Comments on: Inman News Plans Objective View of Real Estate Commissions

By: Kicking off the real estate commission discussion

Kicking off the real estate commission discussion — Sun, 15 Feb 2009 23:34:17 +0000

[...] estate agent and AgentGenius contributor, Jonathan Dalton, wrote a post yesterday opening the debate on real estate commissions. The comment discussion that followed is spirited, and well worth a read. It is the perfect [...]

By: Austin Smith - Goomzee.com

Austin Smith - Goomzee.com — Fri, 13 Feb 2009 22:39:04 +0000

Fantastic Post Jon. This is a senseless argument that is taking more of the industry’s time then should be allowed.

You’re point about the public not having a say (and rightfully so) in the salary of Inman execs was spot on. To provide ‘Joe the Plumber’ an equal voice in this forum would be ludicrous; and would it not open the door to negotiations for all of America’s goods? Hmmm, maybe that wouldn’t be such a bad thing. When I get home I’m gonna call my electric company and see if I can barter down the utilities bill…

By: Barry Wolfert

Barry Wolfert — Fri, 13 Feb 2009 22:00:36 +0000

This was a very good post. I think of the reasons that commission becomes a hot topic is that the public has a perception that 1) if the price of the house is negotiable, so is the commission 2) that the agent listing the house gets all of the commission; you have to explain to them that we coop with other agents, pay broker fees, etc and 3) they perceive our job as fun and easy.

I really have no issue with a client asking me to lower my commission. The answer is a simple no. I have built a business model and marketing plan around generating a certain amount of income. If they don’t see the value I’m bringing, they can shop elsewhere. This isn’t arrogant, it’s called common sense.

Who negotiates with their doctor, CPA, attorney, grocery store?? No one. You have the right to buy from whomever you want. The market determines value not the seller.

I would love to see us go to an hourly model. If my sellers paid me by the hour, I don’t think I’d have listings sitting on the market and overpriced. Buyers tend not to get distracted by this because they don’t “feel the pain” of paying us.

This is all about educating the client. I sit down with every client for 1-2 hours before we agree to work together. We discuss their needs, goals and I make sure they understand how I get paid. If they’re not comfortable and willing to sign an Exclusive Listing/Buyers Agreement, all I’ve spent is a few hours. I can write this time off to good use rather than driving them around, seeing houses and then finding out they don’t want me to get paid.

Real estate is a service business. Every year I accumulate more knowledge, insights, market awareness and invest in better tools. However, my fee does not go up every year. In fact, given the current market, my fees are lower today due to lower prices. Should I add a gasoline surcharge, multiple trip surcharge, checked baggage surcharge like other industries?

I don’t think the market will go for that and I’m not interested in that kind of business model. The next time someone questions your compensation, ask them about theirs. That usually stops the discussion.

Good luck out there.

By: Jonathan Dalton

Jonathan Dalton — Thu, 12 Feb 2009 15:13:44 +0000

> The days of x% or goodbye are gone, or won’t last forever anyway.

They’ll last as long as there are members of the public willing to support that model and members of the industry who find it to be a viable model for their business.

By: Erica Ramus

Erica Ramus — Wed, 11 Feb 2009 22:54:29 +0000

When I opened my brokerage 18 months ago, I set out to create a very different set of rules for how we get paid. I do a lot of consulting and work with many business people. I set my fees based on how much work they want me to do. Yes I have a fixed percentage, but if a lawyer client of mine wants to use me to put his property in the MLS and do marketing, but not negotiate/etc why should he pay the same fee? The days of x% or goodbye are gone, or won’t last forever anyway. There is no reason we cannot charge as lawyers or other professionals do. I do it and it works for me. It might not work for all… that’s why we have a free market!

By: Ned Carey

Ned Carey — Sun, 08 Feb 2009 17:48:23 +0000

Jay Thompson Wrote:
>Interesting approach. (putting commission in the contract)And can not be done in the State of Arizona. Honestly, I’m surprised it’s allowed anywhere. The contract should be between the buyer and seller, not the listing and buyers agents.

You are darn right Jay, the contract should be between the buyer and the seller. I am a buyer more often than an agent. That is why I don’t want you, the real estate commission, or the state legislature telling ME what can be in MY offer.

If my buyers agent is a terrific guy and I want him to get paid more by the seller I should be able to put that in my offer. And NO ONE should tell me the buyer that I can’t.

By: Ned Carey

Ned Carey — Sun, 08 Feb 2009 17:40:49 +0000

Agents aren’t making near as much as the consumer thinks. One of the problems is that the consumer doesn’t understand that the agent usually spits with the Broker.

My solution – get rid of the middle man, get rid of the broker. I don’t see where the broker adds value to the situation. Have ALL agents trained to the broker level. Essentially I am saying get rid of agents and only keep brokers.

I would allow brokers to form an “agency” to combine costs like advertising but the two tiered commission structure makes no sense.