All Realtors Are Not Created Equal!
Real Estate is one of those topics that people can't help but probe you about wherever friends gather. While I try to avoid making every social function, a business call, I also realize that Real Estate is a hot topic that seems to come up whether I am attending a newcomers' party, picking my kids up from school, or cheering on one of my sons at a baseball game. As anyone who reads my blog knows, I am rarely shy about offering an opinion when asked.
Recently a friend said she was going to list her home with her former agent, but only if that agent would agree to a 5% commission on the listing, instead of the standard 6% she had payed her previously. She said she had felt "gullible" for failing to discount the commissions on previous dealings with this very well known realtor, but hadn't know commissions are negotiable. (They are - just as the price of your home is.)
By way of a carrot, she followed up with, "if she won't do if for 5%, I'll let you sell the house instead." While I'd love the opportunity to sell her home should she decide to move, I surprised her by responding, "Let me tell you why you might not want to "discount your commission . . . Why selling for full commission works to your best advantage and why I would encourage you to list your home for 6% as well . . . "
I then told her the story of a recent listing of mine in Piedmont that was a "high-ticket fixer." While it sits on a wonderful street, across from a charming little park, it had quite a bit of deferred maintenance. The owner had lived to be more than 100 years old and failing eye sight and poor health had lead to some significant deterioration of the property.
To my great good fortune, I had the pleasure of working with a trustee who believed whole heatedly that "money motivates." Having given me a FULL 6% commission, he left it in my hands to see what I could do. Given that I now had more money to work with, I was able to paint and stage a few rooms of the house, polish the wood floors, wash the windows, and throw a catered "Preview Party" for the house which I marketed as "A Masterpiece in the Making." In addition I was able to have the home drafted to scale and passed out custom made measuring tapes as a party favor, so that everyone who came, had the tools they needed to begin the process of remodeling. Finally, I twisted the arms of two very talented Piedmont professionals - an architect and a landscape architect - to join forces with me to create a more up-to-date vision of the house. Their ideas gave perspective buyers a jumping off point and were instrumental in helping me to sell the house in eight days for well over asking!
The 1% difference in the commission, allowed me to market the home more fully, print and mail invitations, create a color campaign in my advertising blitz and go well beyond the scope of an average listing. It allowed me to overcome some significant hurdles with the property and "romance" it to pieces, while leaving no stone unturned.
When this topic came up at a recent round table, a colleague of mine asked if I really felt that the service was different on a 5% commission versus a 6% commission. My first inclination was to say "my service is always the same," and on the buy side, it is. I never look at the commission rate when representing a buyer. I look at the "fit" of the property and the goals and the needs of the client. If the commission is a full 3% to my side, it's a nice surprise, but it's never a driving force (for me, at least).
However, on the selling side, that extra one-half percent, gave me all of the incentive and the extra marketing dollars I needed to create something really unique for this one-of-a-kind property. On careful reflection, I had to say "yes. I believe it makes a significant difference in the way one can market a property for sale." As the example above illustrates, it does. Truthfully, if all my sellers felt as my trustee did with regards to money's ability to motivate, I could be more creative, more imaginative, and ultimate more successful with every listing I take. At 5% I am forced to be much more prudent and practical with my marketing dollars. That's just a fact of business.
While not every house may need the extra attention my high priced fixer needed, in a competitive market, every property does benefit from dynamic advertising and marketing, and almost all homes require some staging, cleaning, gardening and primping before coming to market. (Some of these items are often included in a full commission package. Here's where you might want to negotiate for services.) Cutting corners on the commission to your agent may not be the smartest decision you make with regards to your single largest investment. You may actually benefit more by offering a full 6% commission!
One final note, commissions are split between the listing side and the purchasing side. Your agent splits the commission in half and splits that half again with his/her broker. While the commission may seem large, it's divided between many parties. What an agent is able to do with his/her share of the commission is what separates and defines the talent. By all means if each of us created the same campaign, marketed identically, and gave an average effort, then you should demand and negotiate a lower commission rate with your agent .
But all agents are not created equal, nor are all brokerage firms. Thinking that they are is naive. The best agents in the business seek and usually receive a 6% commission because their skills and experience set them apart - there is an art to selling a home and they have perfected it.
Moreover, most top agents seek firms that can support them in their endeavors to stand apart from the crowd, as I did by choosing The Grubb Co. to affiliate with. As with most things in life, you get what you pay for. Real Estate is no different. Hire a true professional and don't sweat the 1%. Instead, make that agent go the extra mile and perform above the pack for it! If the result is satisfying, the 1% difference won't even be a consideration. Instead, you'll be grateful that you made a smart and wise decision to support your agent to his/her best ability. Don't short change their efforts for what amounts to a relatively small investment on your part. Don't be "gullable" by falling into the thinking that you are saving money by discounting the commission, as my friend did. In reality, you are not.
Recently a friend said she was going to list her home with her former agent, but only if that agent would agree to a 5% commission on the listing, instead of the standard 6% she had payed her previously. She said she had felt "gullible" for failing to discount the commissions on previous dealings with this very well known realtor, but hadn't know commissions are negotiable. (They are - just as the price of your home is.)
By way of a carrot, she followed up with, "if she won't do if for 5%, I'll let you sell the house instead." While I'd love the opportunity to sell her home should she decide to move, I surprised her by responding, "Let me tell you why you might not want to "discount your commission . . . Why selling for full commission works to your best advantage and why I would encourage you to list your home for 6% as well . . . "
I then told her the story of a recent listing of mine in Piedmont that was a "high-ticket fixer." While it sits on a wonderful street, across from a charming little park, it had quite a bit of deferred maintenance. The owner had lived to be more than 100 years old and failing eye sight and poor health had lead to some significant deterioration of the property.
To my great good fortune, I had the pleasure of working with a trustee who believed whole heatedly that "money motivates." Having given me a FULL 6% commission, he left it in my hands to see what I could do. Given that I now had more money to work with, I was able to paint and stage a few rooms of the house, polish the wood floors, wash the windows, and throw a catered "Preview Party" for the house which I marketed as "A Masterpiece in the Making." In addition I was able to have the home drafted to scale and passed out custom made measuring tapes as a party favor, so that everyone who came, had the tools they needed to begin the process of remodeling. Finally, I twisted the arms of two very talented Piedmont professionals - an architect and a landscape architect - to join forces with me to create a more up-to-date vision of the house. Their ideas gave perspective buyers a jumping off point and were instrumental in helping me to sell the house in eight days for well over asking!
The 1% difference in the commission, allowed me to market the home more fully, print and mail invitations, create a color campaign in my advertising blitz and go well beyond the scope of an average listing. It allowed me to overcome some significant hurdles with the property and "romance" it to pieces, while leaving no stone unturned.
When this topic came up at a recent round table, a colleague of mine asked if I really felt that the service was different on a 5% commission versus a 6% commission. My first inclination was to say "my service is always the same," and on the buy side, it is. I never look at the commission rate when representing a buyer. I look at the "fit" of the property and the goals and the needs of the client. If the commission is a full 3% to my side, it's a nice surprise, but it's never a driving force (for me, at least).
However, on the selling side, that extra one-half percent, gave me all of the incentive and the extra marketing dollars I needed to create something really unique for this one-of-a-kind property. On careful reflection, I had to say "yes. I believe it makes a significant difference in the way one can market a property for sale." As the example above illustrates, it does. Truthfully, if all my sellers felt as my trustee did with regards to money's ability to motivate, I could be more creative, more imaginative, and ultimate more successful with every listing I take. At 5% I am forced to be much more prudent and practical with my marketing dollars. That's just a fact of business.
While not every house may need the extra attention my high priced fixer needed, in a competitive market, every property does benefit from dynamic advertising and marketing, and almost all homes require some staging, cleaning, gardening and primping before coming to market. (Some of these items are often included in a full commission package. Here's where you might want to negotiate for services.) Cutting corners on the commission to your agent may not be the smartest decision you make with regards to your single largest investment. You may actually benefit more by offering a full 6% commission!
One final note, commissions are split between the listing side and the purchasing side. Your agent splits the commission in half and splits that half again with his/her broker. While the commission may seem large, it's divided between many parties. What an agent is able to do with his/her share of the commission is what separates and defines the talent. By all means if each of us created the same campaign, marketed identically, and gave an average effort, then you should demand and negotiate a lower commission rate with your agent .
But all agents are not created equal, nor are all brokerage firms. Thinking that they are is naive. The best agents in the business seek and usually receive a 6% commission because their skills and experience set them apart - there is an art to selling a home and they have perfected it.
Moreover, most top agents seek firms that can support them in their endeavors to stand apart from the crowd, as I did by choosing The Grubb Co. to affiliate with. As with most things in life, you get what you pay for. Real Estate is no different. Hire a true professional and don't sweat the 1%. Instead, make that agent go the extra mile and perform above the pack for it! If the result is satisfying, the 1% difference won't even be a consideration. Instead, you'll be grateful that you made a smart and wise decision to support your agent to his/her best ability. Don't short change their efforts for what amounts to a relatively small investment on your part. Don't be "gullable" by falling into the thinking that you are saving money by discounting the commission, as my friend did. In reality, you are not.
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