The Commission Paradox, Part 1.
I’m a big fan of facts and proof. Last night I was watching the Science Channel about how there is some disagreement in the scientific community about how best to get humans to Mars. It caused me to think about the real estate community’s disagreement about commissions.
I think people generally believe that the following statement is true: “Real estate commissions are too high, and real estate services are overpricedâ€
I began to think where is the proof of that? How do we know it is true? It seems to me that we would need some supporting facts, to be able to confirm that statement applies in all situations. We need to know the following:
1. What are the standard elements to the real estate process
2. Can a baseline cost be applied to each of these elements
3. How does “service level†impact the premium placed on the baseline cost
4. What effect does the market have on the costs
5. What other factors would affect the premium calculation
Over the next couple of days I’ll examine those questions and how the commission argument has developed among our community.
Just found your blog - nice format…this post is intriguing and I am going brainstorm here with you cause I think it is important.
1 - I think you have it summed up well in your newest post - lead generation, sales/listing, taking transaction to close.
2 - lead generation - yes, plan a personal marketing budget and stick to it. Sales/Listing - baseline should be a percentage of expected income.
3 - if you mean “service level” as my performance for my clients - my monetary cost or gain doesn’t affect my client service. In my opinion, that is the key to career longevity and reputation, not to mention core in my moral fortitude.
4 - Hmm…initial costs maybe. If the market is moving and my listing is conceivably going to move fast, I may wait 7-10 and ride the free ad venues (web marketing, MLS, office circulation, word of mouth) before I venture into paid advertising.
5 - price of gas
Just some initial thoughts.
Comment by April Groves — June 19, 2007 @ 8:02 am
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