Have you ever wondered why, in real estate, the term “Standard Real Estate Commission” is never used? The reason is actually pretty mundane: there is no standard. No government body or brand sets a standard commission law for all REALTOR® Associates to follow. It’s not fixed by anyone! Commission is fully negotiable, as it should be. Now here are some need-to-know facts about commission that can help you navigate the industry as a consumer.
The real estate industry has accommodated the request for lower agent/brokerage commissions with seemingly more models than houses to sell! A race to the bottom to see who will sell their services for less has taken place, and the winners and losers have been determined. The winners have been posting companies imitating brokerages who typically charge a “low flat fee” instead of a commission. However, that fee is actually only to list the home for sale, not for any associated real estate costs and services. A fee just to list the home? That’s right! Where most full-service agents charge a commission only if or when a seller accepts an offer, these posting companies charge a fee solely to list the home for sale; and sometimes even charge an extra fee when a seller has an offer to negotiate. In addition to these fees, the seller is also responsible for whatever the buyers’ agent commission might be—which is, of course, negotiable.
It’s no doubt a good business model, but who loses? The real estate industry is forced to adapt, and those who refuse to recognize consumer demand or fail to provide a level of service as their customers are faced with more choices. This means consumers can lose out too as they get caught up in sleek deals and tempting discounts instead of considering the actual services they are receiving. No real estate professional is perfect, but some can offer a bit fit than others when it comes to your own specialized needs. For the consumer who thinks the only difference is an agent’s fee, you may experience a distinct lack of quality representation.
Avoid choosing a service based entirely on its initial cost. Costs have a tendency to add up quickly, so having an agent whose services you can negotiate is important. A flat fee sounds nice but be wary of any companies who are unwilling to show you exactly what they can provide. Whether your priority is a fast sale, easy-to-access support, or maybe even supporting a local business, being able to negotiate is a great tool in a healthy business relationship.
Most people are happy to pay for value when they can trust that the end product is worthwhile. Nobody feels good about paying too much for something you could have done yourself for far less. But selling your home requires skills and knowledge, in addition to full-time hours and expensive resources. It’s reasonable to expect to pay for professional work as long as the investment is worth the end product. Think of it as choosing a sale instead of a Realtor. Choose the service or professional that will ensure your sale happens, not just a sparkling promise on a billboard.