Real Estate Commissions go back to the buyer or seller
You may have heard that real estate in Jacksonville is a very good business. Both Buyers and Sellers are able to sell quickly and for quite a bit more. This is new since the great recession a few years ago. However, many people think they can throw a sign in the yard and sell a house. No one wants to pay that 6% commission rate. But I want to show you what that 6% covers. I think you will be surprised to learn that Realtor commissions go back to you.
I can show you time and again where the 6% goes in an average transaction. When I go to the doctor, I cannot tell you where my co-pay or payment goes to besides the overhead, labor and maybe a bit of profit back to the professional. Its important for people to realize that the thousands of dollars or hundreds of realtor commissions go back to you, the buyer or the seller. Look at any of my recent Just Sold by Liz properties. Look at Coachman Lakes, it sold for $235,000 and 6% is $14,100. Did you know that half of the 6%, which is 3% goes to the other “side” or agent who brought the buyer or seller. So immediately $7,050 is gone to someone else.
How much commission is left?
Now that we are left with $7,050 we need to take 50% of that and give it to our Broker. The Broker is in charge of all the websites that the property goes to and then also with the overhead in the office and our ability to hang our license with the Broker. Brokers also protect their agents from other agents and Brokers, and frivolous lawsuits. No the National Association of Realtors does not protect one Broker/Agent from suing another. So the Broker gets half of the 3% or in this case, $3,525.
So our agent is now left with $3,525 for the purchase or sale of the property. Pretty nice amount on the surface! But if the agent was showing you property and using their car, gas, wear and tear, time, how many houses did you see before this one? Could the agent have been working with someone who had more of an immediate need? As a seller’s agent, the Realtor had to advertise the house. Hold some open houses, market the house with professional pictures, maybe staging too. Then there are the office fees the Realtor pays, national dues, and Error & Omission Insurance (Yes, agents need their own protection from mistakes made during a sale). Take out 30% of the remaining amount for Realtor expenses and you have $2,467.
What is the time cost on the amount remaining?
I spend on average 75 hours per transaction. When I first started, each transaction were much longer, probably 150 hours each. I had to learn how to do things more efficiently. No one teaches this to you in Real Estate School. From the marketing, working with buyers or sellers agents to coordinating repairs and the closing. Think the closing is the end? LOL! I’ve had closings take 4 hours because the title company messes up the paperwork. Or last second changes to numbers cause a problem. Remember, this document is going to the county forever (or until the next sale). It has to be done right. So that $2,467 over 75 hours comes out to about $33 per hour. Put into everyday terms, a $60,000 per year job.
What about those “Discount Realtors”?
Discount brokers can’t afford to do the right kind of real estate marketing on the same scale. A discount broker can spend the same amount on marketing. However, what takes 30% of my commission would be 70% of theirs. Real estate brokers who charge a discounted rate might make you pay less, but your photos on the MLS could end up as dark, blurry, vertical iPhone shots. Are those the pictures you want on your open house flier? This is the most expensive transaction you will make, in many people’s lifetime. Is it worth it to have discount people representing you?
Lower Cost Companies Don’t Always Know What They’re Doing
All Realtors have a story about the “Discount Realtor” or sign in yard and listing on MLS for a flat rate. Let’s say you walk into the doctor’s office and he has 3 options for you. Good care, Better care or Best care. Which would you choose? Its your body, its your life and he is offering you the choice of care for your life. Would you settle for good care because you wont want the best for yourself, your body? Good care may mean older equipment, older procedures. They worked in the past, but now there are newer, safer, better options. Would you sacrifice your future for a few bucks?
Discount Brokerages are “good” options, but there are sacrifices. Prospective customers don’t know that a discounter is only discounting the upfront expenses. Real experience in the market cannot be discounted. The more successful people become in selling or any profession, the more it costs for their services, because they have success in their line of work. As the person hiring the professional, “Why would I want good, when I can have best” and it will save me money in the long run? Homes listed with professionals also tend to bring in more money. Why? Because professional Realtors like to work with fellow professional realtors. Remember that 75 hours, if I work with someone brand new and in the business for a few minutes, it will cost me more, cost the client more and I will be less likely to work with this house.
Are Discount Real Estate Brokerages With Low Fees or FSBO Sales Off the Table?
Some clients don’t need the full service real estate agent experience. If you’re selling a cookie cutter condo or house. A property with the same price tag as six of the other properties in your neighborhood. You won’t need much pizazz put into your listing. A discount broker could be great for a client looking for a quick and dirty, straightforward sale where they know that their place will sell for the same as other comps, and nothing more. After the great recession and all that robo-signing and mortgage fraud. Even these properties need a good title company and research to make sure that the deeds are correct at the county. You may pay a bit more for the process on the back end. Always have some extra available when closing for the “what-ifs” that always seem to occur.
Why Realtor Fees Are Worth It
An agent charges a 6% realtor fee so that they can market your home and negotiate a killer deal. At the end of the day you should pick an realtor because they are compatible with your personality, your schedule, and the stats on their profile show that they are going to do amazing work. How much experience in actually selling a house does that low cost agent have in your market?
The real estate agent commission pays for the marketing that gets your home sold. Professional interior and aerial photography, ads in newspapers and online, email campaigns, and open house flyers all come out of pocket for your agent. Pay the realtor fee they need to ensure that you get the best real estate marketing experience possible.
Thought the real estate agent commission was all for the agent? In reality, Realtor commissions go back to you.
Are you looking for a real estate professional to help you with the buying or selling of real estate? I have been in the local Jacksonville real estate market since 2005 and I have seen highs and lows. I can help you with your needs. Call me today to get started at (904) 210-6399 or email me at firstname.lastname@example.org