Who Really Wants A 6% Commission Anyways?
June 11, 2008
There has been so many questions regarding whether or not an agent is worth a 6% commission. Although I believe there are some situations that a Realtor may deserve a big fat paycheck they are few. I really don’t think most agents are truely asking for or get 6%. Here is how I see it.
Using a $100,000 listing price, an agent goes out to sign up a listing and when asked how much it costs they may say 6% of the sale price. What they are really saying is I want to make something from this deal, so if I subtract the $1,500(1.5%) my Broker would like to make from this deal and the $3,000(3%) that is shared with the selling brokerage that leaves me with a reasonable $1,500 (1.5%) for myself. So when an agent is getting upset with someone questioning a 6% listing, they seem to be arguing to save someone elses paycheck, not just their own.I have always thought it was not how much you made but how much you keep that makes the difference.
Here is something that has been working for me. First of all I own my Broker’s License, so I can make my own rules, at least on my half of the transaction.
I figured out how much I spend on average for each listing. That came to $500 each. Which is exactly what I charge them up front. I then tell them that I collect $500 to list the home and 3% at the time of sale and if another Broker sells it, I will pay that Broker the entire 3% and I get nothing more, so nobody wants to sell it more that me.
Sounds risky doesn’t it. But there is a method to my madness. Sellers are buyers too. I just saved them a boat load of cash and bought a ton of loyalty as well. The word of mouth advertising is saving me money and keeping me busy. So, who do you think sells them the next house? Me!
A nice little 3% commission. And since I am also a mortgage broker, who does the financing? Yep, that’s me again. Another 1.75% of the mortgage amount…. Ahhhhhhh!
So I am getting about 4.5% per deal all inclusive, my marketing costs are covered by the upfront fee and no negative talk about my fee structure.
Now I just added a little twist, if someone buys a house with me and finances it with me too, I make their first payment.
Sounds like I am giving money away but I have a great split arrangement with my Broker, he lets me keep it all.
Forget about being BIG and keep PROFIT on your brain.
If you think I am kidding about this check out these links Selling a Home or Hey Wayne make my payment!
PS: As another added bonus, It also drives the competition crazy!
About the Author:
Wayne Malcomb is the Broker/Owner of Niagara Frontier Funding & Realty, serving both Niagara and Erie counties of Western New York.
Wayne is called upon as the local expert for newspapers and radio shows including his own weekly radio show on WLVL 1340.Wayne follows the theme of Sy Syms, "an educated consumer is our best customer."
When asked what sets his company apart, Wayne said, "We use a combination of technology and one stop shopping to reduce both time and expense per transaction, which saves the average customer $3,200."Do you know anyone who could use an extra $3,200?"
If you need real estate sales or financing information in Western New York call Wayne Malcomb at
800-216-6829 or visit him on the web www.niagarafunding.com.
You can also email wayne at wayne@niagarafunding.com.
I don’t do mortgages and I also don’t do dual agency so I don’t have the extra there to help me but I do flat fee and 1%. It started when I said yes to a friend when asked if I could write up the paperwork for a already negotiated deal.
I got $500 for it. They buyer was selling a home and I got that listing for 1%, $5,000. Then they bought another house, $6,000. They referred me to a friend
and I listed their home and received $2600.
You do the math but I made quite a bit for saying yes to a measly $500 that few other agents would bother with. I am a Principal Broker so I don’t pay the fees that most agents have to pay. Maybe that makes up for the edges you have.
You have it completely correct. Pay attention to profit.
Mike, Thanks for the comments. Today I spoke with an agent that told me two months ago that I was nuts to do what I am doing and I could not make money that way. Now he is asking me if I can help him get one of his three listings sold so he does not have to get another job. Keep up the good and profitable work.
>>>Today I spoke with an agent that told me two months ago that I was nuts to do what I am doing <<<
I know the feeling .. in the last 3 months I took a flat fee ($10,000) for selling a $700,000 house, then a 3% commission split on a $550,000 condo ($8,250) and last week a small $180,000 condo on a $7,000 split ($3,500) … that’s almost $22,000 for listing or selling 3 properties at a very reduced commission — all my friends laughed.
— in the meantime, out of 29 agents only 3 have made more $4,000 in the last 90 days .. I guess I should have stayed around the office and listened to them .l.o.l..
Like my great grand Daddy used to say - “you can be a lion, you can be a tiger - but never be a pig..”
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