For years the idea of lowering real estate commissions has been the topic of conversation amongst many in the real estate industry. Since the discount brokerages came onto the scene in full force back in the early 2000s, many home sellers have sought out agents who will cut commissions to save sellers money. Could lower commissions eventually become the norm?
A recent study by Realtor Magazine indicated that 62% of buyers and sellers want lower fees in real estate transactions, yet of those 22% still want to receive quality service and worry that low fees do not go hand in hand with that type of service. So while sellers want to pay Wal-Mart fees, they obviously still want Nordstrom service.
I have written many blogs over the years about the benefit of working with agents who provide stellar service – not just in marketing a property or knowing a neighborhood, but with respect to the very important legalities of real estate transactions – negotiations (by the way, 89% of sellers in a recent study indicated that negotiation was the number 1 skill they desired of their real estate agents), paperwork, disclosures and other potential liabilities.
Many sellers for years have complained that it is not right that an agent can be paid 2 1/2-3% of the purchase price for a million dollar home and the same for a $300,000 home. The real question is how much work is that agent doing? I personally know of listing agents who “list and pray,” doing virtually no or little work to market a home and bring a buyer without spending time or money out of pocket. Also, what about the buyer’s agent who has been working for months with her buyers, showing them 20, 30+ homes, driving the around to show them areas and being there on hours of phone calls, writing offers…that agent gets nothing until she actually closes a sale, which may or may not happen.
If you wonder what agents actually do, here is a list of some of the things your agent should be doing…so do not be afraid to ask your agent what he or she is doing for you.
1. Marketing – this varies vastly so make sure you understand the marketing plan that is proposed
2. Open houses – if desired
3. Broker caravan
4. Professional photography
5. Creating custom flyers and other marketing pieces (mailers, ads, emails, etc.)
6. Showing advice/preparation and staging, if necessary
7. Handling all paperwork and explaining it all to you
8. Showing the property (being available to do so – you’d be surprised how many agents are not)
9. Negotiations with the other party/agent – this does not stop after a contract is signed, as it is still often necessary for repairs/credits.
10. Providing a list of repair people if needed
11. Constant communications with all parties involved – agents, lender, escrow, title, and of course, you
12. Making sure you have copies of your entire file at the close of escrow, and helping with other things like finding agents out of the area if you are moving somewhere else, or helping you synchronize closings of current and new homes. I have even helped clients move out and clean up after everything is taken from a home.
Of course each listing may require a different plan, and some may need more pre-listing work or more marketing than others, which of course means more money. So, will lower real estate commissions eventually become standardized? That remains to be seen but hopefully if they do, quality service won’t go down with them.