I’m going to preface this by sharing my opinion on the importance of considering value over price.
When I think of the number of times I’ve been asked “What sort of services do you provide?” compared to “What commission do you charge?” it’s overwhelming how much more frequent the second question is.
Of course, everyone wants to know what they’ll end of paying for a service — what should be just as important though, is what they’re getting in return.
In a sense, selling a home can be just like anything else in life. There’s huge variability in the agent that can be hired, and a massive difference in what you might pay in commission.
Commission structure and rates
It’s true. Commissions are not fixed, and are negotiable between seller and listing agent. I’m pretty sure you can hire someone to simply post your home on the MLS for $500 – $1,000. But then what?
Or you can hire someone to list your home for 3% of the sales price. I would immediately ask, “Wow that’s awesome, tell me a bit about how this works. How are you able to sell my home for so much less than many other agents?” (I know that’s a tough question because the info they’ve given you sounds soooo attractive! But the more you know, the better!)
Or you may see the eye catching “list your home with so-and-so for a 2% listing fee”...but what they don’t tell you upfront is what they’ll be paying the buyer’s agent in addition to the 2%. So what’s the TOTAL cost to the seller?
I think the industry has a long way to go in terms of transparency with consumers. Things were structured very differently in the 1980’s and even during the 1990’s regarding representation of clients, disclosure law, and generally what obligations an agent had to their buyer/seller.
So I guess here I am….doing my best to change this one post at a time.
What’s best for the seller?
Let’s quickly look at a company (I promised, no names!) that charges 3%. Sounds amaaazing right!? They’ll likely give you all the good stuff upfront, have you feeling like this is a sweet deal, then they finally hit you with something like “that’s right, and we’ll be exclusively selling your home within our network or agents.”
WAIT, WHAT? What does that even mean?
This means they won’t be having your home available to thousands of other potential buyers looking at homes like yours. This is how a company like this would get away with charging 3%. Because they don’t have to pay a buyer’s agent (who would typically get around 2.5%).
Whatever way it’s spun, there’s literally no way – in my opinion – this can be beneficial to a seller. And there is every reason in the books to say that this method of selling a home would NOT save the seller any money. In fact it would likely lose them thousands.
One of the most important things in marketing a home is generating the largest pool of qualified buyers.This is the best way of getting as many bidders as possible and literally creating a buying ‘frenzy’ around your home.
Only selling your home to a select number of agents within one company is counter productive and quite frankly should be disallowed, UNLESS this is presented to the seller upfront with 100% transparency – and this is what the seller decides they’d like to do.
There are a lot of options when it comes to selling. Who to choose as an agent. What marketing plan should be put together. The best timeframe for the family selling. I truly believe this is best discussed sitting down with the clients and having an open conversation. Might I call it putting our heads and together and possibly some teamwork!