Syndicated real estate columnist Ken Harney had some good news in his column for Friday 8 June, at least for the established, full service brokers: the tough market is causing average commissions to rise for the first time in years. This in spite of the rise of the discount, “no service for no fee” brokerages in the last five years.
While the rise is not going to break many sellers’ piggy banks open — from 5 to 5.2% — it still reverses a trend that brought averages down from nearly 7% ten years ago. But it also seems to be presaging hard times for the new kids on the block: the cheapskate companies that specialized in sellers who didn’t want to pay for anything.
One agent quoted in Harney’s column, who is affiliated with an Assist-2-Sell franchise, stated “One of the biggest misconceptions consumers have is that you need to pay full price to get great service.”
Oh, really? Well, how about the old saying, “You get what you pay for.” I think that most consumers have seen ample evidence in every industry in this country of the rock-solid economic foundation of that principle.
Its true that thousands upon thousands of real estate agents just in Maryland alone have never sold real estate in a market where listing on the MRIS wouldn’t sell a house in days, if not hours. Forget about big advertising campaigns, targeted markets, direct mailings; many of these people have never really had to consider them. They were very fortunate.
They are also now having to refinance their mortgages because they have no business. And the listings they do have aren’t selling, because they never bothered to put certain tools in their kit that would let them weather the storm of a down market.
The bottom line, which shouldn’t be a surprise to anyone, is that in a down market it costs more to market a property. Agents need the promise of more money to front the credit for the marketing. Period. You really do get what you pay for.