Thinking of Selling Your Metro Milwaukee Real Estate? Where Does All that Commission Go Anyway???
When interviewing an agent, commission is always part of the discussion. This post from a colleague of mine explains clearly where the commission goes. If you ask me to drop my commission just 1%, say from 6% down to 5%, that is actually a TWENTY PERCENT cut in pay. As described here, the agent doesn't get the entire commission, but 20% is a large cut in pay.
It's not uncommon to be asked by a potential seller if I will reduce my commission, especially in cases where this individual will also be using my services to purchase a new home. And oh, how I used to cringe when that question would arise. But having been in the business for a few years now and gaining a clear understanding of the time, effort, and manpower it takes to get a house sold, I've learned that saying "no" really isn't so hard after all.
So where does all that commission go?
OFFICE -- rent, electricity, phones, computers, copy machine, fax machine, secretary, sales director, paper, insurance, Closing staff, Accounting staff
SALES AGENT COMMISSION -- cell phone, errors and omissions insurance, tech fees, car expenses, association dues, license fee, personal web site, living expenses, self-employment taxes,
COMPANY PROFIT
CO-BROKE COMMISSION -- Incentive offered to other brokers to show and sell your house
MARKETING -- shorewest.com, billboards, radio, mailings, open house, Shorewest TV, yard sign, Shorewest hotline, smart phone apps, listing flyers
Charging less means spending less.
If the broker spends less on overhead, they wouldn't be able to do the work they need to do.
If the broker reduces the percentage paid to the sales agents, those agents will work elsewhere.
If the broker reduces their profit margin, they won't survive.
If the broker reduces the co-broke percentage, fewer agents are motivated to show their listings.
And if the broker reduces the marketing dollars, homes will not get the same level of exposure, which translates to fewer buyers, longer times on the market and lower sale prices.
I remember when I bought my first house I did the math. I thought the agent, who both listed and sold the house, was walking away with literally thousand of dollars in her pocket on a $100,000 house.
But I get it now.
Those thousands of dollars are covering several paychecks and paying several overhead bills.
I just have to remember that the general public isn't in the business so really have no way of understanding this, and it's therefore my job to explain it to them. And it's my job to prove to them my broker and I are worth every penny.
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