There’s an old story passed down from generations called, “ham in the pan.” It’s the one where generations of women traditionally trimmed the sides off hams before cooking them in the oven. Why? Because back then, ovens were smaller and the ham wouldn’t fit. Over the years, the size of ovens grew and so did the size of the pans. However, generations of women kept cutting the sides off because that’s what they knew – they continued to cook like Grandma. Real estate follows this “stuck in the past” relationship as well. No industry more desperately needs to be modernized.
Here are just some of the glaring weaknesses in the traditional selling of real estate, each begging for a refreshing, bold individual like “The Champ” to shake things up.
- I’ve been in real estate for most of my life, and if I’ve learned anything, it’s that if a homeowner is rational about the price and not the price range, that is where the degree of difficulty lies. A $500,000 seller traditionally pays the same commission as a $300,000 seller.
- Real estate agents take the risk while sellers control the outcome. Listing agents spend their time and money, working intensely for months, hiring a photographer, creating marketing materials, advertising a home, showing a home, obtaining ideal offers, but they don’t earn a dime because sellers are set on a high, impractical price. I’ve experienced it more times than I can count.
- New, amateur agents attempt to earn the same 6% commission as the established industry topnotch realtors do! I don’t know of any other profession where experience and expertise is so unsuitable matched to their compensation.
- Does the typical, lottery-like way that commission works even make sense? Perhaps realtors should charge like lawyers, doctors, and other professionals do and base it on capability and time.
- Home sellers shoulder all the burden while home buyers don’t pay for the time and service of a realtor. Half the commission home sellers pay compensates the buyer’s agent, who has it in their best interest to negotiate for the buyer.
- Unfortunately for home sellers, MLS (Multiple Listing Services) reveals to buyers the number of days a home has been listed. What this results in is a greatly lowered price when a home doesn’t sell immediately. Buyers assume it is overpriced or that there is something wrong with the home, even though that isn’t necessarily true. It’s possible the ideal buyer isn’t looking at the time a home was listed, forcing the seller to lower the sale price.
- Think about the main real estate firms in your area. Are there any distinguishable differences between them? How about a difference in 6% commission or strategy? Or a difference in the level of service? I’ve worked in real estate for over 35 years, and yet I can’t find one compelling, unique factor between most major real estate firms. This is because most of them are more concerned with gaining agents than on their current agents who have a valuable, uncommon home selling product.
These reasons are why the traditional 6% model doesn’t make sense and is unfair. Realtors could do everything the right way but never make a penny because sellers won’t budge with their price. By MLS disclosing time on the market, homes end up selling for less.
Great potential awaits to inject non-traditional methods into antiquated business models. It’s time that progressive real estate visionaries took bold action to become the forward-thinking mavericks the real estate industry so badly needs to champion these changes.
Farewell, “Champ;” my hero when I was growing up and still to this day. A few years ago, I have the honor of meeting him and never imagined I’d have the opportunity. He was so gracious when he endorsed me in real estate.What the real estate so desperately needs is someone like Muhammad Ali. Someone who encourages people to believe in themselves, raise their aspirations, and accomplish unlikely feats that might not otherwise be achieved.