How to Save Money on Realtor Fees

Why realtor’s commission fees & rates have held steady

The growth in the number of realtors across North America over the past twenty years could be compared to the Klondike Gold Rush, as people naturally seek opportunities for great financial returns. Today, over 2 million realtors are reported across North America and the numbers continue to climb as excitement and interest in the industry, combined with the windfall commissions paid per-house sold, are too irresistible to ignore. As sellers, how can we navigate this rush to save money on realtor fees?

A realtor’s take-home pay isn’t as high as you’d think

Yet, as more realtors are drawn in, the reality is that market equilibrium and new technology is significantly affecting a realtor’s income. It’s simple: the more people selling with relatively fixed listing inventory, the fewer homes sold per realtor, the lower a realtor’s income. Average salaries range from $40,000 – $60,000, but realtors have considerable expenses including brokerage fees, insurance, and travel. At the end of the day, a realtor’s yearly take-home pay is not as stellar as one would think.  So why all the fuss?  It comes down to the attractiveness and excitement of commissions earned from selling just one high-value home.

Why realtor’s commission fees & rates have held steady

Despite the explosion in the number of real estate agents in the industry, the 5% commission fee homeowners pay to sell a home hasn’t changed very much over the years. Economics dictates that increased competition should reduce fees, yet realtors have held firm, particularly as the volume of homes sold per realtor is declining.

Further, up until now, homeowners have had little-negotiating room, as they feel pressured to offer the full 2.5% buyer agent commission on their listing page, meaning only the seller agent’s fee of 2.5% is what’s truly negotiable. Selling agents advise clients that buyer agents favour listings offering full commissions, but if you’re a homeowner and it’s your out-of-pocket expense, is the buyer agent truly servicing you and your home? The answer is, maybe not.

What’s happening to buyer agent services?

The National Association of Realtors, Home Buyer and Seller Generational Trends 2017, reports 92% of home buyers under 50 years of age purchased their home with an agent or broker, while only 28% of agents actually found the home the buyer purchased….. wait, say what? The fact is technology has enabled buyers to find their own home online, or through friends, family and others. This would imply it’s the home buyer who is drawing the buyer agent to your home, not the reverse.

Home buyers are doing all their own homework

The NAR further reports that buyer agents have less to do with finding buyers a home, although 50% of buyers claimed that help with finding the right home is what they wanted most from agents than helping buyers understand the process. In essence, homeowners are paying a whopping 2.5% to educate home buyers on the process while instead, they could save money on realtor fees.

Become a DIY buyer agent and save money on realtor fees

The question becomes if an agent’s primary role is to educate home buyers on the process and buyers are finding their own home, why not save money on realtor fees and avoid the 2.5% buyer agent fee and DIY – bring your own buyers to your selling agent?

RuListing.com supports DIY and lets you do just that – for free. You can see who’s looking in your neighborhood for what and where view buyer profiles and contact them privately even before you list your home for sale. As a free service, it’s about as disruptive as it gets, as it enables private connections between you and buyers so you can invite them to your agent’s open house.

New technology is changing the real estate landscape as traditional realtor services are being usurped with new, informative and accessible digital alternatives. Realtors’ roles and responsibilities will change over time, along with the traditional commission fee structure as new technology continues to advance.

Learn more about how selling by-owner is disrupting the real estate market in our most popular post.

Author: RuListing

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