LOVELAND – Well hello, can you believe that we are already into March? That means that the spring home selling season is upon us! There has been a lot going on in the real estate industry lately and I wanted to fill you in on some of it. Rest assured, the entire Realtor® organization has been working hard at the national, state, and local levels to help Americans achieve the dream of homeownership. Do you remember the beginning of the pandemic when everything was shut down, including real estate? Within a couple of weeks, our team was able to convince elected officials that home buying and selling was essential allowing showings to begin again and deals to happen. According to the National Association of Realtors® the real estate industry was responsible for almost 17% of the GDP in 2021 (Real Trends), that’s huge at a time when many industries were struggling.
As you are considering selling your home there will be a lot of questions, fortunately, Realtors® are here to answer them. Among the biggest we hear are; how do you get paid and how much and how do you work with other agents? It can certainly be confusing, and one wants to be certain when it comes to one of the biggest investments, so let’s get to the bottom of it.
How much do we charge for our services?
Contrary to some beliefs, there is no set number for this. Some agents will charge a percentage of the sales price while others will charge a flat fee. I think the biggest determining factors in what an agent charges are their experience and their level of service. Real estate agents have all levels of experience, some are just starting while others have been in the business for decades. The volume of transactions can be a part of the experience as well, someone who has been in the business for 20 years but only does a few deals for friends and family may not have as much experience as someone who has been in the business for half that time but closes 30+ deals a year.
Sometimes it’s not always easy to see the work that we put into helping clients buy and sell homes, but that’s exactly the point. The best transactions are the ones where agents work together behind the scenes to make sure everything goes smoothly. This is a job that takes practice and it changes all the time, it’s up to us to be experts in not just homes, but markets, contracts, and a slew of other things. We get compensated not only for the time we spend with you on your home but the time and effort it’s taken us to get to our presentation at your kitchen table. Before we even meet you, we educate ourselves, market ourselves, maintain our licenses and insurance, spend time away from our families, advocate for our industry as well as our buyers and sellers and maintain our MLS which is the source of all data, even if you are finding that data somewhere else. Once you sign our Broker agreements we will (and this is not a complete list) help you price your home, drive you around to find a new property, advise you on positives and negatives in the process, we’ll give you our evenings and weekends, sometimes we even become therapists and marriage counselors. Whew!
The most important thing for consumers to remember is that our fee is always negotiable. It’s up to us to show our value, but remember negotiation is what we do. If you have an easy time negotiating a cheaper commission, ask yourself, how hard do you think that agent will negotiate on your behalf?
How do we work with other agents?
We are probably one of the few industries where everyone is in competition with everyone else and at the same time we all work for a common goal. Cooperation has always been a foundation of our industry and both sides must cooperate with compensation as well. When I am listing a home, I always tell my sellers that it’s just as important that I am marketing that home to other agents as it is to potential buyers. It’s more than likely that another agent, probably from another company, is going to bring that buyer to the home and write me a contract. There is a good chance that the other agent has spent as much time as I have to help their client and they know when looking at an MLS listing how much compensation my seller is willing to offer them. By the seller offering compensation to other brokerages, it promotes home affordability, as buyers will have the opportunity to work with a trusted advisor to get them the best deal. They won’t have to pay more for that service in what is already an expensive process. Many buyers are only able to pay for the home, an additional fee might mean not being able to purchase. This would mean fewer buyers for homeowners trying to sell.
The local MLS fosters both cooperation and competition, it connects agents, allows brokerages to share data with the public and levels the playing field for large and small companies as well as new and experienced agents. The local MLS also creates consumer choice by displaying and promoting different business models like flat fee real estate companies. This free-market approach allows consumers to negotiate a commission based on the market and services rendered.
If you have any questions about cooperation, competition or the market ask your favorite Realtor, we love to talk!
By Erich Menzel, President Loveland-Berthoud, Association of REALTORS®. https://lbaronline.com/