Whether Rebates or Referral Fees, It Still Adds Up to the Same Thing - Hands in our Pockets

There's been a lot of talk of late regarding commission rebates. The consumer, squeezed by the market, is increasingly asking for them and many in our industry are increasingly providing them.

But...we sure don't like it!

From our vantage point, it feels like hands in our pockets, grabbing at our shrinking paycheck. It feels like...DARE I SAY IT?...the way we have felt for years when relocation companies offer us a coveted buyer or seller in a nice price bracket but attached at the hip to a pile of extra paperwork AND a 30-35% cut out of our check for the privilege!

From our vantage point, it feels like we're being robbed. And we are. The truth is that the commission system only works when the big transactions pay for the little ones. We need the "cushion" from those high end transactions to make up for the lower priced ones that we lose money on.  The buyers that we spend hours with but never buy. The listings that don't sell, despite the resources we devote to them. The "free" CMA's that we're expected to provide.

But from the high-end consumer's vantage point, (and the high-end is who's asking for them), they're only wanting what's fair. On the high end, there is no way that we can justify that commission check with the services we provide on THAT transaction. That high-end consumer's sale is in fact subsidizing the lower end sales that can't even cover our costs PLUS all the free work we provide in general that comes as a price of doing business.

Funny how we rail against the high-end consumer who has a justifiable claim to a rebate yet we routinely pay outrageous referral fees to relocation companies that are nothing but parasites, totally supported by our hard work.

This is what our broken commission system, that compensates us based on the value of a property rather than the value of our services, has wrought. But coughing up rebates and relocation fees is like spraying on perfume when what you really need is a bath. It might temporarily mask the problem but it doesn't solve it.

In the olden days when consumers had no other choices, the commission system worked. But today's internet-empowered consumer, who is being squeezed by a market in free fall, no longer wants to be the support system. They want real value for their real estate dollar - value that they can understand.

That's why real estate consulting, which provides quality, transparent choices in both the services they can receive and how those services can be paid for, is the perfect antidote to the rebates and referral fees clawing at our shrinking pay check. Offering choices meets the consumer where they live and offers us an answer to the hands in our pockets.