Let me start by saying that I like you, I need you and I respect the work that you do. I have no interest in selling my home by myself and I look to a professional like you to help me out with that. But I have a problem, and it is a touchy subject. It is something all of us home sellers think but are too afraid to say out loud. But I have summoned up the courage to tell you and I am going to tell you now. You make too much money for the service you provide.
I know you are highly trained, so are we. I know you work hard, so do we. And we work especially hard for our home equity, much harder than you do. We save for years just to get a down payment on a grossly overpriced home. Then we make mortgage payments for years, that as you know, are mostly interest at first. And if we choose to sell or have to sell before we pay it off, it seems to me that the proportion of our equity you receive is not commensurate with the work you have done, relative to us.
Let me tell you how devastating your traditional commission structure is to our well-being. When you sell our home with your percentage-based commission structure, you may make 6%, but you take much more. As a result of recent economic events, many of us are stuck with miniscule equity in our home. If we bought a home for $375,000 several years ago, we may be lucky to sell it for $400,000 today. So, you may be making 6% of the sale price, but you are taking 100% of our equity. Equity we need to buy our next home, or even to afford a down payment on a rental. Your commission formula can set us back years in our lives.
Now, if the job of real estate agent had been getting harder or more expensive over time I might be able to understand the fees you charge, but it hasn’t. In fact, just the opposite has happened. Your job has been getting easier and cheaper as you have held steady to your incredibly unfair compensation.
To put things in perspective, since the launch of the personal computer revolution in the mid 80s, the cost of computers has dropped by 80% while computing power has risen by a factor of 1000. In that time period, personal productivity has skyrocketed as a result of this new technology in all industries, including yours. Can you even contemplate what it would have taken thirty years ago to advertise a listing to the entire planet? Today you can do it for free in minutes on a myriad of websites, including your own.
But in that same time period, as your expenses have dwindled and your productivity has increased, what has happened to your fees to sell a home? They have tripled, rising at the same rate as housing prices. Perhaps you can understand my frustration.
I do not blame you for your fees. If I were a real estate agent I would do what you do: defend them as if my livelihood depended on it. I would attend the same seminars you do on how to overcome commission objections. Most sellers are terrible negotiators and you confidently use that to your advantage. No, I do not blame you for your inequitable fees. I blame myself.
I have been too lazy and too intimidated by this large, infrequent financial transaction to seek a more beneficial outcome for myself. As a result, I have abdicated my control in this matter and relinquished it to you. My penalty for doing so is that I have had to live with your commission rules. But that time is over.
I am taking back control. I am committed to being less intimidated, more educated, more savvy and playing a more proactive role in the sale of my home. I still intend to use your services, just as I choose to use those of the painter and the plumber. I could paint my house or fix the toilet, but I choose not to. Likewise, I could sell my own home, but I would rather have the help of a professional. And just as the plumber and painter are willing to work for fair compensation, unrelated to my home’s price, you and I will work together to find a more equitable compensation for both of us. One that will still allow you to make you a terrific living as a real estate agent, while leaving my equity alone.
There is a new day dawning in the residential real estate industry. Change is coming, and it does not depend on you or any new technology. It depends on me and my changing behavior. And as I change my behavior, you too will have to adapt. You will have no other choice. There will soon come a time when you have to choose between a listing that is more fair for the seller or no listing at all. I feel confident you will choose wisely.