Bonanza, Hoss Cartwright, and Chevrolet — all classics forever part of my Sunday evening TV memories. Most folks back in the day were “Seeing the USA in their Chevrolet” yet yearning to cruise “Route 66” in a Cadillac. It was part of my first exposure to the concept that “you get what you pay for.” And so it is with REALTORS®.
In today’s market, listing inventory is tight. While seasoned professionals tend to stick to what really works, others offer discounted services in order to entice sellers to list with them. Experienced agents know what it costs to sell a listing. Each office sets commissions, but typically, a seller can expect to pay at least 6% on a residential sale. Because two offices generally split commissions, a $100,000 sale normally nets the seller’s agent about $2,100 (much less than the cost of marketing your home yourself).
Today, as much as ever, moving real estate is directly tied to effective marketing. So much so that I know when a properly priced listing isn’t selling, marketing is the problem. An effective marketing plan includes hard costs that quickly approach $1,000 for even an average listing that sells in a timely manner. Of course, listings that don’t sell quickly cost more to market.
Buyer’s agents expect their full 3% split, leaving the seller’s agent to absorb marketing costs and commission adjustments. When discounted services are offered, in reality, savings are being passed through in the form of reduced services.
New agents and offices scrambling for listings are those most likely to accept commission reductions. Accepting less than optimal services is like asking a seller to accept a Chevy and then asking them to do without the tires. Agents proposing this discounted concept would have sellers believe they can undermine the competition. The reality is they are normally only eliminating services.
As strong as the market is, now more than ever, a successful sale relies heavily on a complete menu of marketing services. It’s no time to gamble with accepting a reduction in services. Like the Chevy without the tires, doing so may make it impossible for a seller to reach their destination.
Agents willing to discount their own value are telling a seller exactly what they believe they are worth. Their ability to protect their own compensation would certainly create doubt as to their ability to negotiate effectively on the seller’s behalf. Real Estate transactions are, by nature, complicated. Accepting less than a full menu of services may actually result in a seller accepting less for the property than they saved on commissions. The bottom line is, if you are selling, go for the Caddy…or at least make sure the Chevy has all the tires!
Twice a month, we Zoom with industry experts. This past week at our Real Estate Wine’d Down, we learned all about property surveys. Look out for Nui’s recap on social media, and email me to join our next Real Estate Wine’d Down online!