Trelora’s mission is to revolutionize how people buy and sell homes. And that will make real estate as simple, transparent, affordable, and easily understood as possible. The company has a long history of trying to make real estate more transparent while teaching home buyers and sellers about real estate commissions.
Information about homes is easily accessible to consumers on the web. But despite having access to a wealth of real estate data online, buyers and sellers can still be clueless about how commission fees work. Many people don’t understand what they are actually paying a real estate agent. Some believe that the real estate industry is withholding pertinent information from consumers that they need to see to make an informed decision.
The debate on commissions isn’t about pocket change. In 2017, home buyers and sellers paid a total of approximately $75 billion in real estate commissions. On a $500k home, this works out to about $28,000 paid in commissions ($14k to both the buyer and listing agents). To put that in perspective, most buyers pay approximately 26 mortgage payments to simply cover their agent’s fees that were included in principal. How many people do you think realize that they spend more than 2 years paying their agent’s fees?
Ultimately, sellers choose how much money to offer a buyer’s agent. And this is typically 2.8% – 3% of the purchase price because it attracts buyers’ agents to show homes. Homes with reduced commission offerings can see fewer showings than those with standard commission offerings.
Why is Trelora offering new cash back incentives directly to buyers?
According to a survey by the National Association of Realtors, more than half of all home shoppers say that finding the right home is the MOST DIFFICULT STEP in home buying. However, most of the home searching process is done by a potential home buyer BEFORE he or she connects with a real estate agent. With the use of technology, homebuyers are able to find their dream home online easier than ever before. In fact, 9/10 buyers find their own home online.
Knowing this information, Trelora notified Colorado real estate agents about a change to Trelora’s seller marketing in the letter below. The company believes that marketing a cash back incentive directly to home shoppers could increase the number of showings on their listings.
Sellers who choose to leverage Trelora’s new marketing options will be able to advertise this cash back incentive directly to buyers on yard signs as well as on hundreds of websites including the MLS and Zillow.
How Trelora’s new marketing option works:
Let’s say a seller is planning on paying 2.8% commission to an agent. To the seller, it really doesn’t matter where the money goes when the home sells. What the seller cares about is selling the home and making as much profit on the sale as possible. Now with Trelora’s new marketing option, a seller has three options on how to pay out their commission.
The seller can direct Trelora to pay the buyer’s agent a commission – this is common and the “industry norm.”
When a buyer doesn’t have an agent, the seller can direct Trelora to give the money directly back to the buyer as a cash incentive. And the buyer can do whatever he or she wants with the money. For some this may be pre-paying mortgage payments, redoing a bathroom, going on vacation, or paying college tuition. For many first-time buyers, they can use the money to lower the actual purchase price and make homeownership a reality.
The buyer and his/her agent can agree to split the incentive. Some of the money can go to the buyer and some can go to the buyer’s agent. And commissions are always negotiable. If the buyer and buyer’s agent agree to split the 2.8%, the buyer’s agents would agree to take a pay cut to get the deal done.
This new marketing opportunity should increase agent interest and bring more buyers directly to Trelora listings. The ultimate goal of these new marketing options is to help Trelora’s clients sell their homes as quickly and profitably as possible.
Trelora believes these seller marketing options will have a second benefit. And that is to make real estate more transparent and easily understood for everyone. If the buyer has an agent, these cash incentive offerings will most likely result in an open and honest conversation between the buyer and his or her agent about how that agent is paid. TRELORA is ultimately moving the conversation on commissions front and center by asking buyers if they want to keep $15k, give it to their agent, or split it with the agent.
Want to learn more about Trelora’s new seller marketing options?