Is it time for real estate agents and companies to rethink the listing commissions?
Let’s start off by saying their is absolutely no such thing as a “standard” real estate listing commission. By no means does this blog post even hint there is a specific price you should pay to list your home. With that being said if someone asked you “what do you think most brokers and agents charge to sell a home?” almost everyone would come up with the same number. There are legal reasons why we won’t be saying that number in this post. A little known fact by most of the consumers is that number is negotiable. For our real estate agents, the policy is to negotiate a price low enough to make the seller happy and the agent can still cover marketing costs and be able to eat.
Being a real estate agent is not a cheap business. There is a ton of overhead from personal marketing material as well as property specific marketing material. It is true we are in a sellers market still but the tide is shifting. When that happens it will cost more to market a home. A listing agent will not be able to just put the home on the MLS and go about their day. It is also more expensive to market higher end homes and they typically sit on the market much longer.
Another thing the consumer doesn’t really understand is that an agent must deal with a bunch of people that never sell or buy a home with that agent. That cost must be figured into the cost of doing business. That agent may deal with 50 people before that one person generates revenue for that agent. So the person they actually make money off of is paying for the people that never end up closing a deal. That may sound rough but that is the way the business works. So an agent that works 10-12 hours a day 7 days a week (like me) may only close 2 deals a month (still not bad at our pricepoint in the Foothills). Those two properties are covering the cost and time the agent spends on people that don’t close a deal.
Back to the fact that agents and real estate companies need to re-evaluate their commission structure, their is no shortage of what is referred to in the business as “discount brokerages“. These are companies that usually charge a flat fee or low fee to sell a home. There is nothing wrong with this business model. However there are times I hear from clients that XYZ Real Estate Company is promising to list their home for less than what a professional photographer costs. That is confusing to me. Not sure how XYZ Real Estate can properly market the home and spend time on the fiduciary responsibility they have for their clients.
With that being said our real estate agents will work and negotiate a price to list a home with the seller. We will make it fair for both parties. We will assure your home is marketed with our state of the art technology we use. Even in a sellers market a seller needs to have the market exposure to get more bodies through the home to assure the home gets true market value.
What to expect from a listing agent
There are a lot of real estate companies out there that claim to be “the best listing agents” around. Some of the real estate agents don’t even have websites or an online presents to properly market your listing. NAR (National Association of Realtors) has determined that over 90% of home buyers will find your home listed online and move forward with an offer on a home they original found online. This means that any real estate company that doesn’t market their listings for their agents online is not doing a service for their clients or for their listing agents.
How we market our real estate listings
All of the listing agents for our real estate company do their own marketing but as a company we also push our agents listings to hundreds of sites across the internet. There are hundreds of sites in their network. From the major international sites for every listing then they push the listings out to a bunch of specialty sites depending on the niche of the property such as horse properties or luxury home listings. The only way to sell a home properly is to get it in front of the perspective market and buyer. Then as a result you will get more people coming through the home and get a much better sampling of the market and a better offer since you will get more market opinion.
As a Fort Myers listing agent I say the best way to market our listing is an open house
There may have been a time that open homes may have been a somewhat effective way to market your home. Since the invention of the internet a very small portion homes are sold via open homes. Actually less than 5% of real estate listings sell from open homes. A dirty little secret most listing brokers won’t tell you is that the reason Realtors have open houses is to build their buyer database. So in other words the listing agent gathers names of people that might be in the market to buy a home but not likely to buy the home that they are looking at that is listed.
Advertising your listing in local papers
Some listing agents advertise in local papers with just listed ads. Once again not the most effective way to advertise a listing. This is once again more of an advertisement for the listing agent. Most people aren’t house shopping in the local paper anymore. Especially since they usually only have one picture of the listing and swfloridahomes4sale.com usually has at least 35 for any given listing.
Make sure your listing agent has an online presents
The best thing you can do is make sure the listing agent you hire knows how to market on the internet and has a large online presents. There are still national real estate companies out there that actually don’t push agents and brokers to push their listings online. It is not good for the client if their home isn’t seen by hundreds of people. Orson Hill Realty is one of the few high tech real estate companies out there. Their owner and employing broker has been marketing on the internet for almost 18 years.
Listing Agents (Brokers)
Our real estate company uses modern technology mixed with proven old school marketing to sell your home
When a seller hires a listing agent for their luxury home or for a small parcel of land, they should expect the same service. If you list your home with an experienced listing agent they will likely market your home to the market it is intended to reach. For example if a seller is wanting to list a $10,000 parcel of land your listing broker should probably not market your home on luxury home sites or in luxury home magazines. That is a waste of money that could be spent marketing your home on a land for sale website or magazine. Listing companies that know what they are doing, like our real estate agents will handle home marketing on a case by case basis. The experienced real estate companies know how and where to market your home in the most efficient and economically sound way. Good Realtors won’t just market your home to say they are spending money to market your home. Too many Realtors use your home for their marketing purposes knowing very well they will benefit from the ad much ore than the seller will. Meaning they are only trying to acquire buyer leads buy advertising your home. This is why listing agents will hold open homes. Most homes will not sell from an open home. This is a way for a listing agent to find people that are in the market for buying a home and will collect their information and follow up on the buyer as a buyer for any property not the one at the open house.
Once your listing agent has properly marketed your home the seller should start to see traffic through the home. It is always recommended to approve all showings. Don’t make it harder to sell your home by saying “I only want showings every other Tuesday between noon and 1 PM.” Even in a seller’s market the idea is to get the largest sampling of the market to view your home and make offers. A seller and their listing broker may have priced the home too low (see how Realtors price your home) so it’s a good idea to have as many people come through as possible. On that same note it is important that you don’t list your home on Friday and accept the first offer you get on Saturday morning. For one people that have seen it on Friday haven’t had time to think about making an offer or maybe they are from out of town and wanted to see a few more homes on Saturday before making an offer on your home. There also hasn’t been enough market exposure to get the true sense of the market and the value of your home. If a seller receives an offer within 48 hours of listing (that is pretty common in a lot of price points in the South West Florida Area) they will most likely receive another offer on that property. So the seller is most likely not going to be missing out on the sale if they hold out a few more days.
A listing agent should always keep you informed throughout the entire process. The job of a listing agent is to inform, educate and advise. A realtor will help you understand what offer is stronger than another and why. A listing agent should always market a home in a sellers market, flat market and a buyers market pretty much the same way. Even in a sellers market a seller needs to get a good sample pf the market to view the property.