(Newswire.net — November 24, 2020) — Since the creation of the internet, and the advent of ecommerce, the way we buy and sell things has changed dramatically. It is now completely possible to buy everything from groceries to cars from your home, and have them delivered to your door.
While the internet has made shopping for almost everything easier, the increased accessibility has made prices for most things substantially cheaper. The global marketplace has also made it easier for everyone with a product to sell to reach their potential customer base.
While the internet has made almost every purchase easier, certain markets have stayed fairly stagnant. For some reason, the benefits of availability, education, and accessibility that have made other purchases less expensive have not extended to markets like real estate. This raises the question “is there a better way to buy a house?” It turns out, the answer is yes.
High Commissions Aren’t a Necessity
While technology has made most jobs easier, some elements of the way real estate has been bought and sold have stayed the same for twenty or more years. Along with these old fashioned systems come old fashioned commission rates.
Traditionally, selling your home would require a 6 percent commission. Half of this commission went to the buyer’s agent, and the other 3 percent would go to the seller’s agent. On a $250,000 house, that commission comes out to a $15,000 payout at closing.
Buyers often think they don’t have to worry about the commission rate of their agent, since technically the seller is responsible for paying all the commissions. Realistically, the seller has an amount they would like to make on the sale, and an amount they HAVE to make on the sale. An excessive commission rate for the real estate brokers comes out of that profitability.
This means that for every 1% you could save on the commission on that $250,000 house, you could offer $2,500 less without impacting what the seller ends up with. Also, since your equity is based on the value of the home, compared to what you pay, lower commissions let you start your new home ownership with more equity, and the seller doesn’t lose a penny in actual profit.
It turns out the only reason commissions have stayed at the same high rate for the last 40 plus years is that the market has allowed it. Modern technology does allow for the streamlining of the process, leading to new and improved ways to buy homes.
By utilizing internet technologies, there are real estate agencies who have been able to still provide the service level you expect from a traditional real estate broker. Traditionally, agents spent the majority of their time Seeking out new listing prospects.
A prospect based selling model means that your agent was focused on getting as many customers as possible, in the hope that a listing would basically sell itself. Many agents spend 80 percent of their time focused on prospecting leads. This leaves very little of their time to focus on actually selling your home—the thing you are actually paying them for.
In the new model, customers seek out brokerages based on the business model, rather than the individual agent that happened to sell them on selling for them. Ater you hire the brokerage, they assign you an agent who will take care of you for the rest of the process. The agent is able to spend all of their time focused on selling your home.
To summarize, You don’t have to sell your home the old fashioned way. You can seek out a technology based low commission model, which will assign you an agent to provide all the service you expect, at a substantially lower cost, while actually being more focused on you!