If you spend any amount of time on social media and have a real estate agent on your connections list (who doesn’t?) then you have no doubt seen a posting of how incredible of a job they did by selling a new listing in 24, 36 or 48 hours. Which just begs the question – did THEY actually have anything to do with that sale? Or, was it just good timing that it hit the MLS, pinged over to a portal (Zillow, Realtor.com) and the right buyer was just laying in wait? Whichever it is, it further brings up the commission debate and how much of a value proposition does the agent truly provide?
There is a lot of talk these days about the value of the agent. Should they be getting a commission that is worth a percentage of what they are selling, when the act of selling does not vary that much from deal to deal, regardless of price? Clearly, some agents have a process that generates some actual expense on their end, but with the technology tools available today, those costs are going down substantially – and rapidly. And then, if a house sells in 24 hours – it is really hard to assign any value to those expenses – photos, flyers, fancy wood sign, open house, etc.
To touch on another point that is grabbing a lot of traction is – efficiency. If you look at the demographics of real estate agents, the preponderance of agents are part-timers and simply do not do enough deals to establish any real operational momentum, so the honest question of efficiency is a real concern – for brokers and consumers. In a survey of 18,000 agents and brokers that I conducted in 2018 as part of an NAR research project – it was discovered that the average agent, closing 4 deals per year, wasted 42% of their time per deal on “non-revenue” generating busy work. So let’s do some quick math on that – according to an ATTOM Data Solutions Report (https://www.attomdata.com/news/market-trends/home-sales-prices/q2-2018-u-s-home-sales-report/) the average US HOME Price in 2018 was $255,000. So assuming a 3% commission side of $7,650 then 42% of waste equals $3,213. THAT IS A LOT OF MONEY.
So perhaps if the consumer is getting more informed – they are thinking – hey we just overpaid for that agent’s actual value by . . . . A LOT! Furthermore, brokers who have to build their businesses on commission splits should really be thinking about whether consumers are going to work with inefficient agents.
What does all this mean in the big scheme of things, probably not too much today, but data is available everywhere and consumers are getting more and more informed. So my whole point in writing this note is just to simply plant a nugget of thought around starting to think about how efficient you are working. The notion of “commission compression” is a very real thing, and before long, the concept of the “strong will survive” will be a reality. Only the agent that is efficient, and can work more deals in the same amount of time, will be the one that survives!
In fact, that is why I started MERGED RE. Our absolute focus is to help the agent gain operational efficiency without being overwhelmed with complex software and getting nickel and dimed to death.
Long live the agent!
ABOUT MERGED RE
MERGED RE is built by real estate pros, for real estate pros. Offering a simple to use and affordable activities management platform, MERGED RE is committed to helping real estate professionals, consumers, service providers and authority groups to “simplify and secure” the real estate transaction. The MERGED platform provides a trusted environment for collaboration and relationship engagement long after the initial transaction. Built on a platform of blockchain technology, MERGED introduces never before seen levels of document and relationship security – keeping all participants to the transaction aware and in control of their data, while mitigating risk for all parties. If you are a US or Canadian real estate agent, and want to leverage the commitment of MERGED RE to your business success – then visit https://earlyaccess.mymerged.re and sign up for a FREE ACCOUNT for one year.