Is the 6% real estate commission dead
The 6% real estate commission may not yet be dead, but it’s not breathing very hard. Back in 2009, my real estate license was hung with one of the largest brands in the world. At that time in Jupiter, 77% of all single family home sellers were paying a 6% real estate commission* to sell their home. I remember a training session being held in our office about scripts to “sell” your client on why getting them to agree to a 7% or 8% commission was in their best interest. Florida is one state where a broker can represent both the seller and the buyer on the same transaction but it’s a position I have never been comfortable in. I always feel strongly about the fiduciary duties I owe to my clients. I certainly did not feel that “selling” them on paying more in commissions was in their best interest. It was then that my thoughts turned to opening my own brokerage where we always put our clients interests ahead of our own. Paradise Sharks would focus on educating and not selling.
So, what has happened in 9 short years that caused the percentage of Jupiter home sellers paying a 6% commission to drop by 61%. Yes, you read that correctly 61%. Each and every year since 2009 the percentage paying a 6% commission in Jupiter has dropped. In 2010, it fell to 75%. In 2011 it was 73%. The drop in 2012 was significant down to 62%. The next 5 years it went to 57%, 53%, 46%, 41% and last year all the way down to 35%. Could it really go lower? The answer is yes, as so far in 2018 the percentage of single family home sellers paying a 6% commission in Jupiter has dropped all the way down to 30%.
Anyone paying a 6% commission, or any commission, should be educating themselves. Paradise Sharks is a firm believer that anyone buying or selling real estate should interview at least 3 brokers and ask a lot of questions. You want to make an informed decision and if everyone took the time to interview, the 6% commission may in fact go away for good.
The real estate industry is constantly changing, but one thing that will always be true is real estate commissions and the services sellers get for their money are negotiable. It’s not just about what you pay, but what you get. The marketing services a broker provides is perhaps the single most important factor in what your home sells for. You cannot look just at what commission you are paying, but what you are getting for your money.
Paradise Sharks has always looked at how much time we need to invest on a transaction to properly meet our high standards and our clients goals. Why should a home selling for $2 million dollars be charged the same percentage commission as one with a value of $200,000? Absolutely, the lower the price generally makes it easier to sell so market strength, inventory, condition of the property and a whole host of factors go into our thinking about what commission we charge on any transaction. If your property is worth in excess of $1,000,000 you should be paying a lower commission, if there is a solid market for your home. If your home is not in good shape and not suitable for professional photos not only will your home sell for less it should also mean you pay a higher commission.
If your home is empty you should typically pay less. If you require your listing broker to be present for every transaction you should pay more. If you want your broker to invest in print advertising, that is typically ineffective, you should pay more. If your broker handles both sides of a transaction, you should typically pay less. If your home is in a neighborhood where there is high demand and low inventory you should pay less. The list goes on and on.
How you Realtor is paid will also effect how much time they can spend on your transaction. There are brokers out there that take 50% of all commissions and brokers where the agents keep 100%. Obviously, the one not handing over half their money can spend a lot more time on your marketing. When interviewing brokers ask direct questions about how their marketing is going to work in the sale of your home. Ask to see how their last 6 listings were marketed and the outcome of those sales in relationship to others in the neighborhood. Ask for referrals and pick up the phone and call them. The Internet is where over 90% of all buyers, in all price ranges, shop before calling a Realtor. Google anyone before even inviting them to interview. If they are not filling up your screen on a Google search, the odds of them knowing the importance of on-line marketing is slim. Find out if their broker charges any other fees that you will be responsible for.
Paradise Sharks may not be the broker for everyone, but if we are included on your interview list we can promise that the education will help you negotiate both the best commission and the right level of service required to get the very best price for your home. We often say we don’t sell, we educate. Paradise Sharks would love to help educate you, whether you are buying or selling. Schedule your complimentary education session anytime by reaching out to us at 561.308.0175 or email@example.com
*for the purpose of this article we are assuming the total commission paid by a seller is double what is offered for the buyers broker