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Why Pay 6%?

Why Pay 6%?

Most homeowners have lots of questions about real estate agent commissions…

Why should I pay 6% to sell my home? Because that’s what agents are charging? Because that’s the way it’s always been? Hasn’t technology helped agents to work more efficiently? Shouldn’t that reduce their costs? Why don’t they lower their prices?

ANSWER: Technology HAS helped agents to work more efficiently. Their costs HAVE BEEN reduced. But most agents don’t lower their prices because homeowners keep saying YES to a 6% commission. Because they hear that’s what agents are charging. That’s the way it’s always been. So agents continue to charge their customers 6%, invest in technology to reduce their costs, and pocket the difference. Businesses in other industries pass at least some of the savings on to their customers. Because if they don’t, their competitors will. And customers will always choose the cheaper option, if the quality of the product or service is equal.

So why hasn’t this happened in the real estate industry? Simple. Homeowners typically choose an agent they have worked with before or an agent referred to them by friends or family. They don’t research their options thoroughly and often assume that all agents offer the same services for the same price. Sound familiar? You’re not the only one who has made this mistake. It happens all the time. To be fair, the agent you worked with before or the agent referred to you by friends or family may, in fact, be the best fit for you. But you would probably feel much better about your decision if you researched all of your options. Here are some questions you ought to ask an agent before you sign a contract:

1) How much do you charge for “full-service”?

2) How much of that amount is offered to buying agents?

3) What services are included?

4) Are there any services available to upgrade from “full-service”?

5) Are there any services that I could do without in order to save money?

6) How long is the contract?

7) Can I get a shorter contract?

The basic idea with these questions is to fully understand how much you’re paying and what you’re getting in return. If you ask these questions of more than one agent, you may find that you get slightly different answers. But most agents will answer them as follows:

1) How much do you charge for “full-service”?

  • 6%

2) How much of that amount is offered to buying agents?

  • Half (3%)

3) What services are included?

  • Everything you need to sell your home. (intentionally vague)

4) Are there any services available to upgrade from “full-service”?

  • No.

5) Are there any services that I could do without in order to save money?

  • No.

6) How long is your standard contract?

  • 6 months (standard listings) or 12 months (luxury listings)

7) Can I get a shorter contract?

  • No.

In case you’re interested in another approach, here’s how I would answer these questions:

1) How much do you charge for “full-service”?

  • You can choose from a menu of a la carte services. You can also bundle services to save money. Your cost depends on which services you choose.

2) How much of that amount is offered to buying agents?

  • In order to compete with other listings, I recommend that my clients offer 3% of the purchase price to buying agents. This amount is separate from the services I provide.

3) What services are included?

  • My “Seller Menu” includes 14 a la carte services, which can be selected individually or bundled into one of three packages. I recommend which services are the best fit for my clients’ needs, but they are free to choose whatever they want.

4) Are there any services available to upgrade from “full-service”?

  • Yes. My Standard package includes what other agents would consider “full-service,” but sellers of luxury homes or unique properties can upgrade. My Premium package includes aerial photos & video, a staging consultation, a pre-listing appraisal, and a Facebook ad campaign.

5) Are there any services that I could do without in order to save money?

  • Yes. Some sellers choose my Basic package if they don’t want some of the services included in my Standard package. They can also choose individual services without bundling them into a package.

6) How long is your standard contract?

  • 6 months

7) Can I get a shorter contract?

  • Yes. 3-month contracts are also available.

As you can see from the answers above, most agents aren’t very flexible in terms of pricing, services, and contract terms.

My clients appreciate the opportunity to choose the services they want, rather than having to accept the traditional “one size fits all” approach of most agents. This way, they get pricing and terms that fit their specific needs.

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