The Problem With Real Estate Commission Percentages

Posted by Steve Vincent on Feb 23, 2016 10:25:28 AM

In GreatNest, percentage commissions, Real Estate Commissions, Sellers

Percentage Based Real Estate CommissionsFor the most part, the ordinary real estate business exists in a percentage based universe. Real estate brokers and agents typically charge home selling consumers a percentage of the sale price of the property to sell it.

Stop. Think about that. Selling a piece of property is not alchemy; it's not even mysterious. It is a fairly straightforward process of proper pricing, careful preparation and effective marketing. It takes a skilled technician to orchestrate this process, especially the very complicated contract-to-closing time frame, but like most jobs, it is a series of tasks, not neurosurgery.

So what does a percentage of your home's value have to do with what it takes to sell it?

Here is the answer: absolutely nothing.

Percentage based pricing was conceived by the real estate industry almost 100 years ago, when selling homes really was a mystery to most people. It was a pricing system 'plucked from air,' or made up on the fly. Consumers didn't question it because they didn't understand what they were paying for.

If you fast forward through the decades, there have been huge changes in the real estate industry. Brokers began to cooperate with one another on sales and the Multiple Listing Service was born. The Internet matured and suddenly consumers had most of the information real estate professionals once controlled. Consumers became smarter and more savvy about the buying and selling process. Everything changed and the real estate industry began to travel at light speed.

What didn't change? The way real estate brokers charge comsumers! It's the same tired, old percentage based model that made no sense in 1956, and makes even less sense in 2016. Dozens of tools have appeared that make it easier to sell real estate, but ordinary agents and brokers - due to ever rising home prices - have actually gotten a raise - a big one!

There is a question involving percentage based real estate commissions that nobody has ever answered effectively. It's been asked repeatedly, by me and by many others. The question is: how come? How come the guy with the $350,000 house pays more to sell it than the guy in the $300,000 house? (At, say, 6%, the $350,000 homeowner pays $21,000 while the $300,000 homeowner pays $18,000.) Each homeowner will receive the same basic level of service but one pays $3,000 more than the other! Where is the sense in that?

I made the decision more than 10 years ago to become GreatNest because it made sense. It made sense from an operational standpoint (we run our office very differently than the ordinary real estate brokers down the street.) It made sense from a service standpoint (we deliver the same full service other brokers offer - and acutally , more - but we also give our sellers the option of participating in the marketing process, which can save them lots of money). And it made sense from a pricing standpoint.

We charge consumers a Low Set Fee to sell their homes. The fee is based on what it costs us on average to sell a properly priced listing plus a reasonable profit. We charge the family in the $350,000 the same thing we charge the family in the $300,000 home. Everybody pretty much pays the same thing!

Our goal is always to sell the property, make enough money for it to be worthwhile (it is), and Save Consumers Thousands over what they'd pay an ordinary real estate broker. In fact, we get just as excited about the money our clients save as we do about the fees we earn!

As always, at The Vincent Group at GreatNest we are proud to save our clients money by charging a low set fee instead of a percentage commission. We are a full-service real estate company serving buyers and sellers in Greensboro, High Point, Winston-Salem, Summerfield, Oak Ridge, Jamestown, and other Piedmont Triad areas. Please get in touch with our experienced real estate professionals by calling (336) 790-5210 or by emailing Steve Vincent.  Visit our website at