Commission rates are the biggest issue in the real estate industry today. Why wouldn’t it be? This is what directly affects you as a consumer most. Low mortgage rates have led to a very high run up in real estate prices and homes are selling faster than ever. This has led the media and consumers to focus on commission rates and wonder exactly what it is they are paying for.
The industry has seen many new products come into the market. For sale by owner, 1% listing commission, $500 listings and some realtors are even listing houses for $0! This naturally has to make you wonder “what commission rate should I pay?” I have tried many different products and packages for clients and I have come to realize the truth about commission rates and that is this: what you are willing to pay in commission rate should be tied to the value added services you wish to receive.
Value added services are what you expect out of your real estate agent when listing your home with them. These services can be design consultations, home staging, pre-listing inspections, professional cleaning, you tube videos, floor plans and various other products which help to sell your home. The current real estate frenzy has allowed a lot of realtors charge high commission rates without offering high value added services and consumers and the media have every right to be mad at that.
Believe me, value added services are worth every penny. I have had clients walk away with much more equity out of their home by focusing on a premium pre-listing strategy. Selling a home isn’t as cut and paste as one might think and putting out a product that is not 100% will end up hurting the eventual sale price. Are you really saving 1% in commission if your home is selling for 5% below asking price?
Of course there are the homes which do not need as much value added services and you should not pay a 2.5% commission rate to sell your home when it does not need any work! There are much less value added services needed in fully renovated homes, estate sales or people listing at a price to attract a bidding war. I am happy when I have clients have a home ready to list because value added services can be very costly as well as take up many hours of time.
Before listing your home you should interview at least three realtors to get an idea of what value added services they offer in their commission rate as well as what they think of your house. When it is your home it is hard to be critical of it and to know what buyers are looking for. Remember, you are interviewing the realtors and they should be open to answering your questions openly.
There are many different scenarios in regards to commission rates and I apologize I cannot fit them all into this blog post. If you have a question that relates to commission rates that wasn’t answered in this article or that you would like more clarification on you can send me a personal message or fill out the contact form on my home page. Don’t forget to keep smiling!