Commissions and why they don’t matter!
March 21st, 2008 categories: Reasons To Sell
Most full service Honolulu real estate brokerages charge a seller 6% of the sales price to sell a property. As most of us know, there are real estate brokers on Oahu that charge as little at $399 to put a listing in the Multiple Listing Service (MLS). Please be clear for $399 you are getting a “Limited Service” listing contract, which means this Seller is not being represented by this real estate broker. In some cases you can get additional services by paying additional fees or adding a commission. Essentially, you may be on your own.
The sale of real estate is normally the single largest financial transaction in a given tax year. On Oahu, using median values, the sale of a house is approximately $600,000 for houses and $335,000 for condominiums. Even with a 6% commission the Seller of a property has far more to lose than a real estate broker. You must be wondering how does a full service broker justify the fee of 6%? There many ways to have it make sense, but the 4 most important factors are as follows.
1. Interest in getting your property sold.
2. Broad market exposure.
3. Experience and reputation.
4. Liability protection
For this post I am going to focus on “Interest in getting your property sold.” With future posts taking on the next three.
The business model of a full service broker revolves around the sale of your home! We are not paid a dime unless we sell your home and therefore we are very motivated to get it sold. Someone that is paid in advance really has no interest in the sale of a property since they have already earned everything they can from the sale. I am convinced that some brokers business plans are to use their listings to get to buyers. The National Association of Realtors (NAR) has taken the position that each listed property leads to 3 buyers. Being overly simplistic, a discount broker may use listings as bait for buyers. By attracting buyers, a broker can then earn their living working with buyers by showing listings that are offering a full commission.
If you are considering selling a property in Honolulu, I recommend that you use a full service experienced real estate agent at a reputable company.
