September 25, 2015 - 9:26 am
“I’m looking to sell my home and have informally spoken to several agents on the phone. Every agent except for one said they charge a 6 percent commission fee and cannot go down from that. However, the other one actually wanted 7 percent! How can this be? I thought 6 percent split between buyer’s agent and listing agent was the standard rate. At least, that’s what I always paid in the past. I’m confused now.”
On a Commission Mission
There is not a standard commission!
Beginning in 2010, the Internet drastically changed the game for real estate. Zillow, Realtor.com and Redfin empowered the consumers, who now have virtually the same access to MLS data as agents. Owners are now asking the question: Why would I pay the same commission today as I did before the Internet?
In the past, agents needed to advertise in several newspapers in several cities. Then we needed to advertise in many real estate books. The time and cost involved was nearly cost prohibitive. We could only use a picture of the front of the property and then fax the information. Today, time and cost have been reduced by 90 percent, and we reach an exponential amount of more people. Over 90 percent of home shoppers start doing research on the Internet before calling an agent.
The agents that have adapted to the new era have passed this savings on to the sellers while others are still clinging to the old model for as long as possible. However, early this year, the largest brokerage in the country, NRC, created HomesForSale.com to compete with Zillow and others. Its average commission will be 5 percent, 2.5 percent for each side.
Just a few years ago, if a buyer were interested in 30 homes, we would have to drive them to see those 30 homes. Not anymore. The abundance of online pictures with a given listing allows buyers to narrow down their selections quickly and drastically, so agents are making fewer trips to homes. Many agents have to pay franchise fees or split commissions with their brokers, and this expense is passed on to consumers in the form of higher commissions and fees.
Research has shown that sellers who negotiate to cut their real estate commission can do so with little risk of getting less service or less money. Real estate agents will have a difficult time in the future charging 6 percent commissions while at the same time giving away valuable information gotten for free via Realtor.com, Zillow, RedFin, etc.
This is a huge advantage for empowered sellers. Just like with the travel agent, stock broker and mortgage broker, the Internet is changing the role of the real estate agent, and many consumers are putting money in their own pockets.
Platinum Real Estate Professionals