ASK YOURSELF THESE FOUR QUESTIONS:

  1. Knowing that some agents are better than others, why does the entire industry insist that all agents to be paid the same commission?
  2. Selling a $250,000 and a $750,000 home takes the same amount of work, so why does the entire real estate industry push for a percentage cut of the transaction, meaning a triple commission on the more expensive house? Why should consumers pay even more to buy and sell in 2016, just because Denver home prices have soared?
  3. Since most people find their own homes online and technology allows agents to do more faster, why does the industry still push to charge what they did 30 years ago?
  4. Here's a curve ball: Who really pays the buyer's agent? Is the industry colluding to prevent consumers from negotiating this commission?

 

WANT ANSWERS? FOLLOW THE MONEY...

Every time a house sells, both the agent working for the buyer and the agent working for the seller walk away with a percentage of the sale price, often totaling 6%. It is the seller's agent who makes this possible. How's that? The 6% commission is written into the listing contract between the sellers and their agents. When listing the home, agents use a private field in the MLS to offer compensation (usually 2.8% - 3%) to the agent who brings the buyer. If the agent listing the home also finds the buyer, he or she will often keep the entire 6%.

LET’S LOOK AT THE TYPICAL COLORADO 5.6% DEAL.

The seller signs a contract, entitling the listing agent to 5.6% of the sale price at the closing table. That agent then uses the MLS - where only agents can log in - to offer half of the commission to an agent who brings a buyer.


WHY DO BUYERS NOT NEGOTIATE?

The problem is a collusion to boycott any change to commission structures. This is held together by several myths being perpetuated by the real estate industry.

The biggest myth is that “the buyer's agent is FREE." Yup, that’s right folks, just ask any real estate professional. Buying a house? You pay nothing for your agent. Nada. Zip. "It all comes out of the seller's pocket," they will state.

It’s a BRILLIANT subterfuge. Let’s face it, the best way to avoid negotiating a fee is to persuade clients that there isn’t one. Pure genius.

The truth is that nobody gets paid until the buyer brings money to the table, and then everyone gets paid with the buyer's money. So who is really paying the agent? In reality, buyers AND sellers are both involved in the flow of money that ultimately pays agents' commission checks.


HOW MIGHT THAT SAME DEAL LOOK NOW WITHOUT COMMISSIONS?

Every home sale uses the same contract and goes through the same process. The amount of work involved has nothing to do with the price of the home. Some deals go smoothly and some have bumps in the road. Transactions like this happen every day in Colorado. 

Buyers and sellers can stop monkeying around and negotiate EVERYTHING. Both have complete control over how much each agent is paid. Buyers have the power to negotiate commissions freely, as part of any offer made on any house.   

When this happens, the world does not end and nobody's hair is set on fire, although 95% of agents will tell you otherwise.


WHAT AGENTS HAVE FALSELY CLAIMED ABOUT FLAT FEES AND DISCOUNTED COMMISSIONS...