Are Real Estate Agents Worth What They Charge?
 by Scot Kenkel, CRS GRI DAD www.PersonalSalesCoaching.com 

Have you ever wondered whether or not homeowners think real estate agents are worth what they charge? Oddly enough, this was the question posed to the entire readership of www.CNNMoney.com  and the question must have struck a nerve somewhere because it resulted in well over 31,000 responses.

The exact question asked was “Do real estate agents receive too much in commissions?”

Here are the actual results of the poll:

  • 84% answered YES
  • 12% answered NO
  • 4% were UNCLEAR (unclear about what exactly?)

(Go ahead and see the results for yourself: http://tinyurl.com/l4vcm )

Apparently—at least based on this group of consumers — 84% of everyday folks think real estate agents charge too much commission. What does this mean to you? Should you lower your fees the next time you meet with a homeowner who’s thinking about selling?

Lower your fees, are you crazy? Absolutely not! If anything, you should raise them.  

I’m serious. Let me explain. For years, there’s been a serious misconception about real estate agents and the fees they charge. Some believe agents charge way too much to sell a home, almost as if a crime is being committed by the industry. Others think that the whole process of selling a home is as simple as running an ad and pounding a “For Sale” sign in the yard—and then, of course, you just wait for buyers to march on in and write offers on your home. Nothing could be further from the truth.

What do you think? Do you agree with the general population and think that real estate professionals aren’t worth what they charge? Frankly, I believe they’re worth a whole lot more than they charge, especially when it comes to selling homes.

Take this any way you choose but I don’t really believe real estate professionals earn their money by doing any or all of the following:

  • Showing homes
  • Writing ads
  • Putting in yard signs
  • Attaching lock boxes
  • Measuring rooms
  • Returning phone calls
  • Delivering flyers
  • Taking pictures
  • Filling out paperwork
  • Going to closings
  • Meeting inspectors
  • Supporting bank appraisals
  • Driving around neighborhoods
  • Arranging financing
  • Holding open houses
  • Going to meetings

 . . . or any of the hundred or so other daily activities that typically fill up their work week. This just isn’t where real estate professionals REALLY earn their money. Not at all.

Here’s what I think (and I’m hoping you feel the same):

Real estate professionals actually earn their money by REDUCING RISK: the risk involved in properly and effectively getting a home sold and closed. And by reducing this risk, among many other factors, agents are able to sell homes for much more than those who don’t use an agent --- the For Sale by Owners.

 

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Let me repeat this in case you thought you read it wrong: real estate professionals actually SELL homes for MORE money than FSBOs sell homes for! Let me say it a different way: homes sold with the assistance of an agent sell for much more than those sold without the help of an agent.

So how much less do you think FSBOs actually sell for compared to homes sold with an agent involved? If you’re not willing to do your own research you can always refer to some of these well-researched articles and reports on the same issue:

  • USA Today Article, May 3, 2003:  conclusion FSBOs Sell for 21.4% Less
  • NAR Report, 2004 Buyer/Seller Profile:  conclusion FSBOs Sell for 15.4% Less
  • Chicago Tribune Report, March 5, 2006: conclusion FSBOs Sell for 16% Less
  • NAR Report, 2005 Buyer/Seller Profile:  conclusion FSBOs Sell for 13.8% Less
  • FAR (Florida) February 2006 Survey:  conclusion FSBOs Sell for 17.6% Less

And exactly what does this mean financially to someone wanting to sell on their own? Suppose someone has a $200,000 house to sell and they’re debating whether to do it themselves or hire an agent. Even though they might not like the idea of paying out 6% or 7% off the top, it’s still a whole lot less than the 13.8% less they’ll end up with by doing it on their own, right? 

But they don’t know it’s going to cost 13.8% or more to do it on their own, do they? If they did, they wouldn’t take on the job of doing it on their own for a single moment. Nobody in their right mind would. Why should sellers pay 13.8% and do all the work themselves when they can pay someone else do all the work for 6% or 7%? It doesn’t make sense, does it?

So even though 84% of the people out there may have the opinion that real estate professionals CHARGE TOO MUCH, the truth of the matter is if they had access to more of the facts they might be grateful to pay you to do it for them: so long as you charge them less than 13.8%. So go ahead: put your evidence together and share the news so you can prove your point and raise your fees. You deserve it!

About Scot Kenkel, GRI CRS DAD

Scot Kenkel, a self-professed dad-a-holic, training humorist, and overall smart guy, has been edu-taining real estate agents for nearly 15 years on how to grow their business using cutting edge sales and marketing techniques. Scot’s style has been described as energetic, fast-paced, down-to-earth, easy-to-follow, and sometimes hilarious, but always informative. Find out more about Scot and his other courses by visiting his web site at www.PersonalSalesCoaching.com. You can also contact Scot directly by email at Scot@PersonalSalesCoaching.com or in his office in East Tennessee at (888) 831-5945.

Don’t miss Scot’s upcoming Business Building Teleclasses:

 “Six Keys to Mastering FSBO Listings...everything you need to know to List FSBOs Like Crazy!"
-- find out more at www.ListFSBOsLikeCrazy.com 
or
“Debunking the Discounted Commission Myth...learn how to PROVE that CHARGING LESS can actually end up COSTING MORE"
--- find out more at www.DebunkingTeleclass.com