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A Discussion on Commissions: Where are we Headed?

By
Real Estate Broker/Owner with Christian Realty San Antonio 540730

   

    Well if money did grow on trees we would have to be talking about something else.  It does not, so we can discuss commissions.  Or, more to the point, what commission do we rate?  And also, why so much discussions about what "other" companies charge as their commissions.

    Here on ActiveRain and other places on and off the internet the discussion of real estate commission rates has been knocked back and forth.  Most has been railing against the "discounters" and the "independents" who charge less than the, say "traditional" 3%.  Ok, so we all have our opinion on the matter.  No surprise so far.  What is somewhat surprising to me is how many folks seem to have hard feelings about those who do not dance to the same drummer.

    Yes, I know we cannot "set" a figure and all of us follow along.  However,  someone does not there are harsh comments and/or hard feelings, or so it seems.  It is far more proper to follow the line of thought as in "whatever the market will bear" in setting commission rates. 

    My brother was fortunate enough to find a real estate agent who handled his transaction for a flat fee.  Ture, the buyer and seller were already on-board and all that was needed was someone to facilitate the paperwork.  So in my mind a flat fee was appropriate.  Is this true of all transactions?  No, of course not.

    The facts are, many have and more are taking the point of view we are overpaid in this profession.  Some of this criticism has been earned and some has not.  We need to step back and consider what and how we do our business and review our business model to see if we make sense in our approach to real estate practioning.  Not all brokers operate the same way.  Not all franchises either.  Some are in niche markets.  Some have very narrow markets and clientel base.

    When a broker makes a business decision, (s)he must live with it.  If it works for the brokerage, then fine, job well done.   If not, oops,  let's reconsider out position on this.  It is a professional decision and fellow professionals should tend to their own matters. 

    To lambast someone else's business model in public is a foul to me.  If they are happy with their level of service, level of business and their bottomline, then so be it.  Others need to not opine, complain, criticise or otherwise throw stones just because they disagree.  There is enough business out there for everyone to keep busy.  Some folks will always make more than others.  Free market and all that.

                            

      Keep your eye on your target (market) and keep doing what you do best.  Let the others do their thing and everyone cooperate and graduate. 

Good luck to all!   

 

Posted by

DOMINICK A. DINA, MA, REALTOR®, GRI, e-PRO, TAHS, Broker/Owner

Christian Realty San Antonio     

www.ChristianRealtySanAntonio.com

(210) 273-9082                                                             

 "Personal, professional real estate services"             

http://www.facebook.com/pages/San-Antonio-TX/Christian-Realty-San-Antonio/18040529193?ref=ts     http://www.linkedin.com/profile?viewProfile=&key=16895353&locale=en_US&trk=tab_pro     http://www.linkedin.com/profile?viewProfile=&key=16895353&locale=en_US&trk=tab_pro    

The law in the State of Texas requires we provide Information About Brokerage Services to our customers and clients.

Billie Chubb
Chubb Realty Group - Wilmington, DE

The internet has made it cheaper to market a property. It is only right that we pass this savings on to the seller. Personally I will not take a listing for less then 2.5%. Real estate market has slowed and thereby my expenses have gone up, so I must charge more. If a house is overpriced, then i won't even take that listing.

Aug 04, 2008 08:14 AM
Loreena and Michael Yeo
3:16 team REALTY ~ Locally-owned Prosper TX Real Estate Co. - Prosper, TX
Real Estate Agents

This topic is debated far too many tmes. Some are worth more than the fee they charge. Some arent. I guess just like any service providers, there's always good and but. But I noticed, we dont go around debating other people's commission/ pocket book as much. I wonder why real estate agents (I dont mean you) seem to love this debate?

Aug 04, 2008 08:20 AM
Patrick Lambert
ALLY Real Estate - Waikoloa, HI
Hawaii Real Estate Expert

I agree with Billie, no overpriced listings and no reduced commissions if possible. Taking a cut off the commission up front does not allow for negotiating later should that be necessary to close the deal.

Aug 04, 2008 08:22 AM
Dominick Dina, MA, REALTOR®
Christian Realty San Antonio - San Antonio, TX
GRI, e-PRO, TAHS, SFR, Notary Public

Billie:  Agree with you on that 100%.

Loreena:  My point too.....tired of some who seem to be complaining in a nice way.  Just never mind and press on.   Or as some in Texas say, just lean forward in the saddle.

Patrick:  Thanks.  We all seem to agree.  Hmmmmm

Dominick

 

Aug 04, 2008 10:15 AM
Troy Erickson AZ Realtor (602) 295-6807
HomeSmart - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

The worry is that since everyone is competing for the same clients, more or less, if one broker goes to a listing appointment and says I will list at 3%, and the next broker goes to that same seller and offers 2.5%, most homeowners are not educated enough to know the difference between a good agent and a not so good agent.  So, they will go with the broker that saves them the most money, the one they only have to pay 2.5% to.

What would happen if everyone did this, and there were ten agents all competing for the same listing, and they all cut their commission to get the business.  The agent who gets the listing may be doing it for 1%.  If this trend were to continue amongst all listings throughout the country, eventually all realtors would have to conform to the 1% or they would never get a listing.

Who in their right mind would pay 3% of a $300,000 home to a listing agent when they can get what they feel is the same service from an agent for only 1%.

Aug 13, 2008 12:04 PM
Dominick Dina, MA, REALTOR®
Christian Realty San Antonio - San Antonio, TX
GRI, e-PRO, TAHS, SFR, Notary Public

Troy:  True enough.  The issue is the level of service and the professionalism of the agent.  The competition in the market is keen.  It is even more true today, caveat emptor.

A 1% commission can be as worthwhile as a 3% one.  The agent is the key here. 

We all need to make a business decision on our rates and then do our best for our clients, regardless of the size of the pot at the end of the rainbow.

Thanks for your comments.

Dominick

Aug 13, 2008 12:16 PM
Larry Riggs
Century 21 Redwood - Frederick, MD
GRI, SRS Your Frederick County Specialist

A couple of comments. First there is no gray area. Mentioning specific numbers when discussing commissions can land you in jail. AR is not a "safe haven" from the law. Ignore that point at your own peril. I teach this subject. I've read the case studies. Use "x" or "y" or chickens if you want but no hard numbers.

Now, to the subject of business models. If a business model is legal then it isn't our place to trash it. What I do find objectionable is when someone who provides minimal services advertises themselves as a full service broker. In Virginia, for example it is my understanding that there is somewhat of a baseline and brokers are required to be honest about the services they do or don't provide. The problem is the general public doesn't know what they are or aren't getting. I'm for any business model that's legal as long as the brokers are honest about what they really do.

Aug 13, 2008 12:44 PM
Dominick Dina, MA, REALTOR®
Christian Realty San Antonio - San Antonio, TX
GRI, e-PRO, TAHS, SFR, Notary Public

Larry,

Thanks so much.  Appreciate the caution.

Agree, a provider needs to inform the client what they will and will not provide as far as service.  Otherwise how can a potential client make an informed decision as to which agent/firm to go with?

Dominick

Aug 13, 2008 02:23 PM