As a home seller, ask the industry to answer this scenario:
“I’m going to sell my house and choose one of two Realtors® from the same office and both tell me they also have a buyer. One is on a 50 percent broker split and the other a 95 percent broker split. My commission costs are $20,000 and if choose the 50 percent agent, I’m paying commissions of $10,000 each to the Realtor® and the broker. However, if I use the other 95 percent Realtor® I pay them $19,000 and the same office broker now only receives $1,000. Based on this information I’d like use the first Realtor® and still pay them $10,000 and then pay the broker the $1,000, who would have gladly accepted this amount had I chosen the second Realtor®”
As the client, I’m paying for the Realtor® services, then why can’t I negotiate the commissions I pay? In the above case, the financial outcome will remain unchanged for one Realtor® and I’ve established the broker was prepared to accept either broker/Realtor® commission split outcome. This result reduces the total client commission costs by $9,000 for receiving identical Realtor® services. By providing a full Realtor®/broker commission split disclosure, this empowers the seller to negotiate their commission fee costs. The seller should also know what commission split the buyer’s broker will take. Both these amounts should be fully revealed to the sellers, who in many states are also paying for the buyers Realtor® and broker. When I’ve represented the sellers and buyers as their Realtor®, to help ensure the transaction closes, I’ve gladly taken a hit on my commission. I’d rather have $5,000 in the bank than see the total $10,000 walk away from me.
For the real estate industry, their branding claims a consistent level of professionalism provided by all their Realtors®. So no argument can be presented by the industry that by choosing the Realtor® on the lower commission split over the higher split Realtor®, that a client will receive a different level of professional service. As all Realtors® are self-employed and are all professionally equal, it begs the question once again as to why there is such disparity on Realtor /broker commission splits when all Realtors® do the same job.
Many bank owned listings only offer a 4 percent commission. It seems ironic to me that the industry that caused the real estate meltdown, now dictate the commission they pay but individuals are still held to ransom by the industry for a full 6 percent commission. Once again double standards prevail and all supported by the real estate industry.
Brian Kean says:
How and why does the real estate industry get away with this?
Fiona Jones says:
The real estate industry really pisses me off. No other business has such a control over its clients and yet openly charges them through the nose for crap service. I just closed on my selling my home and my Realtor was useless. He would not return my calls or emails and it was only when I suggested I drop the price of my home, that I got an offer. For doing that he gets paid $7,000….what a joke.
Fred says:
I’ve been on both sides of the real estate industry merry-go-round. I’ve bought and sold homes using real estate agents and I’ve represented buyers and sellers as a real estate agent. So, I’ve seen some strange events in this so called “professional” industry. Basically, the real estate industry is a closed system where only a few major brokerages and NAR make money. Most real estate agents hardly make any money. Home sellers overpay for the services they receive. Because NAR and the big brokerages have a lock on the industry, trying to reform this flawed system might be impossible. The real estate industry is a cash cow for NAR and the big brokerages, and they will prevent any type of reform in the industry. The real estate agents and sellers will continue to suffer…
Reluctant says:
Fred, I agree with your comments. They are many ways to change the industry for the benefit of the clients and Realtors, but under its current SOP it will never change.
Jason Dillon says:
There should just be one flat fee charged to sell a home. How can 6% be charged on a $100k home and also a $ million home. The Realtor probably work less on the $ million home but get 10x more in commission…and for what? It is a total spoof business that’s just there to benefit the brokers and Realtors.