Home sellers are not getting the full benefit of a SELLER MARKET. Metropolitan Place Condominium owners are paying a nearly $10,000.00 premium to sell their condos in 2020. A quick comparison of sales in 2020 compared to sales in 2011 proves somebody can save significant money if they had a viable choice.
2011 Recession Pricing of Condos and Broker Fees
In the first 10 months of 2011 only six Metropolitan Place (360 W Wash) condos sold. The average time on the market was 193 days. Each sale reported to the MLS shows the seller paid buyer brokers a 3.0% commission. We know the RASCWMLS practice offers 50% of the total commission to a buyer agent so let’s assume the typical seller paid a typical 6.0% commission. If 2011 was a buyer’s market (six months on the market and 93% of the final asking price) and the going commission rate of 6.0% was related to the difficulty in attracting a buyer and negotiating a sale, do we expect to see the commission rates change in a favorable seller market? A hundred economists might say yes. Let’s see what happened.
A Fast Market in 2020
Compare the 193 days on the market in 2011 to the 38-day average in 2020. Consider the average sale price to asking price, with no price reductions, is 98.5%. Sixteen units sold in ten months. There are supply and demand. So, what happened to commission rates? Fifteen out of sixteen owners paid 3.0% to buyer agents. Assume that’s 50% of the commission, and it’s safe to conclude the typical commission rate was 6.0% in 2020. If you are an economist, please share your thoughts. Are owners not able to negotiate both sides of the commission? If not, why not?
Lack of Viable Choice
The average sale price in Metropolitan Place was $357,706. Essential Real Estate, LLC is a choice for complete real estate service at a market rate. We charge $499 plus 1.0% of the sale price to represent our clients. Furthermore, we teach our clients how to negotiate the buyer agent commission AFTER they see the Offers’ quality. Promising to pay 3.0% before you know the terms of an offer is an expensive mistake. Most of our clients receive multiple offers and they negotiate a buyer agent commission of 2.0%. I’m happy to explain how this works. Our clients are delighted to save a few thousand extra dollars.
3.0% + $499 Total Commission v. 6.0% is a Viable Alternative
The average sale price of $357,706 is an opportunity to save $10,000 in home equity. We believe it is better that you keep your home equity than spend it on selling costs and fees. If that seems like a good idea, let’s talk.