We leave more home equity dollars in the hands of our clients.

When we talk of real estate commissions as a percentage of the sale price we overlook the fact that the fee is paid from home equity, not the sale price. As a percentage of equity that 6% can be an enormous 20, 30, 40%.

From the day we buy through the day we sell our home equity is at risk of being depleted. By paying attention to where the money comes from to pay costs, expenses, concessions, and commissions our clients see the importance of wise negotiations and reasonable fees.

When we think of real estate commissions as a percentage of the sale price we overlook the fact that the commissions are paid from equity dollars, not from the price. Six percent is not the same for everyone. For example, everyone with a $400,000 house could be charged a 6% broker commission. For the person with $100,000 in equity, a 6% commission of $24,000 will consume 24% of their equity dollars. The less equity a person has, the greater drain the fee will be on their savings, jeopardizing their ability to do the next thing they have planned in life. We think the consumer should have more choices.

Collusion or price fixing is not what’s happening here. Given a choice to charge as much as the market will bear or less, very few firms will concede the higher price. We can say real estate commissions are not fixed and they are negotiable. What we can’t say is that the consumer has many choices. Without choice, there is no real negotiation.

It is the essential real estate services required by license law that the consumer is least prepared to concede. A system that ties less real estate service to a lower fee is incomplete at best. The only reason there are not more options for complete real estate agency service at a more affordable rate is choice. Few talented people are choosing to fill the void.

One day more firms will look at home equity as a person’s treasure the way we do. And when more firms strive to leave more equity with home sellers they will offer smarter services and everyone will benefit. Until then, Essential Real Estate is showing that it can be done. Lower fees. More ideas. Better choices. Safer contracts.

Author: Tom Meyer, Owner-Broker, Essential Real Estate, LLC Madison, WI

The real estate transaction, disclosure, and confidentiality are the business of a Wisconsin licensee. It's in the transaction where the skill of the licensee, and their commitment to the law where the public is protected or placed at risk. Essential real estate services are specified in real estate license law. Those services are worth professional fees. Paying professional fee rates for administrative services is a choice when an alternative exists. We are that alternative. Old business model commission rates are taxing the home equity of American home sellers. Essential Real Estate LLC was created so our clients keep more of their home equity, spend less on broker fees, and receive skilled representation in negotiating purchase agreements.

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