First, why do consumers accept big commissions? We live in a Wal-Mart world. A world where you can get everything for cheap. They demand some sort of value, but if they wanted to pay top dollar then places like Wal-Mart wouldn’t control our economy (and if you don’t think they control our economy you should look at their sales vs. GDP). What we are finding is that consumers don’t want to pay the huge commissions, but they have trouble finding quality companies (like Tiered Real Estate) who are willing to do a good job for less money.

Next, why do agents need to charge huge commissions? They don’t. Real estate companies need them to. If you think about these big real estate commissions, ask yourself ‘how much does the agent actually receive?’ In the example placed in this posting, the person was arguing for 6% commissions. Of that 6%, less than 3% makes it into agent pockets. Split that in half (one half for buyer and one half for seller) and each agent is fighting for just over 1% of that commission. So where does the other money go? Into the franchise/corporate/big business/office pockets. So agents don’t need to charge the big money, companies do. Any agent who broke down what they actually made would look for new alternatives.

Finally, why do these big commissions continue? A lack of consumer education. No one wants consumers to know how it really works. They don’t want to be transparent. They want to push consumers to a point of no return and then they ‘can’t’ turn back. Sounds cruel, but I have watched it happen (on the other side) much too often. On the other side is fancy sales pitches or advertising. I have talked to many people who “didn’t pay any commission” but paid to list their home for sale. Wow! Would you do that? What if it doesn’t sell? You just lost a LOT of money and the company doesn’t care! It already has your money. I am amazed.

So do yourself a favor. Get all of the information. Talk it over. Question it. Don’t be pressured into doing something that isn’t right. Death to big commissions. Life to honest commissions. If you are an agent, find or start a Tiered Real Estate company. If you are a consumer, find a Tiered Real Estate company to help you. If you are like Tiered Real Estate, join our network. If you are one of those ‘other guys’ then I would run. Consumers want companies like Tiered Real Estate and you can only put them down for so long until a revolution takes place. Viva la revolution!