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Pay a Commission to sell a Home?

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Real Estate Commission“The Economist” says that the internet has put down incompetent middlemen but not American realtors. Although sale-owner websites have boomed, traditional realtors have kept their 80% market share and still at an unbelievable Real Estate Commission  to up to 6%. According to them fees are so constant because selling a house in a weakened market requires the expertise of an agent along with energetic marketing. On the other hand in some areas a few big brokers handle a large amount of business and they set a high Real Estate Commission attracting more people to the industry which increases the competition to the point that while a British real estate agent closes from 40 to 50 transactions a year, an American closes 7, says Norm Miller from the University of San Diego.

According to The Economist, because of the interdependence nature of the business, both the buyer’s agent and the seller’s agent need to collaborate to close the deals. Nevertheless, some seller’s agents will cut their own Real Estate Commission while offering the full price to the buyer’s agent which makes the buyer’s agents drive their clients away either to support full-service brokers or because they worry the discounter will leave them with the biggest share of work. That discrimination has gotten to the point that Colby Sambrotto, the founder of ForSaleByOwner.com and USRealty.com, a discount broker, was forced to contract an agent to get his own home shown to prospective buyers after he tried to sell it in New York. But because discounters need to make up for a lower Real State Commission with higher volumes, the slightest discrimination can drive them out of business. The end of the 6% in real estate commissions appears to be a long way off.

Builders Also Reach Out to Agents

RISMedia reported that builders are also increasingly turning to realtors to bring them qualified buyers. Some of them are even raising their bonus and their Real State Commission to build sounder bonds with agents. According to the National Association of Realtors, about two thirds of new homes sold in 2013 were bought  by home buyers led by realtors. In fact David Erickson, president of Grayhawk Homes in Columbus, GA says that they are in a small market and if they don’t develop a relationship with realtors, they won’t sell even at the lowest Real Estate Commission. In the past they might have seen each other as competitors, but that is no longer the case. RisMedia says that the Providence Group of Georgia, a builder, organizes lunch gatherings for realtors and they literally said:  “…we cherish our loyal realtor community and would love the opportunity to stay in touch …”
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