We are writing to invite you to be part of an ongoing conversation about the fee clients pay to buy or sell a home. As advocates for the best interest of individuals and families over the course of the most meaningful financial investment in their lives, we owe it to ourselves and our industry to work together to earn back the trust of consumers; a trust we have largely lost.
Consumers have access to information and resources that give them greater input into the process of listing or purchasing a home, but industry pricing models have not adjusted to recognize this change; the industry is clinging so tightly to the 6%-or-as-close-as-we-can-get commission rate that the rights of consumers have become secondary to the desire to maintain our paychecks. We’ve been taught to keep mum about the details of our work; to provide just enough transparency to satisfy the law; to paint a picture of mystery and complication in an effort to convince consumers of our value; if they know too much – will they still pay? Once they know what the modern real estate service proposition looks like – should they pay at the same rate? This is a question worth asking, and you don’t have to lose your shirt in order to charge your clients fairly and earn an honest living in this business. There is a better way.
Points to ponder:
- Commission is negotiable. Do you treat it as such with potential clients?
- Clients should have access to your commission rates and those of your competitors in order to make an informed decision when choosing a real estate representative.
- Clients have a right to preserve as much of their home equity as they can, and it is our responsibility to deliver excellent service while helping them do so.
- Knowing your worth and preserving your paycheck should not require hiding your commission rate from the public; demonstrate your worth through service excellence. Transparency will make the industry better, for agents and consumers.
You are doing good work, and you expect and desire to be compensated for your education, experience, talent and effort. The best agents should reap the rewards of a job well done; the standard business model in our industry makes your job difficult – not easier.
- Real estate agents should be privy to the benefits of employment, including generous compensation, health insurance, a regular schedule and job security.
- There are too many “accidental Realtors” taking up space in the industry, endangering the financial well-being of consumers and leading to inconsistent levels of service. Low barrier to entry is part of the problem; we consider ourselves “professionals,” but other professions, such as the practice of medicine, require far more education and training.
As an industry, we have lost our professional edge.
- The independent contractor model of real estate does not provide adequate training or oversight for agents; the sale or purchase of a home is too important to allow a hobbyist to pretend their way through a deal with little to no oversight.
- Agents should be task specialists, mastering a specific aspect of the transaction alongside a team of other specialists rather than trying to be an expert at everything. This encourages true mastery rather than a juggling act, and provides an opportunity for deliberate practice of the art of real estate through increased volume; when an employed team of highly trained specialists tackle a higher volume of transactions together, they will complete many more deals over the course of a year than the traditional agent does now. (11 deals per year is the average according to NAR.)
What if you could focus on your favorite part of the transaction, and someone else could sweat the details? What if you were part of a dozen deals or more each month, becoming a rarefied expert at that singular aspect of the transaction? What if you got a great paycheck for doing something you loved without fearing the volatility of the market? What if you had company benefits like health insurance and paid vacation? This is the way we do business, and a regular paycheck beats the feast-or-famine model of real estate any day – just ask our partners.
We’ve shared insight into how we do business, but this isn’t about us – it’s about the consumer. You are receiving this letter because you are a contributing member of the real estate industry in Metropolitan Denver, and we believe your voice matters.
- Be part of the conversation at LINK.
- Talk openly and honestly with your clients about the value of your work.
- If you are worth more, you should charge more; and you should help your clients understand your value proposition and how you earn your paycheck.
- Expose your commissions. Give your clients a voice by disclosing information they deserve to know about their expenses.
Joshua Hunt, CEO and founder of TRELORA