The process of undergoing a real estate transaction can be expensive, which makes it tempting to find ways to cut costs. However, you should really think twice before you hire a discount broker.
People find me through a number of ways. I get calls all the time from commission shoppers who tell me they found me on YouTube, heard about me through a friend, or saw one of my flyers. After this, they always ask me, “What do you charge?”
The truth is that I simply don’t have a blanket answer for this. Every situation is different, and that means that the price is too. I do have a commission strategy I charge for most of my clients, but this doesn’t factor in my marketing strategy or the amount of money I’ll be investing into a property.
So when I get these calls, I tend to tell people that I charge between 4% to 7%. I also tell them that the only way I can give them a definite price is for them to come by so we can work together on making a strategy for their specific circumstances.
But the industry is very saturated. Not every agent out there has the same experience I do. Newer agents can become desperate to get a listing. In this case, it isn’t uncommon that you might find an agent willing to charge you 1%.
But is the lower cost really worth the lower level of service? Sellers should remember to focus not just on what they’re paying the agent, but what that agent will be able to help them walk away from the sale with. A seller’s focus should be on their net profit.
My team and I are often able to help sellers net them a higher overall profit despite the fact that we charge a higher price than discount brokers.
Consider the following story. I once got a call from a prospective client who lived in the very same area that I own two homes in. He told me he was thinking of selling his home, but was in a big rush and wanted a good deal. Not only did he want a great commission, he wanted to sell within the next week or two.
Now, I happened to be out of town at the time, but I told him I’d be more than happy to meet the next day and see what we could work out. Understanding that he was in a bit of a bind, I asked him to be sure not to sign a contract with another agent since I have such an intimate connection to the area his home was in.
But when I called the next morning to confirm our appointment, he had done just that. He told me he had listed with another agent who was only charging 1% to list his house. “I need to walk away with the most amount of money,” he said, “so I hired him.”
After that, I watched the listing from start to close. Unfortunately, it was a disaster. The home was listed three days after the contract was signed, which meant the agent did nothing to prepare the home, did no pre-marketing, and didn’t collaborate with professional photographers or any other vendors.
In short, the agent made very little effort in the sale. When it eventually went under contract 45 days later, it sold for $670,000—$30,000 less than the goal I would have set for that property. This is a goal I’m confident I could have helped him meet, since I know the area and my own marketing strategy well enough to know it would have resulted in a closed sale at $700,000.
So even though he saved a little money on the commission, he got totally burned on the home sale. What you walk away with is much, much more important than what you’ll pay your agent.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.