Full Service is Like Choosing the Cadillac

Bonanza, Hoss Cartwright, and Chevrolet; all classics forever part of my Sunday evening TV memories. Most folks back in the day were "Seeing the USA in their Chevrolet" yet yearning to cruise "Route 66" in a Cadillac. It was part of my first exposure to the concept that "you get what you pay for."

And so it is with REALTORS®.

In today's market, there are still plenty of listings to go around. While seasoned real estate professionals tend to stick to what really works to sell property, others are offering discounted services in order to entice sellers to list with them.

Experienced agents know what it costs to sell a listing.

Individual agents normally pay the cost of marketing your home themselves. Today, more than ever, moving real estate is directly tied to effective marketing. An effective marketing plan includes hard costs that quickly approach $1000 for even an average listing that sells in a timely manner. Naturally, listings that don't sell quickly cost more to market. Of course, high end listings cost much, much more.

Each office sets commissions but typically, a seller can expect to pay about 6% commission on a residential sale. Because two offices generally split commissions, a $100,000 sale normally nets the seller's agent about $2100 (much less for newer agents).

Buyer's agents expect their full 3% split, leaving the seller's agent to absorb any commission reduction. Cost savings, in reality, are being passed through to the seller in the form of reduced services.

New agents and offices scrambling for listings are those most likely to accept commission reductions. It's like asking a seller to accept a Chevy and then asking them to do without the tires. Such agents would have sellers believe they can undermine the competition. In reality, they are only eliminating services.

Today's market is highly competitive and not one where sellers should compromise by accepting a reduction in services. Like the Chevy without the tires, it may make it impossible for a seller to reach their destination. Agents willing to discount their own value are telling a seller exactly what they believe they are worth. Their ability to protect their own compensation would certainly create doubt as to their ability to negotiate effectively on the seller's behalf.

Real estate transactions are, by nature, complicated. Accepting less than a full menu of services and expert representation historically results in a seller accepting less for the property than they saved on commissions.

Bottom line is, if you are selling, go for the Caddy…or at least make sure the Chevy has all the tires!