This won’t shock you. Paying 6% to sell your home is too much, way too much. In today’s Internet based, technology driven world, homes can be given exposure to buyers far more efficiently and cost effectively than 20 years ago.
Computers deliver more for the same money every year. Cars get more efficient, planes use their space more wisely, virtually every product and service in the world improves, offering more and more value each year… except in the real estate industry.
The opportunity for realtors to skyrocket their businesses by lowering real estate transaction costs is huge. 98% of today’s home buyers start their home search online. Zillow, Realtor.com, and Trulia are primary sources for connecting home buyers with homes for sale. Realtors can upload their newly listed homes to these websites at virtually no cost. The bottom line (and hidden truth) is that most realtors don’t spend more than a few hundred dollars in photography and marketing costs on each listing.
Imagine a circle of home selling success. If a home is priced fairly, it can be sold cost efficiently, which enables the realtor to charge less, which allows the home seller to price the home fairly and still net what they want.
Naturally, you won’t find many real estate brokers who criticize the “standard” 6% commission. But I do and others should because realtors who blithely charge 6% have not given serious thought to a fee that is more reflective of today’s costs of selling a home.
I am truly perplexed why so many realtors persist and insist on staying with the traditional 6% commission when consumers resist it and costs don’t justify it. It’s not only too much, it’s an outdated, predictable move, revealing that a realtor is just playing “follow the leader,” and acting as a “do what’s expected” amateur. It indicates that they have given little or no thought to pricing their services in a way that makes sense.
Differentiation in a competitive business is critical. Any realtor who charges 6% not only charges too much, they scream to the world, “I’m just one of the herd.” Do you want to sell your home with a realtor who is just another clone? No thank you.
I don’t advocate that all realtors charge $990 and that some shouldn’t charge more (or less). Some realtors are so good at selling homes super-fast at a maximum price that maybe they should earn more than $990! But 6%? No way. It doesn’t have anything to do with anything. It is just imitative pricing.
I realize I’m sticking my head out and I expect the criticism. The truth is, there’s no other business where one price point is so protected. Instead of encouraging innovative marketing strategy and unique fee structures, those who charge less are accused of “strangling the golden goose” and “ruining” the real estate industry.
We need to shift our stubborn traditional real estate mentality to reflect the thinking and missions of Fortune 500 firms such as Apple, Tesla, and Amazon. Yes, it’s scary and it takes guts to buck tradition, but the real estate industry desperately needs open-minded, seller-committed agents who challenge themselves to earn more by constantly finding ways to do more at a lower cost.
Every realtor in America should constantly be asking themselves, “How can I provide better service at a lower cost and earn more in the process?”