Real Estate Commission

“Marketing Fee”

Discounted or Full Service Listing Commissions

“You Get What You Pay For” 

Anyone who has a license can put a sign in your yard and list your property but there is a difference between just listing it and selling your property. I choose to think of a commission as a marketing fee because that’s what it is. When I hear Realtors offering “cut-rate” or a discounted commission fee it reminds me of “You Get What You Pay For”. There is a big difference in the level of service. I also believe that Realtors who discount their professional hard working services value themselves less and will provide a less than average job for you. There is a difference between staying in a Motel 6 and a Ritz Carlton. 

If you just want to be listed in the Multiple Listing Service and a sign in the front yard then hire a “discount” Realtor and pay them a cut-rate commission. If you want an agent who will actively promote your property to other agents, aggressively advertise, mail out “Just Listed” post cards and customized creative flyers, add your property to virtual tours, sponsor open house’s, newspaper ads as needed, send invitations to neighborhoods in surrounding area and much, much more, than you probably are not going to be very happy with the level of service from a Realtor who offers a reduced commission. 

At times, the lower commissions are offered when you agree to tie in to other services offered by the broker, such as agreeing to use a specific lender, escrow settlement or title company. The broker, not the agent, will probably have some type of ownership or profit participation in those businesses. The down side is that they do not have to be as competitive in pricing their products or services. 

In addition, a commission might be lower when you agree to buy your future home through the same broker. Usually the reduced commission will be on the next purchase not on your current existing sale.  I suggest you ask a lot of questions otherwise you will wonder what you are giving up by accepting such a low offer.

How and When Listing Marketing Fees are Earned 

A Realtors job is to bring a “ready, willing and able” buyer to present an offer. If you reach an agreement with the buyer than the Realtor has done their job and earned their marketing fee; it’s not until the transaction closes does the Realtor get compensated for his/her work. Please read your listing contract.  

Let’s say that the buyer proves unable or unwilling to conclude the sale than your house goes back on the market and Realtor has to start the process all over again. But if the seller backs out and does not accept the offer that meets the price and terms of the listing agreement, the Realtor has still earned his/her marketing fee. They will want to be compensated, even though you did not actually sell your house. Although this happens seldom it does happen and than the seller should compensate the Realtor for services rendered. Therefore, it is very important to carefully consider every detail when completing your listing contract and accepting an offer to buy your property. 

The listing agent’s real role is to market your house and expose it as many other agents as possible. Agents are the ones with buyers. A listing agent’s main job is to market your home to other agents, not homebuyers. 

Listed below are some “behind the scenes” activities that Realtors do to sell your property.  

The “For Sale” Sign 

The sign and post (with reflectors) that goes in you yard should be attractive and have a telephone number that goes to a live person as much as possible. The object is to answer the phone while the caller is “hot”. A potential buyer may be on the street outside your home, placing the call using a cell phone. You might want to ask if the sign will sign send the buyer to a visual tour of your property.

Marketing your Home to other Agents 

The Multiple Listing Services (MLS) 

Even before the sign goes up in your yard the listing agent will funnel all the details of your house to other MLS members and start selling it immediately. Interestingly enough most people think a Realtors job is to find a buyer and yes this is true but not the way you think. See the listing agent’s job is to expose your house to as many other agents as possible who have buyers looking for a house like yours. Listing agents target other agents not buyers.  The MLS is a large database of all the homes listed by local real estate agents who are members of the service, which is practically all of the agents.  

All ”special” and important information about your property is listed here from square footage and the number of rooms to does it have central air conditioning or tile. Pictures of your property say a lot so make sure photos are included as well. Other agents search the data base for homes that fit the price range and needs of their clients. And they pay special attention to homes that have been recently placed on the market (hot sheets), which is one reason you get a lot of attention when your house is first listed (the main reason not to overprice your house). Since there are many agents who are members of the MLS you now have a huge sales force working for you instead of just one agent. They are all working for you.  

Flyers and a Brochure Box 

Believe it or not people still search for a home the old fashion way –they drive around neighborhoods. Your agent should prepare a flyer that displays a photo and provides details about your house. The information should include a phone number so buyers can contact your agent to get additional information. The flyers should be located in a noticeable location on the property and also in a brochure box attached to the “for sale” sign. This is a great way for buyers to follow up by calling your agent or their own to inquire about getting more information. 

Visual Tour 

Technology has opened many doors in the real estate market. One way to reach more buyers is to have your home put on a virtual tour. Your realtor can take care of this for you.

Office Preview 

If your listing agent belongs to a fairly sizable office, an “office preview” will introduce your house to other agents working in the same office. At some point the agents “caravan” together and preview the new listing. This is generally done by everyone pulling up in front of your house at about the same time and they preview your house in a rather “follow the leader” game.  They are sizing up your house taking notes and truthfully deciding if this is a house they would be proud to show a client of their own. The goal is to expose your house and you just never know…they may come back with a buyer. 

Marketing Sessions  

Your agent should belong to a local association of Realtors that often have weekly or monthly marketing meetings. There is a time when agents get to stand up and talk or “brag” about their new listings while other agents stand up and talk about their buyers needs.  Your listing agent has the opportunity to “pitch’ your house. These meetings can be very effective. 

Office flyers 

Flyers can be a “silent salesperson”: Crafted to have that professional look, flyers may be distributed by a weekly flyer service that delivers advertisements to other agent offices in the area. Local real estate boards might have mailboxes on sight for each real estate office in the area and flyers might be distributed that way. Make sure they look professional. 

Marketing Your Home to Homebuyers 

Understand that ads seldom sell you house directly. But for agents they do create a pool of buyers that could potentially buy your house. Most home sellers like to be assured that their listing agents will run ads featuring their home, run small classified ads featuring just your property, put your house on the internet, etc. Agents do this but not for the reasons you expect. 

See, the main reason for advertising in general is not to sell your house directly. Advertising creates phone calls and some of those callers become clients of the agent answering the phone. This builds up a pool of buyers looking for property in general, all represented by selling agents. Multiply this by the amount of other companies that advertise homes and there is a large pool of buyers in the market at any one given time- all of whom are represented by selling agents.

The agents match up their clients with available homes one of which could be yours. A match is made and an offer is produced and this is how your house gets sold. So remember these ads create a pool of clients; not necessary selling your house directly.    

Real Estate Office Advertising