Transparency is the Best Approach When Handling Real Estate Commission in Northern Virginia


What is the Consumer Objective?
The consumer objective is to procure an agent who provides a compelling value proposition. One who has the requisite skill and experience to achieve the consumer’s desired outcome while producing the highest qualitative and quantitative benefits. Qualitative benefit is derived from elements like protecting a client’s best interests and providing superior customer service. In the case of a seller, quantitative benefit includes selling at top dollar, in the fewest days possible and negotiating low contingency risk. Essentially, the consumer objective is to procure the agent who achieves optimal selling conditions and level of service at the lowest failure risk and fairest commission possible. Every agent’s objective should be to deliver clients that preferred experience.

What is a Real Estate Commission?
If you hire an agent to help you buy or sell a home or real estate, the agent gets paid through a commission – typically a percentage of the transaction price upon a successful sale. Rather than earning an hourly wage or annual salary like most bi-weekly paid employees, most real estate agents are business owners who earn a commission only when a transaction goes to settlement. The commission paid by the Seller is split between the Listing Broker (Listing Agent) and the Cooperating Broker (Buyer Agent). Each agent then further splits the commission with their respective brokerages based on their individual business agreements. Agents can invest several months of work with a client on business development, advisory services and transaction activities only to receive payment on that single settlement day.

The Four Cornerstones of My Commission

#1 – My Commission is Negotiable
Despite what some agents may tell you, my view is commissions are always negotiable. Several aspects of a home sale are negotiable like price, deposit, type of financing, settlement date, or possible repairs resulting from a home inspection – it’s only fair that commission is also negotiable. My broker doesn’t determine commission, nor is it regulated by any federal or state agency. Commission can only be determined by me and the consumer.

#2 – My Commission is Transparent
Transparency is the key to trust. My commission and how I’m compensated for my work are transparent to my client. Nothing is ever hidden or undisclosed. When selling a home, I outline the total commission a Seller pays to the Listing Broker (me) and how much is shared with the Cooperating Broker (buyer agent) – usually half. This is clearly shown in the excerpt below from my Listing Agreement. The mechanics of how I’m compensated when representing a buyer operate a little differently, but this same level of transparency is in writing.

Broker Compensation

#3 – My Commission is Competitive
Competition arises when at least two agents strive to acquire a client who cannot be shared. I realize I’m not the only agent in town. Consumers are smart, educated and will always find their optimal value proposition. I work like I’m always in competition, regardless if the client comes to me as a friend, from a coveted referral, through my various marketing efforts or from a simple internet search. I treat all customer acquisitions the same and my approach never wavers. My compelling value proposition is one that combines a competitive commission with superlative service – no other agent will deliver a stronger value proposition in the sale of your home than me – the combination of commission, marketing, home selling price, days on market, contingency risk, level of service, contract protections and agent capability of maximizing seller gains and preventing losses.

#4 – My Commission is Equitable
I do not have a one commission fits all approach.
 Unlike other businesses, I don’t sell a product that I produced which sits on a shelf at a store waiting for a customer. If I controlled the production process and costs, then I would exactly know my price and could publicize it to consumers. The real estate you would like my help to sell or buy is my de facto product. However, I don’t control the product – and the factors involved with trading the product between buyer and seller can be different in every situation. Factors like residential or commercial markets, transaction type, condition, price point, sub-market liquidity and velocity, transaction risk and my ultimate level of effort all play a part in determining a fair and equitable commission. For example, I may not apply an equal commission to the sale of an investment property exiting a rental market with possible condition issues as I would to a primary resident’s home that has been upgraded, improved and received impeccable care.

Commission can be the single most challenging topic for an agent and consumer to address as they build a relationship. Agents typically don’t publicize their commission for some of the good reasons outlined above. If an agent lacks clarity and explanation when the topic arises, this can be fodder for a breakdown with a potential client. If not handled properly, it can be the reason an agent misses the opportunity to work with their next fantastic client or the reason a consumer possibly misses the opportunity to work with an agent who can produce exceptional results. Commission is an important part of a consumer finding optimal value and it should always be part of an open dialogue.

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