Real Estate Commissions: You Get What You Pay For

The Housing Market seems to be on the upswing! We’re seeing more homeowners looking to list their homes and of course all of them want to be able to achieve great results with the highest possible sales price in the least amount of time. While meeting with prospective sellers, the subject of commission frequently comes up. Here is a thought provoking blog article that I ran across from the KCMblog:

“Does it make sense to pay a full commission to your real estate agent in today’s market? Sellers, buyers and even agents are debating what should be charged to assist a consumer in completing a real estate transaction. Forget what the actual amount of the commission is. The bigger question is whether you should pay a ‘full fee’ when hiring a real estate expert to guide you through the complexities of today’s rapidly changing housing environment.

If a full fee was the rule in 2006 when completing a deal was so much simpler, why would you now consider cutting the fee of your agent in today’s tumultuous market? You are depending on this person to help you reach your goals in a sale or purchase. In 2006, buyers were willing to pay almost anything to a seller just to get into a home. Banking entities seemed to be willing to mortgage any property for any buyer. The process was rather simple.

Today, a person looking to buy or sell should be willing to pay a full fee for two reasons:

You need an expert guide if you are traveling a dangerous path
The field of real estate is loaded with land mines. You need a true expert to guide you through the dangerous pitfalls that currently exist. Finding a buyer willing to pay fair market value for your home at a time that there are mass inventories of foreclosures and short sales will take a true real estate professional. Finding reasonable financing can also be tricky in today’s lending environment.

Experts in any profession do not discount their fees; especially when the job is becoming much more difficult.

You need a skilled negotiator
In today’s market, hiring a talented negotiator could save you thousands, perhaps tens of thousands of dollars. Each step of the way – from the original offer, to the possible re-negotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes.

When an agent is negotiating their commission with you, they are negotiating their own salary – the salary that keeps a roof over their family’s head; the salary that puts food on their family’s table. If they are quick to take less when negotiating for themselves and their families, what makes you think they will not act the same way when negotiating for you and your family? If they were Clark Kent when negotiating with you, they will not turn into Superman when negotiating with the buyer or seller in your deal.

Bottom Line
We believe that famous sayings become famous because they are true. You get what you pay for. Just like a good accountant or a good attorney, a good agent will save you money…not cost you money.”

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One Response to Real Estate Commissions: You Get What You Pay For

  1. Carol Costanzo says:

    There is an important distinction the public should know between discount or limited service real estate companies, as compared to full service companies, the mere words “discount” or “limited service” imply to many people, there is only a reduction in the cost.

    The word limited is defined as “lacking breadth and originality”, and discount is defined, “a reduction made in the gross value of something.” This means yes, it may cost less, but the value was reduced to get that price.

    Is reduced value what you really want in the most expensive transaction of most family’s lives? There is a very real difference in the services provided and potential liability, in my opinion.

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