Real estate agents’ fees are hands down one of the biggest costs of selling your house. So, why are they so high, and why do customers end up feeling like they’ve paid a lot for a little?
Most real estate agencies are old-school
The real estate business is one of those ‘old school’ industries, like taxis or hotels, which have been run in a particular way for a very long time, with the agent holding all of the cards and offering very little flexibility or visibility for the homeowner. Back when house prices were only the equivalent of a few years’ salary for the owner, a 1–3% portion of the sale price was a more reasonable amount of money, in line with the value of the service performed.
But these days, with house prices closer to 12 times the average salary, real estate agents are taking home a lot more money than they used to, and it’s simply because house prices have grown. So, just like taxis and hotels, the real estate business is the perfect target for innovation and disruption.
There’s no consistency in real estate commission fees
Although a 1-3% commission doesn’t sound like a lot, it could equate to thousands of dollars of your sale price. But since there’s very little transparency between estate agents’ fees, it’s hard to know what the standards are – leading many to believe that perhaps they’ve been taken advantage of.
Real estate agents haven’t taken advantage of technology
Related to the ‘old school’ point above, many real estate agencies aren’t keeping up with the times in terms of technology. Each estate agent has a physical office, and each physical office has a number of staff. But in today’s connected world, it’s possible to reduce this big outlay by having a head office, cutting out the expensive shopfronts, and condensing admin and marketing teams into one team that looks after the whole company.
The tech question also has repercussions for customer care – technology plays a big role in delivering fantastic customer care and giving customers full visibility on the progress of the service they’re paying for, and most real estate agents aren’t keeping up in the way most people now expect.
So, how much do I have to pay a real estate agent?
The good news is that you don’t have to pay tens of thousands of dollars to get a good agent. Although we generally equate paying more with getting better results, it’s not necessarily the case. In fact Upside has worked out a way to keep costs down for home sellers in a way that’s sustainable and works for both the seller and the agent. Find out about our great flat fee options here.