Are the days of 6% real estate commissions dead?
Inman is posting an article today about 6 percent brokerages being dead....what do you think?
Here is a portion of the article written by CondoDomain.com founder Anthony Longo
"...the "standardization" and commonality of the 6 percent commission in the industry is dead and 2009 will be the year in which we will see major movement to innovative fee-based business structures."
Here is part on Longo's reasoning:
"As a seller, it is quite possibly a good idea to have your agent tied to a percentage-based commission on the sales price. After all, your agent's compensation is tied to the highest possible price he can negotiate for you. Not bad, actually -- this kind of makes sense.
But looking at it in reverse, as a buyer, the buyer's agent makes LESS commission for negotiating the lowest possible price for you. This is not in line. It doesn't make much sense. Actually, it does not make sense at all."
This makes perfect sense. Why has the industry stuck to the old 6% rule? I think agents like the 6% rule. It simplifies the process- makes it quite easy. I have noticed in the Dallas/ Fort Worth area that many listing agents are adding on a "transaction fee" to their commissions. They are taking the listing at 6% (or in some cases less than 6%) and then charging a $495- $1200 transaction fee. This seems to make more sense to me. Why would an agent spend time and money marketing a listing that is over-priced, never sells and eventually expires? Collecting a transaction fee makes perfect sense when coupled with a less than 6% commission. Maybe this is the direction that real estate is heading in 2009.
What do you think?