This is a very interesting article. It made me think and ask questions.
Commission rates up, but agents earn less
Study reveals reverse trend in seller's market
By Bernice Ross, Sunday, March 29, 2009
My comment was as follows:
Is this an advertisement for Keller Williams?
..."KW reported a 2 percent increase their per-agent productivity while the National Association of Realtors reported a 2.9 percent decrease.
What's fascinating about the KW numbers is that during the time that commission rates were falling, agents were actually making more in the average amount commission amount they were earning."
Is that a subliminal recruitment post for Keller Williams?
COACHING WITH COOL-AID*
What is the goal of this tactical maneuver of mentioning your book? Book sales or home sales?
Declaring War on Discounters sounds more Wall Street than Main Street. This is not a time for war. This is a time for entrepreneurs, independent thinkers, go-getters, and good old American gumption. Competition and capitalism are part of what made America great, healthy and thrive. Not greed.
How does paying a higher commission help the nation's housing market to recover and economy to mend. It doesn't. But it may save the any real estate companies that are financially wounded that could possibly end up casualties during this economic time.
*In case some don't know, "drinking the Cool-aid" is a catch phrase when someone (usually a corporation) can convince people to believe their way of thinking...like the Jim Jones followers. Jim Jones was able to convince his followers to drink poison cool-aid. It was a mass suicide. But they believed it was the right thing to do.
This is the way I perceive (not believe) what the article is not saying:
The big real estate companies need to convince the home buyers and home sellers to spend more money to sell their homes because the big real estate companies need that money for agent RETENTION.
How AIG!
Could it be a subliminal marketing bail-out plan for financially struggling real estate companies?
Convince home buyers and sellers to spend more. Brilliant, huh? Transparent, well, if you are really looking.
Real Estate Agents are the foundation of any real estate company. If a foundation is starting to crumble, cracks will appear then the above structure is knocked off balance, and without quick repair it is risking collapse.
More money from home sellers and buyers is the mortar to repair and restructure real estate companies, because the real estate companies have sucked their agents dry.
Real Estate Agents are the real VALUE to a real estate company. The agents are the money makers.
Traditionally, an agent gets a lead and closes, then splits the commission with the company, pays an additional marketing fee to the company, and pays for out of pocket expenses. In the end the only entity making money is the company.
Real Estate Riddle Me This:
If real estate agents are not making any money, then what is the real estate company's VALUE to the agent?
How can real estate companies satisfy the agents, and not become a casualty of these economic times?
How can real estate companies retain agents and still convince their agents not to become independent brokers, or go to another company?
Possible answer: convince the home buyers and sellers they need to spend more money.
If hurting real estate companies can convince the home sellers and buyers to pay more money for their services, the real estate agents could possibly walk away from the closing with a little more money , and the real estate company will still get their tidy sum, and get to stay in business.
The other side of the coin, is that a real estate company advertises they charge more because of value, and then negotiates. The home sellers and buyers think they are getting a better deal. You know, like the price sticker on the window of a new car.
Since 2005, what's the number of real estate agents that are officially in-active?
How many agents took part-time jobs to make ends meet?
What is the number of real estate professionals who are not renewing their licenses entirely?
How many agents are getting their broker's licenses?
How many independent brokerages are there now compared to 2005?
Bernice's closing paragraph:
"...Will commission rates go down when the market improves? Based upon past markets, the answer is probably "yes!" Will agents make more money per transaction when the market improves? If the past market trends predict the future, the answer to that question will be "yes!" as well."
Corporate cool-aid code:
The real estate company desperately needs to retain agents during this difficult market, and charge a higher commission.
With that said, if the market improves, and an agent's production goes up, the agent's commission split usually does, too.
The underground is grumbling with underpaid real estate agents. Obviously, real estate agents want their just share.
Continuing on with information regarding real estate commissions, services and value:
Consumer Reports August 2008:
Quoted from Consumer Reports:
"...We found that paying an agent a lower commission rarely had any effect on the sales price. And readers who paid commissions of 3 percent or less were just as happy with their brokers' performance as those who paid 6 percent or more. People who paid extra, in fact, were more likely to say they had regrets about the selling process. The biggest regret? Nearly one-third said they should have been more assertive in negotiating their agent's fee."*
"... We asked survey respondents who had sold homes how much commission they paid, then compared that with what they said they received for their money. The results show that the higher commission didn't always translate into more service or better results."*
Oh here is something new and interesting for real estate agents thinking of leaving a large company and going with an Independent Brokers, becoming an Independent Broker..the consumer report states:
"All the major chains and independent brokers did very well in our survey."
Independent Brokers means a smaller real estate companies, or individuals. (Hey, like me!)
"... Consumers Union accepts no outside advertising, no free test samples, and has no agenda other than the interests of consumers. Consumers Union supports itself through the sale of our information products and services, individual contributions, and a few noncommercial grants."
I do have a question have one more question.
Could an article written by Consumer Reports be edited or altered because of pressure by real estate companies waging war on real estate discounters?
I hope not.
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