Are Real Estate Commissions Too High?
We think they are, and we’re doing something about it.
My interest was piqued last year when I read that the Federal Trade Commission had filed suit against the National Association of Realtors to combat pricing practices deemed to be in restraint of trade. The practices in question are not ones I have observed in our North Bay market area, but it got me to thinking about commissions.
Real estate prices have risen dramatically in the last 10 years, as measured by the median home price, which has about tripled. Commissions sellers pay have gone up proportionately.
What we found
We attempted to account for all the time and expense that goes into a typical marketing effort. What we found was that there are significant opportunities to be more efficient, and therefore, to reduce the cost by reducing the commission. The major opportunity is to eliminate expensive marketing activities that produce little in the way of results… at least for the seller.
How we can save sellers money
Based on our findings about marketing activities and expenses, we elected to make available for those who would choose it, a new approach we call “value priced, full service” marketing. As the name suggests, we are not proposing a do-it-yourself scheme that calls on the homeowner to do their own marketing. We are proposing reduced commissions for those sellers who elect to use our more efficient marketing approach.
Where we see an opportunity for savings is largely in expensive print advertising that does little to actually sell properties. Rather, these ads are widely recognized in the real estate community as a benefit to agents by attracting potential future clients, but not much benefit to home sellers.
MLS – Powerful Marketing Tool
The multiple listing service is by far the most powerful marketing tool available. It instantly creates wide spread exposure to the property, both among other agents and with the public who access this information over the Internet. By listing with an MLS member, in effect you get a sales force of thousands of agents working to sell your home. With such a powerful marketing tool available, there is little need for expensive print ads. In the event a client still insists on advertising, we invite them to do it from the commission savings we offer. So far no one has taken us up on it.
Of course, each property presents different marketing needs, and so we still offer other marketing programs when they are more appropriate. The bottom line remains that we see a more efficient way to get the job done, and we are offering that choice to consumers who see the advantages of an alternative approach. Call us to learn more, and to discuss your own marketing needs.
Jack Atkin, Broker
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