“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 was the standard rate. At least, that’s what I always paid in the past. I’m confused now.”
There is not a standard commission. Many banks ,investors and hedge funds only pay 1% to increase profits. They get top dollar so now the average homeowner is also choosing the same path to get top dollar for their home and higher profits. Beginning in 2010 the internet drastically changed the game for Real Estate. Zillow, Realtor.com and RedFin empowered the consumers. Consumers 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 would have to advertise in several different newspapers in several different cities. Then we would have to advertise in many real estate books. The time and cost on this was astronomical. We could only use a picture of the front and fax in the information, but a must before the internet. Today the cost and time has been cut by 90% and we reach an exponential amount of more people.
Over 90% of consumers start doing research on the internet for homes then call an agent.
The agents that have adapted to the new era have passed this savings on to the sellers, while others are still milking the old model for as long as possible. In fact one of the oldest and largest Real Estate Franchises in the country just announced they are creating a new site to compete with Zillow. They announced their average commission will be 5%, 2.5% on each side.
Just a few years ago buyers might be interested in 30 homes; well we would have to drive them to see 30 homes. Not anymore, the advancement of 25 plus pictures of the interior and exterior of homes allows buyers to like or dislike the house from the comfort of their own home No longer making trips to homes that are not desirable. Huge cost savings and spike in volume for the Modern Agent
A majority of agents today are part time need to charge 6%. Many have to pay a franchise fee or split commissions with their broker, this expense is passed on to you in higher commissions and junk fees. Some of these splits are as high as 75% to the broker and only 25% to the agent. This does not get more exposure for your home just more cost. Many companies only let high producing agents reduce their commissions. Check how many homes your agents sells with their MLS public ID. Zillow is also publishing how many sales an agent does via agents public ID.
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% commissions and at the same time give away valuable information for free via Realtor.com Zillow RedFin etc. This is a huge advantage for empowered sellers. Just like the travel agent, stock broker, mortgage broker, the internet is changing the role of the Real Estate agent and many consumers are benefitting from it by putting more money in their pocket.
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