Fair and Reasonable Commission Rates

Our clients don’t pay for cheap service. They have high expectations of us and any professional who they trust. People who trust us to guide them through the sale of their homes are most likely to be fair and reasonable people. I think they see our intent to increase their profit and keep them safe as fair and reasonable.  

You get what you pay for. So, pay for fair and reasonable.

Placing a high price on mediocre doesn’t make something less crummy. The phrase, “you get what you pay for,” suggests otherwise. So, what are you paying for when you pay for real estate brokerage service? I know what I expected when I hired REALTORS. They needed to show me they understood the contracts, possessed ideas to make the market work in my favor, and they would keep our interaction confidential. I’ve never paid a broker six percent commission to sell my house, and I’ve never been disappointed. If that’s what I expect and what I pay for, it makes sense that I deliver the same to my clients. 

Essential Real Estate’s business plan is different than other firms. We intend to guide home selling clients to higher profits, safer contracts, and less worry. Higher profits are a product of eliminating unnecessary expenses and using the strength of the market to increase a seller’s bottom line without depending on just getting a higher price on an offer.

Look at real estate brokers across the country. You can easily find a broker who charges more or less than we charge. I don’t think you will easily find a brokerage firm prepared to show you how they intend to increase your profit and eliminate risk. Essential Real Estate brokers are ready to show you how we increase profits for our clients and eliminate risk and worry. More profit, less worry. That’s what you get when you pay us to sell your home. 

The fee we charge and how we guide you through negotiating the selling costs and terms of the sale are fair and reasonable. You will pay lower commissions with us. You’ll get more of what you pay for. 

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Prepare to WIN the hottest properties without overpaying.

Ask most buyer agent brokers for their best ideas to win the accepted offer for their clients this year, and you’ll hear something like: Outbid Everyone.  If that’s their best idea, they’ve got no idea. After three years of markets extremely advantageous to sellers, REALTORS should have more ideas to help their clients win in the home buying competition. 

Eight years ago, long before the market turned sharply against buyers, we started looking at ways to give our clients ideas to negotiate the competition out of the way without overpaying. We enjoyed a unique advantage for years while most agents continued to write offers the way they always had. By knowing the terms of purchase agreements, contingencies, and the transaction mechanics better than most agents, we guided our clients to outsmart the competition. We bet that home sellers are more likely to accept contracts that carry the least risk when the price is close. We were right. The good news for 2022 is that this strategy still works. 

Structuring an offer to appeal to the seller’s security needs is easy, provided the buyer does their part. Do these things first to win an accepted offer in competition without being the highest bidder on price. 

  1. Find a lender who will underwrite your loan application before finding a house to buy. Lenders will work with you and your agent to draft a letter for you to include with your offer that accomplishes the objective of the commitment letter most buyers promise to provide 30 days after acceptance. With this strongly worded letter, you level the playing field with many buyers who don’t need the protection of the commitment letter contingency. 
  2. Gather the evidence that you have access to all of the funds you need to buy without taking a mortgage. Most people who think they got beat by “cash buyers” are wrong. They got defeated by people who took a mortgage but showed the seller that they had access to enough money to buy if they didn’t get the loan. Consider all of your options before deciding you don’t have access to a half-a-million dollars. Many “cash buyers” don’t have the cash, but a relative does, and often the relative is willing to promise to provide the funds if the buyer cannot qualify for financing. Don’t rule this out. I’ve seen buyers discover they have trust funds they were unaware of or had a parent or grandparent who considered them a reasonable risk to promise to provide the funds with no strings attached, knowing they would never need to do more than give the letter. 
  3. Understand the limited value of contingencies. When the market favors the buyer, you can include any number of contingencies, and the seller probably won’t object; not today. The protection of some contingencies isn’t worth the cost or the risk that the contingency will discourage the seller from accepting your offer. Testing, inspecting, investigating, getting another person’s opinion aren’t helpful to your goal of getting your offer accepted. The seller’s goal is to get to closing with no worries. When you show you are the most committed buyer, your value goes up even when your price is less. 
  4. Select an agent who knows how to make the Offer work for you. The practice of real estate is a contract negotiating business often left in the hands of people who don’t like contract work or think they can protect a buyer from every possible risk. The State approved forms are dummy-proof. But, if all you do is check the boxes and fill in the blanks, every offer will look risky to the seller, regardless of the strength of the buyer. Prepare yourself by finding an agent who can show you how they can structure your offer to fit your tolerance for risk and best show your commitment to close. 
  5. Let the skilled agent lead. You’d think I would be wise enough to take the advice of my REALTOR when I tried to buy in this market. Eventually, I was, but my first efforts got the same results I helped my clients avoid. Trust the skilled agent. If they have a plan to get your offer accepted without depending on you outbidding the crowd, go with their program. Moving into your first choice home is more enjoyable than living and learning a few times over. 

Our clients expect fair value and exceptional skills.

Raise Your Expectations and Profit.

We take on clients who expect us to be exceptional. No one asks us to reduce our fees. And still, our clients pay thousands less in commission than their neighbors, and they never pay 6% broker fees.  

The average real estate commission charged by brokers to sell a house in the United States hasn’t changed much in a hundred years. The six percent commission has survived every possible market condition. Its immunity is being tested today by the US Department of Justice. The lawyers want to dig deeper to see if the reason commissions hold steady is related to a lack of fair market competition. 

Some estimates figure real estate commissions cost the American home sellers $100 billion annually. The money we use to pay closing costs and real estate commissions comes from our home equity savings. If the average American homeowner has $153,000 in equity in their home and pays $30,000 in broker fees, they’ll use 20% of their equity savings before moving on to their next big plan. 

Is 20% too much?

I don’t know if 20% of your equity is too much to pay for broker fees. It’s more than I spend. We do know if the broker’s cost to sell your home is related to time on the market; an average of three days compared to 30 days might generate higher profits at lower costs. Can some of those cost savings be passed on to consumers?

Facts are Key to Commission Negotiation 

The following is just my opinion, and I could be wrong. There is no conspiracy among real estate licensees protecting the 6% commission. Real estate agents have persuasive information to make a case in favor of top-of-the-market commission rates. (To keep the lights on is just one argument you might hear) For consumers to successfully negotiate commissions with professional real estate brokers, they need to know how the MLS works. They must understand that they can structure their commitment to pay a commission at a time and in a way that leaves them room to decide to pay a top-market rate.  Facts about compensation and cooperation will dispel the myths that homeowners pay to avoid.

With facts in hand, consumers will spend less of their home equity paying our utility bills and keep more money in their own hands.  The economy doesn’t suffer when less home equity is spent on broker fees.

The Problem With Home Selling Costs is Information.

Information about real estate purchase agreements, the thousands of contingencies, and how real estate transactions and negotiations work is the key to reducing home sales and acquisition costs. 

In some ways, the information problem has improved. It wasn’t so long ago when REALTORS held all of the information on homes for sale, sales prices, and market statistics. Today, anyone with a smartphone has access to more real estate sales data than any previous generation. Access to the data that once was confidential and privileged for the eyes of REALTORS-only allows consumers to be more intelligent, savvier, and wiser. 

Better informed consumers struggle less with negotiating decisions. They make commitments based on facts and data. Emotions will always play a role in negotiations. Having information helps temper the emotion or offset disappointment when emotions overrule logic. 

If consumers had a better understanding of how the commission sharing among members of a multiple listing service works, they would not concede their ability to negotiate commission quickly. Left to believe it is to their benefit to promise to pay the highest commission rate to a buyer’s broker before seeing any offers, home sellers lock themselves into commitments that increase their selling costs by thousands of dollars. 

Commit to paying less and reserve the right to pay more. 

Since January 2020, Essential Real Estate brokers have compiled evidence to prove that home sellers spend more home equity than necessary to sell their homes in this red-hot market. Our clients see how the commission-sharing component of the MLS works. We show them how to commit to paying less to a buyer’s broker and reserve the right to spend more AFTER they see the offers. 

An easy example is the $400,000 home sale. When our clients sign their listing contract with us, they may agree to pay a buyer’s agent 2% of the sales price to work against them on behalf of the buyer. That’s a peculiar concept, but that’s how it is today. The Seller agrees to pay X% for a broker to represent the buyer to gain an advantage over the Seller. The typical X% is 3.0%. But for our clients, the X% is 2.0%.  

By promising to pay something, but not the top rate, our clients have room to negotiate to pay more depending on the quality of the offers they have to consider. An offer may be so good that a seller is willing to pay $4,000.00 more to accept it. The Seller will know how good the offer is once they see it and can compare the offer to their choices on the table.

What makes an offer better than another? It’s not the price that matters most; it’s the net. And the net is the result of contingencies, credits, costs, and price offered for the property. 

Besides knowledge of the commission sharing process, homeowners will be in a better position to squander less equity when they learn how the contingencies work. 

Ambiguity Kills Your Opportunity

Your offer is more likely to get rejected because of a drafting deficiency than a price deficiency. Drafting an Offer to Purchase that will work as a contract is the highest responsibility of real estate licensees. A well-crafted offer will guide the parties to stay on track from the time of acceptance to the date of the closing. Ambiguities left unattended may cause problems that someone has to pay to overcome. I’ve often been challenged with: “I’ve never heard of that happening.” There are plenty of REALTORS who doubt my opinion about the need to be specific and thorough. Their clients have paid or will pay the price to hear about what they’ve never heard. And the agent may never know what happened.

Errors. Ommissions. Ambiguity.

Each line of an offer to purchase describes the responsibilities of the buyer and seller. Who is going to do what, by when must be written in a way that a reasonable person can interpret the intentions and the action steps. When things go wrong, there must be a clear process of next steps to allow exploration, negotiation, or termination. Real estate contract lawyers know what can go wrong, and they probably can give you examples of when the most obscure problem occurred. When problems occur during a transaction, agents get the opportunity to see where the problem started. Problems that arise after closing give agents the opportunity to see how the legal system operates.

I’ll give you a few examples of some common drafting deficiencies.

Errors. Purchase agreements are 99% prewritten. All you have to do is fill in the proper blanks with numbers or words to make complete sentences and check the boxes to indicate that you intend for this or that provision to be part of the Offer. Some errors are easy to see when you read the purchase agreement. A line preceded by a $ sign calls for a number, not words. The number is not intended to become a percentage and if the drafter makes a dollar amount space a percentage, the sentence will make no sense.

Ommissions. Real estate firms have their own additional contingencies written on the addenda. There is a line on the Offer to Purchase that identifies the addenda which the buyer intends to be included. When the drafting agent fails to include a reference to the addenda where the reference is called for, the addenda may not be considered a part of the offer by the seller. Buyers who expected the protection of a contingency will be concerned to discover the contingency was committed.

Ambiguity. This is my favorite example: Closing Date: The buyer agrees to be flexible as to a closing date. Your idea of flexible might be, you meant moring or afternoon. My expectation might be this month or some date next month. My second favorite: In the event that XYZ occurs, the buyer and seller agree to negotiate a mutually acceptable solution. Who decides whether or not the parties negotiated? How do we arrive at a mutually acceptable solution when the parties do not mutually agree?

Purchase agreements are completed by licensees, lawyers, non-professionals, and paralegals. The range of skill and interest in precision is vast. Most purchase agreements have deficiencies. It’s true that the kind of issues I described may not be a problem in many transactions. But, when one becomes a problem, the problem will be costly.

At Essential Real Estate we take contract drafting seriously. A well-drafted offer can be accepted whereas a poorly drafted offer requires a counteroffer to clean up deficiencies. We’ve been told the difference between our offer and second place was the quality of the drafting. That’s not surprising. I’m sure people often think they got outbid on price when they lose in competition. They’d be displeased to know their offer could have been accepted had the simple Errors, Ommissions, and Ambiguities been fixed before the offer was submitted. The problem is unless the drafter knows better, the errors aren’t seen as errors and the buyer will pay the price.

Multiple Listing Services. Do they help or hurt American Consumers?

Some people see the real estate multiple listing service (MLS) business model as a great benefit to the American consumer. Others (Not-REALTORS) have doubts. The Department of Justice and some judges are on the side of the doubters. I favor a competitive environment that allows more brokerage service and fee options for the consumer; the MLS model has room for growth. Essential Real Estate has proven long-held beliefs are myths.

The essence of the issue is that MLS systems are designed for the Seller to pay one commission to the listing broker, and the listing broker then commits to paying half of the commission to a cooperating broker. More often than not, that cooperating broker is working diligently for the buyer’s advantage to the Seller’s detriment and then collecting their fee from their opponent, the Seller. The rules of membership in an MLS result in listing brokers obligating their home-selling clients to promise to pay the highest typical rate of commission to the buyer’s agent in most cases. (I estimate that rate to be 3.0% in 90% of all listings)

Paying the other side to work against you is unprecedented. The closest example might be losing in court with the obligation to pay court costs and attorney fees for the other side. The Seller isn’t losing in a home sale, but they still pay the buyer’s broker. That’s peculiar. 

This article in the New York Real Estate News summarizes the complex issue. I’ll offer a solution suggestion. Split the commission in two. 

The MLS is a Private Club

To understand how the MLS works, consider it similar to a private club for people with specific credentials. In this case, it’s a real estate license. Licensees apply for membership and pay dues to join the MLS. The members promise to cooperate with all members in exchange for the privilege of access to every member’s inventory of listings. Cooperation is guaranteed, while meeting standards earn compensation.

One rule of membership in the MLS can not be an obligation to pay a set price commission to members. Over time, some practices become Standard Operating Procedures. About 88-90% of all listings in an MLS will include a 3.0% offer of compensation to be paid by the Seller. That’s not a rule; it’s the way it is. The following most likely number below 3.0% is 2.5%.  

Split the Commission. Let the Free Market Decide. 

Cooperation between MLS members will not change, and the consumer will not suffer if the practice of one commission paid by the Seller ends. My proof is two years of running an alternative business model with more options for the home seller’s advantage. Instead of obligating the Seller to pay a 6.0% commission expecting half of that commission will be delivered to a buyer’s agent, listing contracts with clients of Essential Real Estate are signed with commitments set less than 6.0%. 

Where the same Seller has an option to sign a listing contract at 6.0% with another broker member of the MLS, Essential Real Estate Clients might sign a contract committing themselves to no more than 4.0% commission and promise to pay the buyer’s agent 2.0% commission instead of 3.0%. This way, our selling client retains the opportunity to agree to pay a higher commission and can decide after seeing the quality of offers. The results are compelling. An uncommon member is a broker who demands a 3.0% commission from the Seller in exchange for their buyer’s Offer to Purchase when the Seller offers 2.0%. 

It’s a Seller’s Market. They should get all of the advantages.

The compensation method we use is the kind of advantage owners deserve in this market. Locking a Seller into an obligation to pay top rate commission for any offer artificially supports the highest commission rate placing the seller at an avoidable disadvantage. Free markets drive prices up and down. The commission is the price of the service. There might be some artificial support for the commission to hold firm at 3.0% in any economy. Splitting the commission into two sides might remove one of those supports. 

To win the accepted offer in a hot home selling market, avoid these five mistakes.

Tight inventories will continue in 2022. If you’re preparing to compete to buy a house this year, take advantage of the lessons learned by people who tried and failed before you. Avoid these common mistakes to outsmart the competition, even if you can’t outbid them.

Mistake 1

Thinking you have leverage. Ignore negotiating ideas conceived before June 2021. Old-school strategies of feeling out the other side and including throw-away conditions you intend to concede to appear as conciliatory will get you excluded from the conversation. As a buyer, you and I have no leverage.

Mistake 2

You are trying to meet in the middle. If your offer is not your best price, what do you gain by setting a price where the seller can meet you in the middle? Owners are not looking to compromise on price in the first two weeks on the market. This strategy only works as leverage for the seller to inspire other buyers to fear losing the house to a better offer. (No one, except the seller, will know your offer is a non-factor.)

Mistake 3

You failed to give the owner security. The owner is most interested in two lines on the offer: price and closing date. Money and security. The remaining nine hundred lines and 23 pages of the purchase agreement protect a buyer from committing to close until the last possible moment. Many good-price-offers get rejected for their high-risk contingencies. Review your offer from the seller’s perspective; look for a commitment to go right to closing safely and securely. Contingencies are luxuries of a buyer’s market. If you won’t make an offer without the protection of an escape clause, this might not be your time to become a homeowner.

Mistake 4

You give up because you don’t want to get into a bidding war. The competition isn’t what you think it is. Be assured, out of ten offers on the table; the owner might have two offers they could accept as written. More likely, it’s one acceptable offer. Keep this in mind: you’re not competing with ten other buyers even if the owner has ten other offers. You’re only competing with the one or two buyers who submitted offers acceptable as written. 

Mistake 5

Your offer includes drafting mistakes or ambiguous terms. Most purchase offers submitted this year won’t be rejected because of the price. Owners refuse or pass on most offers because they are not acceptable as written. The Wisconsin purchase agreement forms are almost dummy-proof. Almost. The drafter still has to fill in blanks correctly (Numbers go in blanks preceded by $ signs, and words that complete sentences go in those blanks not preceded by $ characters.) Ambiguity is a fatal flaw. Subjective criteria, undefined terms, and unresolvable contingencies require counteroffers. Owners are not sending counteroffers when they have clean offers in hand. Given a chance to fix their offers, I’ve been told by buyer agents, “just send us a counter.” Some people never know how easy it would have been to get their offer accepted.

Bonus Mistake

You allow your buyer agent to speak for you. The proper way to negotiate an offer is in writing. We will not verbally negotiate with buyer agents. There is nothing but trouble when two agents hammer out some details and expect their clients will understand the scope of the commitment made on their behalf. It’s not often, but sometimes an owner will give one buyer a chance before committing to another offer on the table. I know the buyer agent is trying their best for their client when they tell me their client will never accept the counteroffer I sent. I’ve seen these “unacceptable” counteroffers accepted enough times to know the buyer agent should say nothing but thank you and present the offer. When a buyer agent speaks for his client without presenting a counteroffer, they run the risk of the listing agent reporting the buyer agent’s feelings back to the seller. I’ve seen sellers withdraw counteroffers based on the negative first reaction of buyer agents. No one knows what a buyer or seller will do. Don’t give your authority away.

Three Costly Mistakes Homesellers Must Avoid This Spring

Real estate commissions are negotiable. But you wouldn’t know it by looking at listing contracts. According to RealEstateWitch, Wisconsin home sellers are paying an average rate of about 6.0%, one of the highest rates in the country. 

Ask any broker, and they’ll probably quote their commission as 6.0% of the sales price. So why aren’t the rates being negotiated? There are two reasons in my opinion. (1) Brokers are well versed in handling the commission negotiation question. (2) Consumers accept the argument against negotiating commission. 

The Consequences of Unnegotiated Commission

Bloomberg reported commissions would top 100 billion dollars in 2021. Is this a problem or a success? It depends. Homeowners pay broker commissions out of their home equity. The commission is calculated on the sales price: $400,000 X 6% = $24,000. But the commission is paid from home equity savings. Assume your equity is $100,000. Let me ask the question another way. Is paying 24% of your savings for one service the best you can do?

The Three Costly Mistakes

The spring market is on in Madison. Thousands of people will sign listing contracts this year. Most will make three mistakes that cost them thousands of dollars. Avoid them and increase your aftersale profit by thousands of dollars.  

1) Promise to pay a buyer broker a 3.0% commission to represent the buyer in negotiations against you. Listing brokers will lock commit you to promise to pay a buyer’s broker top rate commission when you sign a listing contract. You can negotiate up from there, but not down.  The time to negotiate buyer broker commission is after you see the offer terms.

2) Promise to pay a 6.0% commission to the listing broker to procure a buyer without exploring options. Alternatives to full-price commissions are indeed few and hard to find, but they’re out there. Before committing to any level of service and price, the wise homeowner will explore options.

3) Blinded by the bright light of a high price. After years of working with multiple offers on single homes, you would think the strategy of offering the highest price and renegotiating later would be well recognized and avoided. There are always new agents and easily dazzled homeowners willing to take a chance on the bright shining price. You can negotiate a ridiculous price; just make sure there are no escape clauses that let the buyer renegotiate a better price a few weeks after acceptance.

 Essential Real Estate brokers guide homeowners to negotiate wisely. We believe you should have options to keep the advantage on your side and reduce your selling costs where possible. Every dollar you save is home equity money, and you need it for whatever you’re going to do next.  To learn how to use our strategy to increase your profit, contact me at www.TMeyerRE.com

Our Client is the Hero

You may know this person. We call them our HERO.

Our hero is a caring person and they own a home.

They know this to be true: if you don’t overpay when you buy, you make money; overpay, and you’re spending equity you haven’t made yet. Our heroes often begin homeownership with a bit of equity. After 5, 10, 15, 30 years, our careful owners increased their equity by a lot.

They made improvements and resisted spending equity on instant gratification.

Equity is important to our clients, but it’s only part of the value of their property. There’s more value in the memories.

Our clients know when you sell, you leave bricks and mortar behind; the memories go with you.

We believe you should keep your memories safe when you sell your home. Protecting your equity is our job.

One day, it occurred to me that we all sell for the same reason—to get the equity to do our next plan in life.

And when we sell, that’s the time our equity is at risk. This is when an expert real estate guide is essential.

However, selling is when the real estate sales system works against the careful owner.

The system is designed to be good for consumers and profitable for the broker, the bankers, the government, and service vendors. Home sales drive the American economy, and the machine runs on the fuel of home equity.

As good as you might be in saving money, the people who want what you have are better at getting what they want than you are at keeping what you got when your emotions get in the way.

Ask any broker, and they will tell you: real estate commissions are negotiable. 

That’s true. Commissions are negotiable.

The problem is, there’s no negotiating happening.

Since 1989 when I started, the commission has been 6.0% of the sales price and negotiable.

Here and across the country, the avg commission is still at or near 6%.

Our clients are intelligent people. Remember, they’re the hero of the story.

Whether they say it or not, they question the obvious: How can their home values rise and fall with the economy, but broker commissions remain immune to market pressure? 

In the recession, when homes were on the market for six months and sold far below asking prices, commissions were six percent.

Today when homes are on the market for six hours and selling well above appraised values, commissions are still six percent.

Six percent must be magical.

Six has staying power because one side has no idea how to negotiate, and the other side is highly skilled at not negotiating.

Brokers handle the commission question the way they were trained for a hundred years.

It goes like this: Our commission is six percent. It’s negotiable, of course.

But, you don’t want to do that because… (manipulate fear here)

And homeowners are easily persuaded by fear.

Home sellers don’t know how to negotiate. What they’re doing isn’t working.

 A typical home seller who pays the full commission will spend $24,000 of their equity paying commission.

We fixed that by. We show our heros where and when to negotiate the commission and our typical client pays about 33% less. That’s about $8,000.00

It’s possible to get better terms and pay lower fees, which add up to more equity savings. That’s what we do for our heroes. They love it.

If I said it before, I will say it again–you pay the costs to sell and you pay for negotiating errors with the money that would be your equity.

I know, you might think you’re likely to lose money by underpricing your home. This market seems to have solved that problem as lower prices just draw more buyers and more competition pushes prices higher.

You’re most likely to lose money by being misled into paying for things you don’t need and paying fees you could avoid.

Selling a home is something you will do a few times in your life. When you’re on a journey you’ve rarely or never taken, a guide who’s been there, who knows the system, knows the contracts is invaluable.

Careful people who value their equity and memories don’t need a social media marketer, or expensive sizzle to sell their homes. Zillow is going to put your home in the face of every person who thinks of owning a house like yours.

 Careful people who would rather keep what they earned than give it away turn to us. We’re their guide avoiding traps and negotiating better terms. After all, real estate is a contract negotiating business, and buyer agents don’t work for home sellers.


At Essential Real Estate, we guide careful people to save home equity money by paying lower fees and avoiding costly negotiating errors.

It takes two sides to negotiate a commission

Do you know how it’s said, “Real Estate Commissions are Negotiable?”

It’s true; they are.

The problem is it takes two sides to negotiate. 

And, it appears one side doesn’t. 

In our market and across the country, the average commission is still Six percent of the sale price. And what does a person get for that?

When brokers don’t negotiate, homeowners spend way too much of their equity on broker commissions. (100 billion dollars last year)

And that’s the problem we solved.

Essential Real Estate clients never pay six percent commissions, and for the commission they pay us, they get more profit, lower costs, and better contracts.Â