Many real estate agents are out for themselves. I mean, we all are, right? The agent wants to close the deal and get paid. The seller wants to get the highest price, and the homebuyer wants top value for the lowest dollar. In real estate, like in life, whoever is in charge usually wins the day, and most real estate agents have been running the show for years now. But knowledge is power. Read on for some secrets about the real estate business and about traditional agents themselves that they’d rather keep quiet and learn how those secrets can affect your bottom line.
1. Traditional real estate agents often tell buyers their service is free. This is wrong. In fact, buyers’ agents are usually compensated 2.5%-3% of the total purchase price of a home. Their commission is built into the final price and they receive their commission from sellers’ agents.
2. Now that the cat is out of the bag about how buyers’ agents are compensated it’s worth pointing out that traditional buyers’ agents and sellers’ agents are both paid by home sellers. Often times homebuyers believe their interests are being represented by the sheer fact that they have their own representation; however, their representation is being compensated by the other party. This formula serves traditional agents over consumers’ best interest.
3. Traditional real estate agents may not push for the highest sales price. In theory agents always want the highest price for you and themselves, but an agent gets paid on closings, not the highest price. Or, an agent might make more money closing three homes at lower prices in a week than two homes at higher prices. A reduction in price for a home seller may change their net earnings by a lot but not affect the agent’s commission very much.
4. Most traditional listing agents will accept a listing at any price, just to get your business, even if it’s the wrong price for your home. Once you’re under contract, those same agents will often suggest reducing it “because all the other agents are saying it’s overpriced or because it hasn’t sold in 30 days.” “They’ll say anything to get you under contract,” reports one Southern California broker. Once you’re tied down to a contract, you’re at the mercy of your agent.
5. Bargaining in an agent-to-agent conversation may not benefit you. In cases where a seller’s agent and a buyer’s agent are negotiating, both traditional real estate agents have a self-serving interest in trying to put a deal together and both agents are being paid by the seller’s agent. They want a done deal so they can collect the commission. The questions to ask yourself are: How much of my interests are being forfeited so that a deal can close? How much would things change if the buyer and seller talked directly?
At REX, the traditional real estate agent is taken out of the equation, allowing the homebuyer and seller, if they would like, to communicate directly, negotiate directly, and buy and sell a home without any interference. And best of all, with REX, homebuyers and sellers get everything a traditional agent would provide but instead of paying the usual 6% commission on the final price of the sale, home sellers pay just 2-2.5%, a hefty savings for both buyer and seller. To learn more how you can save thousands of dollars with REX, visit our Sell My Home page.