Let’s face it, Real Estate Agent commissions are under attack these days by the government and the consumer. It is only a matter of time before the consumer will win. If real estate professionals do not adjust to these pressures, consumers will bypass agents and find alternate routes to get the services they need at what they feel is a fair price. To survive as an agent in 2006, agents will need to be flexible with their fee structure, informed of powerful online services, aware of the changing market, and better equiped with marketing tools and ideas.
Traditionally a 6% commission based on a home’s sale price was split between the listing agent and the buyer’s agent. When homes were selling for $400,000 in Clayton, less than a decade ago, that was about $12,000 per agent. However, with many Clayton homes now valued at $1,200,000, that equates to a $36,000 commission for each agent, that’s $72,000 that the home seller pays out! Homeowners in Clayton do not feel that this number is fair, although they do believe that agent services are important and valuable, just not that valuable. Although agent expenses have increased over time, like advertising and materials, sellers feel the agent is performing a similar service to back when their house was worth much less.
Recently I have started offering a 5% commission right out of the gate. That’s usually where I ended up anyway. This is looked down upon by some agencies and people that taught me how to be a successful agent. Once I got out there and met with residents, who loved me and felt no one could do a better job, I found myself coming in second place because of my non-discounted 6% commission. The winner, offered a lower commission and many times was less experienced, less capable and sometimes from another county! If I was more flexible back then, they could have expected better results with me, and I could have still expected an attractive commission. That’s when I decided to change my approach.
Remember buying that new car a decade ago and negotiating back and forth at the dealership? I’ve bought several and found it to be an annoying, inefficient experience. If I could have gone online, found my car with a list of all local dealerships and prices, I would have done so without hesitation. Well, it may have taken a while for me to realize, but this is where our industry is headed. The agents that are going to be successful will need to adapt to this changing model, some already have. Give the consumer what they want at an attractive price. That’s what will keep agents around as long as there are homes.
