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.

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

Metropolitan Place Owners Might Be Missing The Market by about $10,000

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.