What's The Big Stink About Real Estate Commissions?

Mortgage and Lending with MLS Maps, Agentopolis, Tweet Me Homes
It kills me to see real estate agents or anyone else for that matter getting beat up about their compensation plan. All this talk about the commission structure being antiquated and in need of revision is insulting. All this talk about how the Internet has changed the game and given the consumer more control over the process, hence agents should be charging less is intriguing but definitely requires closer review, rather than a quick flapping of the lips.

To say that ALL agents are worth the full commission would be a lie, but it is also a lie to say that every doctor, lawyer, or mortgage professional is worth their industries average fees. I don't see this as an industry issue but more of an agent issue. The question isn't whether or not real estate commission rate are too high, the question should be, "Where can I find an agent who is worth the money and how will I know?"

Listing agents
Good listing agents are worth their weight in Gold! I think it is far more difficult to be a great listing agent than a great buyers agent because, at least in today's market, it is easier to find a home than to find a buyer. Above average listing agents need to be;
1. A marketing geniuses, both online and offline,
2. An expert in staging,
3. An expert in negotiating and
4. They need to be experts in the markets they serve so they can price the home correctly in order to balance the sellers financial and timeline needs.

The best testimonial a listing agent can get is, "They sold our house fast and at full price!"

Buyer's agents
It costs money to deliver the best home search technology to their buyers. A good buyer's agent, someone who is definitely worth the commission, must provide a buyer with at least these three components;
1. Access to technology to help the buyer find the right home, (idx broker reciprocity mls site)
2. Superior negotiating skills and
3. Superior knowledge of marketplace. (i.e. city, neighborhood, schools, etc)

The best testimonial a buyers agent can get is, "The found exactly the home we were looking for and got the sellers to drop the price!"

It is critical that every agent be able to answer the question, "What is my competitive advantage in the marketplace?" or "What do I do as a listing agent or buyer's agent for my clients that totally justifies my compensation?" When you can answer this question in a way that is relevant to a home buyer or seller, compensation will never be an issue.

At the end of the day one of the best ways for any agent to prove their value in their market place is with agent recommendations/testimonials. I'll be the first to admit that I hate asking for testimonials, even when I know I have exceeded expectations, so before anyone goes off on me about how this is an unfair measure of value because not every agent is comfortable asking for them, let it be known that I am not saying it is easy. Agentopolis tries to help address this concern by being online and making it easy for agents to simply email their past clients with a link and a simple request, versus having to call each one and ask. (Although the top agents tell me that this call for a testimonial is where they generate a number of their referrals)

Threats by Refin, Zillow and others to change the Realtor profession into that of a hourly wage factory worker makes great news stories but I for one don't think it will create a wholesale change in the industry. The bottom line is that the Internet is changing the way people buy and sell homes but the fact is that the Human Side of Real Estate is not going away anytime soon. People will continue to do business face to face with people they like and trust so my advice to consumers is find a great agent to help you buy or sell your next home and be glad you are only paying 6 or 7%.

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New Jersey Real Estate James Boyer Morris, Essex & Union County NJ Realtor
RE/MAX Properties Unlimited, Real Estate - Morristown, NJ

The big stink is a bunch of bitter people, many of which have nothing better to do than to complain about something.  Last month they were complaining about something else, now they have moved onto real estate, and at sometime in the future they will move onto something else.  The funny thing about many of these people is that they are good at complaining, but not good at adding any value to anything.  They usually are the people you would not want to work with, no matter what industry you were in.



Jun 07, 2007 03:05 AM #1
Doug McAnally
RCP Realty Group, LLC - Calera, AL
Working Hard to Make your Experience Easier

Great Post...I fully believe that if you sell what sets you apart and that it truly is a difference people will choose you and they will pay the full commission. I am young to the profession but know from a  marketing background that the value of great marketing of the product is priceless. If the client sees you are different in what you offer they can see the difference in the commission rate.


Jun 07, 2007 03:10 AM #2
Sandy Sivits
ERA Pro Realty - Gaithersburg, MD

Personally, I have always felt that my strength lie in my negotiating ability, my knowledge of the contract (our average 40-50 pages with all the addendas and disclosures) and my ability to keep track of 5-6 contingencies in each contract.  Add to that my ability (I was a geek in my previous life) to delve into the comps and come up with a number that is sound.


Another strength is in my confidence in my abilities to tell either my client or the other agent that they are 'mistaken' and being able to back up my position.  Admittedly, one has to do this 'nicely'. 


Buying a home is the largest transaction most people make in their lifetime - would you operate on yourself and not hire a doctor?  Would you go into court on a serious matter without an attorney? 


It's our expertise in these other areas - not our posessing the information - that is our value in the age of the internet. 

Jun 07, 2007 03:12 AM #3
Roger Stensland
The Cascade Team Real Estate - Maple Valley, WA
Let's Move!
I agree with what Sondra and Douglas had to say.  You helped put everything in perspective. 
Jun 07, 2007 04:06 AM #4
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