Let’s take a moment to think about Ethics and Compensation (i.e. Commissions) in real estate. As Realtors® (the practitioner designation of the self-regulating National Realtors Association) we adhere to a professional Code of Conduct. Ethics are more then following some code developed by a professional trade organization, or complying with the regulations of an undermanned and underfunded State Board. Ethics are the core beliefs that influence and direct the way we live our lives. They are not left by the door when you enter your workplace. Some people love to live on the edge, trying to extract and leverage every little advantage – this is an “I win, you lose” mentality. We truly believe that real estate transactions should be “win – win” for the Buyer, Seller and any intermediaries. Market conditions and other circumstances may define and limit what “win” might mean for any party; but it certainly should include honesty, courtesy, and professional conduct. We would be pleased to have you talk to some of our clients and hear what they have to say. Whether you are a Buyer or Seller, or just looking for some guidance, please contact us and let us show you what proper client service means.
Real Estate is generally considered a “Transactional” business. We get compensated (paid) at the conclusion (closing) of an individual transaction (sale). As the Director of Business Development for a NYSE corporation, I led a team that acquired companies. I quickly learned that the effort to buy a small company was nearly identical to the effort to buy a large company. What does this mean for you? It means we should look how the Mergers & Acquisition marketplace compensates Investment Banking intermediaries – the “Agents”. They are normally paid a fee based on the “Lehman Formula” or “Modified Lehman Formula”. This sliding payment scale more accurately compensates Brokers for work effort rather than a constant commission percentage.
The same is true in Real Estate. The effort required to conduct a transaction is very similar for either a large or small transaction. We may incur additional marketing expenses for certain types of property, but the reality is that we all like high value sales because of the big commissions. But the market is changing, and not only because we are in an economic slowdown. There has been a paradigm shift in the way business is done. Over 80% of Buyers now begin their property search via the Internet. Buyers have an enormous amount of information at their fingertips. That is why our website is organized to hopefully meet the informational needs of both Buyers & Sellers. Like any industry, improved efficiency eventually will translate into lower costs for customers in a competitive environment. And the real estate industry is an extremely competitive industry. The key is being able to pass on these cost savings to the customer without compromising the quality of our product and service.
We are not a “discount” broker. We promise to provide full services – but at a more competitive rate. Here is our commission schedule:
| Transaction Value |
|
|
Commission Rate |
|
|
|
Residential |
|
Land |
| First $100,000 |
|
|
5.0% |
|
7.5% |
| Second $100,000 |
|
|
4.0% |
|
6.0% |
| Third $100,000 |
|
|
3.0% |
|
4.5% |
| Fourth $100,000 |
|
|
2.0% |
|
3.5% |
| Fifth $100,000 |
|
|
2.0% |
|
3.5% |
| >$500,000 |
|
|
2.0% |
|
3.0% |