Ask most people what the Golden Rule is and they will say something along the lines of, “treat others how you would like to be treated.” But, ask a cynic what the Golden Rule is and they will tell you, without hesitation, “That he who has the gold makes the rules.” And throughout history, the “second” Golden Rule has held true most of the time.
There are, however, exceptions to this other Golden Rule, and one of them is the residential real estate industry. When you, as a home seller, go to sell your home and employ a real estate agent to help you, who has the “gold,” you or the real estate agent? You do. You have the gold—the money—and they are the ones who want the money. But who makes the rules? Who determines what gets paid, how it gets paid and when it gets paid? The real estate agent, the ones without the gold.
I think it is an indication of how overwhelmed most sellers feel about selling their home that they are willing to relinquish their power to make the rules (and a lot of their gold) to real estate agents. You might think that with all the information and services available to home sellers today, from being able to conduct their own Competitive Market Analysis, to being able to post their own home on an MLS for a few hundred bucks, there would be a re-writing of the rules. But just the opposite has occurred. In fact, the percentage of gold that home sellers hand over to real estate agents has gone up in the past few years. Real Trends, a research firm, reports the average commission paid to the buying and selling brokers was 5.4 percent of the price of a home in 2011, up from 5 percent in 2008.
It cannot be for lack of interest on the home seller’s part that the percentage has gone up. I do not know of a single home seller who wishes they could pay more to a realtor to sell their home. Most think they charge too much.
So how does it persist, that in the residential real estate industry, the group without the gold continues to make the rules? It must be a failure of imagination. A failure, on the part of home sellers, to imagine a different set of rules for handing over their gold. Home owners simply cannot imagine any other formula for compensating real estate agents, other than the one the agents carved in granite so many years ago.
Only one question remains: does that antiquated formula persist to infinity, or do home sellers decide it is time to enforce the golden rule?
To see how ReaListing is helping home seller’s re-write the rules, click here.