I’ve been on strike since 2012. For what exactly? I’m on strike for having to still pay 5% – 6% in commissions to sell a property. Sorry readers who are realtors, I appreciate your support, but the fee is too damn high.
Despite the creation of Zillow, Trulia (acquired by Zillow in 2015), and a bunch of other internet real estate companies, commission rates still haven’t come down. Just look at the wealth management industry. They used to charge 2% – 3% of your assets to manage your money. Now, thanks to robo-advisors like Wealthfront and Betterment, you can have your money managed with similar results for 0.25% or less. That is a 90% decline in commissions!
Every property I’ve bought since 2003 I found through the internet. It’s why I’ve always asked for my realtor to share some of their commission once the deal closes. They always oblige since they didn’t do anything except help write the offer I deemed was fair. Today, you can just write an offer in minutes using DocuSign.
Then in 2014, I decided to take saving money a step further by getting the listing agent to also represent me to save an estimated 8% off the purchase price (1% commission refund, 7% lower offer price FTW). It was a no brainer because I understood the transaction process after writing a couple dozen offers already.
Selling a home for top dollar does require skill because marketing a property well and having a large network makes a big difference. The listing agent who sold me my current home basically left $120,000 on the table for his sellers because as a retiree, he didn’t have a network, didn’t market the property over the internet, priced too high, and became friends with me! You don’t want to be friends with me if you’re trying to get the best deal possible.
A great realtor is absolutely worth her weight in silver. But that weight is still worth less than 5% of the value of a home when home prices are now so steep in major coastal cities in the U.S. Instead of a fee based on a percentage, a flat fee seems much fairer to consumers.
Let’s look at a real cost breakdown for a home that sells for $1,850,000 in San Francisco. It was part of the presentation the visiting realtors gave me if they were to sell my home. I think you’ll be shocked to see how much selling a home costs!