Darrell Catmull

Realtors, Prepare to Lose Your 6 Percent

The 6% commission is actually a 3/3 a commission. 3% goes to the listing agent and 3% goes to the selling agent representing the buyer. On a rare occasion the listing agent sells the home and keeps the full 6%, but it is rare. The commissions have been under attack for over a decade. Our board and MLS in Utah have never prohibited discount brokers from setting their price nor has the NAR. Discount brokers have been around forever. I know of two discount brokers who could not make it in the business because: 1) their revenue stunk 2) People end doing business with a professional who charges what their worth, most likely 6-7% split 50/50. Some even add transaction fees on top of that.
Jeff, your article is not researched well and is more of a tirade than informational. The truth as to why it costs 6% to list your home with a competent broker is because there are too many large brokerages with in expensive office buildings. Furthermore they need more agents in the house to subsidize the high expenses. As a broker I know the game of the big brokerages. They go to the specialty schools hire an eager newbie. That newbie predictably will do 1-6 deals with family and friends in the first 6 months. The big brokerages know that the newbie will be out of the business in 4-12 months, in debt up to their eyeballs, if not bankrupt. NEXT!
The solution which the NAR will vehemently fight against is to make it harder to get a license; The NAR likes their 1.2 million dues ($104). The states need to require: 1) at least an associate’s degrees to enter the field or 2) require that all new agents operate under an apprentice for a period of time or until certain points have been achieved. Under this model, similar to appraisers after the S&L scandal, the industry would then attract people with a sense of direction, commitment and understanding of patience and discipline. Right now we get 18-year olds to retirees who just want to earn a buck or two, “part-timers.”
I personally have a punch-list that includes 180 items from: to-do’s, calls, meetings etc. that I do for a client and this is just a starting point, it’s customized for each client. PLUS I have to prospect for new business at some point in the week.
Jeff, I assure you the commissions are huge but your tirade is focused on the symptom vs. the cause. Perhaps your right, the commissions will come down. But consider this: If I average more than 2 clients a month, with my system, I would have to hire one assistant for every 12 additional clients (1 averaged). This is exactly why you see the trend of “teams” in big brokerages. That 6% gets cut up like a pie. The real disservice to consumers would be cutting the commission for the sake of cutting the commission. The right thing to do is to make it harder to become an agent. Then watch the commissions go down naturally or watch the service and reputation of agents do a 180. I’ve been financially broke many a months because I truly have the clients’ best interests at heart, and didn’t sell a property even though I easily could have. I know many who fall in the same category of ethics but like all things the bad guy ruins it for the good guys.