldn’t Buyers pay for our services? 

    • DJ Realt.
      DJ Realt. Dice:

      I agree, Beverly.  We are viewed on the same level as used car salespeople.  Willing to do anything to get that big commission.  I think we would also benefit by taking a fiduciary oath for our clients.  Then there is no impression that we are looking out for anything beyond the wallets of our clients.

    • RMGH
      RMGH Dice:

      We are viewed like used car salespeople because almost anyone with a pulse can get a license.  Until we raise the bar on entry and require at least a college degree and some more extensive formal training, that scenario won’t change.  The training offered is not that great and having earned a high degree in a field that got outsourced, I can promise you that we do not compare in any way to a doctor or lawyer.  

      The fact that we don’t charge an hourly rate gives the public the option to treat us like garbage – which unfortunately,  they often do.  Charging $20/hour, plus a more modest commission might make the consumer shape up a bit.  Last year I had 23 qualified buyers spin my wheels, drink gallons of gasoline and go on endless excursions….and not buy.  1750 miles on my car later and not so much as a “Sorry for all the time and effort” and I knew the meaning of being treated like trash.  With the meter ticking, people might think twice.  It would take some of the risk out. 

  10. Karen
    Karen Dice:

    Dont get me started here.  I’m a stager & real estate photographer and I get SO frustrated at lazy agents who let houses present terribly, and look like they used a Mattel Preschool Camera for photos! Crooked walls, reflections in the mirrors, TV sets on, dishes in the sink, KIDS in the photos — really?  And they expect the houses to sell?  Even worse, the sellers who do not make their agents accountable for the commission they are paying them.

  11. Pete
    Pete Dice:

    All I can say is I have been investing in
    properties for over 12 years and have always used a realtor. They are well
    worth the cost. A good realtor will take the emotion out of the transaction and
    keep the deal together.  More deals fall
    apart because you have an inexperienced realtor than any other reason.  If you can’t understand this simple part of a
    deal then maybe you should try it without a realtor and after you have suffered
    enough and waited a few months go out and find a good realtor.  Builders and investors are not in the
    business of giving away money so why do we use only the best realtors?


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