A year or so ago, real estate circles were abuzz with argument and discussion about the pros and cons of discount real estate services and commissions. Discounter Redfin had opened with one agent in San Diego, and their CEO Glenn Kelman promised that real estate discounters would turn the real estate brokerage business either upside down–or inside out (I don’t recall which).
Beating Kelman at his own venture was Iggy’s House, which would list one’s home for free, and a corresponding sales arm that rebates even more than Redfin. In between the two were countless other ventures that vied against each other in real estate commissions and levels of service.
In the ensuing months, we began to see not a decrease in real estate commissions, but instead a rise in commission offerings. Builders and desperate sellers were offering 3, 4, 5, 6, 7 and even 8 percent sales commissions on their properties. (Of course, with inflated commissions we tend to suspect inflated pricing–and share this with our clients.)
It is unimaginable to this writer that the U.S. Department of Justice could even think that the real estate industry is capable of controlling anything, let alone commissions. Brokers have long lamented that trying to control real estate agents is no easier that trying to herd cats. If they can’t convince agents to attend weekly sales meetings, how could one think that they could possibly “set” commissions that their independent contractors charge their clients?
So what is the commission and service situation in today’s more challenged real estate market?
According to the National Association of Realtors, the latest survey of buyers and sellers showed that 83 percent used full-service agents last year, while 9 percent used limited-service agents and 8 percent needed only minimal service.
Of course, I can’t resist adding my own simplistic opinions regarding the issue of full service versus discounted commission/service real estate brokers. These answers of mine came as a result of one questioner’s queries on Trulia regarding the advisability of using a discount real estate broker:
Pros: You may save on commission.
Cons: You may not.
Pros: You may gain valuable experience in selling real estate on your own.
Cons: You may never want to go there again.
Pros: It can be a workable strategy in a seller’s market.
Cons: It could be disastrous in a buyer’s market.
(You seriously ask a very good question. I just can’t resist simple answers–and wish you well regardless of your listing strategy!)
We have been in an indisputable Seller’s market in San Diego for some time. Now, more than ever, real estate buyers and sellers need expert guidance in the purchase and sale (or lease) of their San Diego property. Your ultimate success in the purchase or sale of real estate in the San Diego marketplace will depend not only on expert guidance, but timing and flexibility.
Commissions become somewhat irrelevant when 1 percent in value per month could easily be lost to a sliding market. This makes it more important than ever for sellers to employ the services of seasoned and knowledgeable real estate professionals–and for buyers to do the same.
For additional reading abour these real estate issues:
Why You Always Need a Good Buyer’s Agent