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.