Every once a while my phone rings and I am asked, “ how much do you charge?” There are a few things that remain constant with this type of incoming call for my services. First, the people who usually call with this question are in the very early stages of research as to which is the best way to sell their home. Second, people trying to figure out what it is going to cost to sell their home.
Unfortunately such a simple question could end up costing the potential home seller more money than save them with the simple answer. I have no problem explaining to anyone, rates for my services, however very few want to know the details of my fee structure and the services rendered. If a home seller is rate shopping, it seems natural to me that the seller would want to know what they are paying for?
It’s easy to shop for the cheapest rates on any service or product. I do it all the time myself when making major purchase decisions. I have been doing online research for my major purchase decisions for more than 12 years. I know where to look, I have a good idea on who I can trust by their web presence and online reputation, but then again I’ve been doing this for over 12 years; shopping online is something I am very comfortable with. I take many things in to consideration, not just price.
The real estate business is little more complex than just calling a dozen people and asking for their rate schedule. Experience, expertise, production and track record will vary significantly between real estate agents. Commission sales has a number of predictable traits. One of those traits is the 90-10 rule meaning 90% of all real estate sales are done by 10% of the real estate agents in any given market.
If you are one of those potential home sellers shopping commission rates, how do you know if you are calling agents who are part of the 10%?
The average sale price of a single-family detached home in Simi Valley in the last 12 months has been approximately $460,000. In looking at the multiple listing service, the majority of commissions vary in the 5% to 6% range. Using the average sales price, negotiating 1/2% off a commission rate would save a seller approximately $2,300.
Understanding the 90-10 rule, is it worth $2,300 to end up with a sub par salesperson? There is a very good reason why 10% of the agents do 90% of the business. What may seem like a $2,300 savings in commission could result lower sales price due to poor negotiating skills or even worse, an agent who misses a costly item on a contract because they have not closed a transaction in a while.
Are all Real Estate Agents Equal? No and here are interview question you will want to ask other than “how much do you charge?”
- How do you rank in your office in production?
- What percentage of your sales are as the Listing Agent or the Buyer’s Agent?
- What kind of transactions did you close in the last 12 months?
- Do you work alone or do you have help?
- Are you a member of any local organizations or civic committees?
- How are you involved in the real estate community?
If your property is a candidate for a Short Sale ask the following questions:
- How many Short Sales have you listed and closed escrow?
- How many have not sold?
- Do you work alone?
- Do you use a negotiator?
- Have you represented Buyers in a Short Sale?
- Have you successfully closed escrows with those buyers?
The 5 keys to finding a good salesperson and negotiating a commission for both the Seller and the salesperson are rooted in the answers to the above questions. As a home seller you want to know that the salesperson you hire is
- In practice, regularly working with buyers and sellers.
- Has recent practical experience with all disclosures, forms and the different types of sales.
- Can handle additional work load and is surrounded with the proper support to do so.
- Has built a positive reputation in their industry and community.
- Has a track record of successfully closing transactions.
If you are a home seller shopping for a commission, you can make the calls, ask questions that will help you qualify the salespeople you do call and more importantly set face to face interviews.
Last and more importantly for this day an age, “Google” the names of the real estate agents you plan to call.
If the Google search results show few matches and few results, you can move on to the next phone number. If the Agent can’t manage their own online exposure, how do you expect them to handle the online exposure for the sale of your home?
Research after research, after research shows that buyers spend months looking at houses on line before they make a decision to purchase. Salespeople that are difficult to find on Google may indicate that those salespeople are not in-touch with how buyers are looking for properties these days. Salespeople in real estate that are difficult to find online will probably be even harder to find offline.
Happy commission hunting, just make sure you don’t end up with a secret agent.