Real Estate Commission: Why Paying Less Can Cost More

Understanding Real Estate Commissions

So one of the things that commonly gets brought up in a real estate transaction, especially when you're hiring a listing agent to sell your home, is commission. Is it six percent? Is it five percent? Is it four and a half? And the idea, the lower the commission, the better the deal. So if I can get a real estate agent, because all realtors are the same, and if I can get the commission from five percent to four percent, well then I'm saving money, right? So from 13 years in the business, I wouldn't recommend hiring someone who cuts their fee or is a discount agent.

Why Hiring a Discount Agent Can Backfire

Think about it. You're hiring someone to negotiate on your behalf, but it's the person who did the worst job negotiating their fee. And now you've hired that person to represent you.

Common Misconceptions About Realtors

I find as realtors, we get the perception that we all do the same thing. We all use the same words. We all have the same system.

We all have the same track record. We've all been doing this for 13 or 14 years. We've all sold 800 or more homes.

And that's not the reality. In some cases, you can sell your home on your own. That is a possibility, not every single person needs to hire a realtor.

Facilitating a Smooth Transaction

However, when you have a home and let's use this market as a good example, a lot of those logistics need to be handled properly in order to get you the best overall deal. Being a good real estate agent is being able to facilitate a transaction and allow people to move through the process without problems. Let me make an analogy, like a pilot in an airline.

Airline Analogy: Discount vs. Smooth Experience

You have a discount airline. It's kind of stressful because you don't get to pick your seat ahead of time. Don't plan on any snacks or drinks during the flight because that's not going to be offered.

Hopefully you charge your iPad and downloaded a show or two because there isn't any Wi-Fi and the seat isn't comfortable. You have zero leg room. The flight was delayed 90 minutes.

You had a bunch of turbulence and hopefully make it to your destination versus now have you ever flown on a plane and thought, wow, that was smooth. That was easy. It only took an hour or so.

I can't believe I paid 500 bucks for that. You pay to not have problems. You pay to be on time and get good service and not have turbulence.

What You Don’t See Behind the Scenes

This is tough when you're negotiating commissions because I know I've gone through deals where people think I really didn't have to do anything when really we did a lot. You just didn't see everything that's happening because our job is to make sure you don't have to deal with all the issues and experience those problems. Look, our job isn't digging a ditch and laying concrete.

Expertise That Makes Hard Work Look Easy

It's more like the plumber who charges $150 an hour and only spent 10 minutes fixing the pipe because he knew exactly what to do. We get paid to make our job seem easy. You get the price you wanted and really not cause a huge disruption in your life.

And now you're able to move. That's really what we strive for. And I'll just leave it with, have you considered the high price of paying too little? Now, if you have any questions about what commission we charge or what commission you should pay, you can call or message me here at the office.

Take care.