What % Do Real Estate Agents Charge?

I spend a little time each month to determine what search phrases real estate consumers use online to find real estate brokers. When I discover the phrases consumers are using, I sprinkle them throughout my websites (including this blog) and thus increase the number of times Help-U-Sell Honolulu Properties shows up in search results.  In 2013, that’s just good marketing!

Most phrases are predictable:  ‘Hawaii Kai homes for sale’, ‘Mililani real estate’ and the like.  But sometimes I uncover something unexpected.  That’s what happened over the weekend.  Here is a Google search phrase that is being used a lot in one form or another:

“What Percentage Commission Do Real Estate Agents Charge?”

People want to know what they’ll have to pay a real estate professional to market their property — no surprise there.  But what jarred me this weekend was not the question, it was the word:  PERCENTAGE.

Seventy plus years of ‘that’s just the way we do it’ has trained the public to expect to pay a percentage of the sale price of their house to an agent when it sells . . . and that makes no sense whatsoever.

What does a percentage of you home’s value have to do with getting it sold? Nothing!

Think about it:

Here you are in your $525,000 house. Thankfully, you are not upside down. You have roughly $100,000 in equity. So you decide to sell, and list with XYZ Realty**, who charges you (and every seller with whom they work) 6%*. When your house sells (for full price), that’s a commission of $31,500!

I’ll give you a moment to catch your breath . . . before I point out that that may be 6% of the sales price, but it’s more than a 30% of your equity!

Meanwhile, your neighbor down the street also wants to sell, but his home is smaller. It’s only worth $450,000. He also lists with XYZ and agrees to pay the 6% Commission. When the house sells for full price, the homeowner is going to pay $27,000 — still high, but not nearly as high as your $31,500 commission.

Now, here’s the question of the day: What did YOU get for the extra $4,500 you paid to sell your house through ABC?

More Advertising?

More Open Houses?

A better Sign?

Oh, maybe your agent worked $4,500 harder! Right.

What you got for the extra $4,500 you paid is this:

Absolutely Nothing
In almost every case it takes no more time, effort, energy, money or marketing to sell a properly priced $525,000 house than it does a properly priced $450,000 house. There are some situations in some areas where a market niche, say, luxury homes, might take a little more time and might require additional or specialized marketing. But these situations are rare . . . and $4,500 extra dollars to sell your $525,000 house? That’s absurd.

It makes no sense today, made no sense yesterday, and will never make any sense at all.

At Help-U-Sell Honolulu Properties, we charge home sellers a set fee. It’s logical. We’ve worked very hard to determine the hard costs of carrying a listing in Oahu.  We then add a reasonable profit to those costs, and . . . that’s it.

I hope next time you need to sell, you’ll do the right thing and call the set fee alternative, Help-U-Sell Honolulu Properties. You’ll save a bundle (the set fee is usually thousands of dollars less than whatever percentage based commission you’re being quoted). And you’ll have the satisfaction of knowing that, finally, for the first time in your real estate life, you haven’t been taken to the cleaners!

*Commissions, whether set fee or percentage based, are always negotiable. They are not set by law or REALTOR rule. They are set individually by office Brokers. Price fixing occurs when different Brokers get together and agree to charge the same thing. That’s highly illegal. Different Help-U-Sell offices charge different Set Fees, because the carrying costs of marketing a listing vary from market to market, as do the number of days it takes a properly priced listing to sell.

**The “XYZ Realty” referred to in this blog is fictitious and is used only for illustrative purposes. Any resemblance between it and any other “XYZ Realty”, is purely coincidental.

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