Entry by Jennifer Allan

Does a Full Commission - Referral Fee - Buyer Rebate = a Too-Small Payday?

  3 Comments

G'morning ACREs!

I just posted a blog that I'd love your comments on... I'm expecting a bit of roasting since it's a post about our favorite topic - real estate compensation and the ridiculousness of determining our fee based on the price of the product "sold."

If you have a few minutes to spare, please check it out: http://activerain.com/blogsview/2387406/real-estate-compensation-does-a-full-commission-minus-referral-fee-minus-a-buyer-rebate-equal-a-too-small-payday-it-depends- and share your thoughts!

Oh, and if you meant to sign up for today's SWS teleseminar: "Setting Boundaries, Taking Control" but hadn't gotten around to it yet, there's still time (at least up til 11am Eastern time). Just go here: www.sellwithsoul.com/monkey.

Have a fabulous day... and Mollie... I'll SEE you soon!

3 Comments

I just commented on your post Jennifer and encourage other ACREs to do so also.

Here is what I wrote:

Jennifer, well said as usual. I think we, as agents, get caught up in the feeling that everyone is in our pocket (which they often are!) and get incensed, but as you said, the math is the math. Instead of taking the contingent commission structure as a given, which pays us on the value of the property, how much smarter if we start to look at compensation based on the value of our services! So many practices in real estate are based on a commission system that has little relation to what work we are actually doing on that transaction. Would 25-30-35% referral fees be even viable if we were paid for the actual services rendered? Of course not! There wouldn't be any "fat" to cut. And if we were paid fairly (and in fact well) for our services rather than a convoluted percentage of the sale, there wouldn't be a call for rebates. Buyers demand rebates because they believe that they are being overcharged in the first place (and YES, buyers do pay for real estate services, despite what we tell them. They bring the money to the table and pay interest on commissions in their mortgage). How refreshing if we offered the consumer transparent compensation options that paid us for the work performed and the time invested. If they ultimately chose to go with the traditional commission system, they would do so understanding that commissions are expensive and have to be as they mitigate risk on their part. But, we wouldn't be commissionectomied! Great post Jennifer.

Jennifer, well said as usual.

I think we, as agents, get caught up in the feeling that everyone is in our pocket (which they often are!) and get incensed, but as you said, the math is the math. Instead of taking the contingent commission structure as a given, which pays us on the value of the property, how much smarter if we start to look at compensation based on the value of our services!

So many practices in real estate are based on a commission system that has little relation to what work we are actually doing on that transaction. Would 25-30-35% referral fees be even viable if we were paid for the actual services rendered? Of course not! There wouldn't be any "fat" to cut.

And if we were paid fairly (and in fact well) for our services rather than a convoluted percentage of the sale, there wouldn't be a call for rebates. Buyers demand rebates because they believe that they are being overcharged in the first place (and YES, buyers do pay for real estate services, despite what we tell them. They bring the money to the table and pay interest on commissions in their mortgage).

How refreshing if we offered the consumer transparent compensation options that paid us for the work performed and the time invested. If they ultimately chose to go with the traditional commission system, they would do so understanding that commissions are expensive and have to be as they mitigate risk on their part. But, we wouldn't be commissionectomied!

Great post Jennifer.

 

Mollie, Can you enter Commisionectomy in Wikipedia, I think you should grab that word as its founder.  jennifer, I hope your hiatus for health turned out perfect, i missed your writing.

Glenn - thanks for your comment and for the good wishes - my health is actually fine (although I have a killer headache right now for some reason); I've just been way overbooked and overcommitted and something had to give! Looking forward to spending more time writing in the next weeks and months... I've definitely missed it and can feel myself getting a little rusty.

This page contains a single entry by Jennifer Allan published on July 7, 2011 8:20 AM.

ZipRealty eliminating buyer rebates was the previous entry in this blog.

Attention Home Buyers, Real Estate is not My Hobby, Its my Profession is the next entry in this blog.

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