There are headlines everywhere about the National Association of Realtors settlement that will, among other things, get rid of the mandatory 6% commission rate. Similar disruption has hit financial services (the old 8% load on mutual funds), insurance (life insurance online), and other industries.
We’ll see what happens. I’m guessing there will be fewer real estate agents and the better ones will adapt and show flexibility, which they should. One comment I heard repeatedly is home sellers asking why they’re paying the buyer’s agent, and this makes sense.
When I’m asked what our fees are my response is usually, “I don’t know because I don’t know what we’ll be doing together.” Every client assignment is different.
It’s a lower fee if the client has the match (potential buyer or seller) than if we go to market. And of course, any advisory work to get the business ready for sale is distinct from transaction fees. It’s a higher fee if we agree it’s a tough assignment so will tougher real estate transactions demand a higher fee?
Bottom line, fees should reflect the value provided. And with less regulation (of fees) the winners will be the clients and the better agents.
“There is nothing so absurd that some philosopher hasn’t said it.” Cicero
