One of the real estate commission major problem is to date a big challenge. What it is? It is using the percentage-based real estate commission which usually a seller has to pay to a buyer. So does the percentage-based commission make sense? I think absolutely not. Nobody has ever answered effectively. It’s been asked repeatedly, by me, and by many others.
Let’s look a deeper look at the history of percentage-based real estate commission and then understand the real estate commission major problem so that this confusion could be clear in several minds.
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Percentage-based Real Estate Commission History
Percentage-based pricing was started by the real estate industry almost 100 years ago when selling houses really was a mystery to a bundle of people. It was a latent pricing system ‘plucked from the sky,’ or made up on the fly. Real estate consumers didn’t inquire about it because they didn’t know what they were paying for.
If I fast forward through the decades, there have been major changes in the real estate industry. Agents began to encourage one another on closing deals and the Multiple Listing Service came into existence. The Internet matured over time, real estate consumers became wiser and savvier about the real estate buying and selling procedure. Everything evolved and the real estate industry start to flourish at a relatively lighter speed.
What didn’t evolve? The way real estate agents charge consumers! It’s the same old percentage model that made no sense in 1956. It doesn’t make any sense in 2021 as well. Dozens of tools have appeared to make real estate buying and selling comparatively easier.
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Understanding The Major Problem
How to justify the percentage-based real estate commission? How come the guy with the $350,000 house pays more to sell it than the guy in the $300,000 house? (At, say, 6%, the $350,000 homeowner pays $21,000 while the $300,000 homeowner pays $18,000.) Each homeowner will get the same basic level of service but one pays $3,000 more than the other! Does this percentage-based real estate commission make any sense like that?
I made the decision more than 7 years before to become GreatNest because it made great sense to me. It made sense from an operational and a service standpoint too. And it made sense from a pricing standpoint also.
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Is this percentage-based real estate commission justified to you? Share your thoughts.
Our objective is always to sell the property, make enough money for it to be worthwhile (it is), and save thousands of consumers over what they’d pay to an ordinary real estate agent. In fact, we get just as excited about the money our clients save as we do about the fees we earn!
I hope now this real estate commission major problem must be clear to you. Happy Reading Ahead!