For a real estate company that assists agents/individuals in selling their homes, what would be a fair commission percentage?
For context:
We manage everything online.
We make all the digital media
We make a custom video for your home
We make a fully custom listing for each home. (No more boring Zillow/Redfin listings. The listings we build are full webpages, designed to bring out the best features of each home)
We market the home via Google Ads and other such methods (giving us the widest reach possible)
We Provide Legal Support if Needed
We can help with any type of property
We use special marketing tactics to make individuals WANT the property (and thus have a higher chance of larger and more pricey deals).
Everything is included in the commission, except for legal help when larger issues arise.
The owner/agent literally only has to tour the property in person with interested buyers, and sign the closing deal papersâŚetc (all that stuff). We do the hard part - selling.
We have a follow up program with sellers to build a favorable image for the agent who we partner with (if an agent is selling a home/property)
Most homes end up with 6% commissionâŚ3% for the sellerâs agent and 3% for the buyerâs agent. I have considered maybe 2% if you have an agent, and 3% if you donât.
Honestly I think youâre better off shifting to a list of flat rates. The work you do donât change regardless of size of house/market, and I feel thatâd be more appealing to clients needing a service like yours (amd knowing exactly the cost). Factor in the roles youâd be replacing, consolidating and automating, mark it up from there to reflect the convenience of your product, and see what that number is. From there do some market research and see if anyone else is playing in this field / offering similar services and what their rates are. Thatâd give you 2 good starting points. Ultimately, what your clients are willing to pay will be more important to where your prices end up.
In terms of being appealing to the client, theyâd know the price right away. Itâs 2% of the lowest list price.
For example, if they listed the house for $400,000 but got a $500,000 offer (might sound crazy, but happens all the time up here in Seattle), Iâd only ask for 2% from $400,000.
If the house is listed for $800,000 and sells for $700,000 Iâd take 2% of $700,000.
So the consumer will know the final price of the entire deal right away. Itâll either be that price or less.
As for seeing other people doing something similar, no one really does what Iâm doing. There are individual firms doing certain things Iâm doing, but no one is doing it under one roof, and there product is still far off from what I offer. (Meaning that there business model and/or product(s) are still pretty different than mine)
My only real advice, especially if nobody else is doing this, is just to make sure the sum of what youâre offering, compared to all of the individual services (hiring a video crew, hiring a website team, hiring a social media person, etc) is only marginally higher than they would if they hired all those teams individually. Maybe the medium price + 25%. I feel like the commission model really only applies to humans, and you may have trouble conveying your value if you also operate on commission. But fixed rates are easy to publishâŚand yes you could still scale those rates based on the market/city.
Good thing is, it costs almost nothing for us to make the website.
Social media is managed in house and also has minimal costs. (Most are young, so we know the smaller tricks that some people donât know to get traction on such platforms)
Video crew is outsourced, but that shouldnât be too much of a hit.
Could you elaborate? Not sure I understood. Thanks!
My thinking is clients hiring via your app may not think of an âappâ as being on par with a human. A human makes a living hustling and grinding to tell you house, and the commission is their payment. A client hiring your app to do a lot of the work may not see the app as being worth the same as a human (i.e.
would you pay a robot minimum wage?'). You may have to fight this perspective, but I would say thatâs a challenge you may face, which is why I mentioned it. And also why I feel like rates are better than commissions for your model. If the market took a downtown, I doubt your rates would want to go down tooâŚbut thatâs what a commission model would mean for you too.
You can Google it and Iâm not up to date on the industry but even Iâm aware (despite living under a rock) of the huge lawsuit changing all fees going forward and undoing the whole 6%.
So, my mother and sister both work in real estate, and I talked to them about your proposal here.
The biggest thing both of them harped on was that you will never get a Realtor to list any listings on your site unless you are approved / licensed (I cant remember the proper verbiage here) with the National Association of Realtors, which is going to cost you a ton.
Furthermore, you are going to be hardpressed to find listing agents who would willingly just step back and let you run the sale, and only do the walkthroughs, open houses, and contract signing. The first concern both of them echoed was that in order to really be involved in the sales process, even the basics of just talking numbers, you must be a licensed real estate agent. At least, in Indiana where we are based.
Another concern was the fact that each agent has a âstyleâ - and itd be hard to match that style. Unless you were thinking of going to an LLM for this. I wouldnt recommend that though.
I wish you luck and success. Also, codeescape is very correct. The commissions model is currently under a lot of scrutiny, and things are shifting majorly soon. Im not sure how yet, my mother tried to explain it to me and I got lost honestly, there is a reason I didnât go into the âfamily businessâ
Just to confirm, do I have to be licensed to market the homes? Thatâs my main focus and itâs what gives me an ability to have a wide reach.
Also, the agent wouldnât do a total step back. Theyâd still see the things I made, give feedback, etc.
Any help would be great here. Iâve been working on this for a bit and need to know if this is something attainable or if itâs something that needs to be left alone.
While they might not be taking a step back, they are sitting passenger and you have the metaphorical keys to the car (to the sale), unless Iâm misunderstanding the value proposition.
To me, I read this as a Zillow but also handles interactions at first. I suppose you could just call that âpre qualifying buyersâ or something similiar. All I know is that in order to even show a home for an agent, you also have to be licensed. At least in Indiana. See, that is where things also get tricky, because every state (and even county) have different rules. Id recommend finding a local realtor (or real estate agent) and talk to them about pain points with other listing sites.
Let me also say, youâre asking all the right questions, so I donât think itâs a total loss. You seem like someone driven and determined, so I hope you can find market fit.
The goal is more to work hand in hand with the AgentâŚ
If they can show a property to a certain amount of people, but with my expertise double that amountâŚthen would they be fine with that?
I donât handle interactions lol. Every click on my site is sent back to the Agentâs email/dashboard. I just have a record of the clicks so I can prove that my work led to a closure. (If someone throws up an issue when i ask for payments).
Ah, okay, then I misunderstood and I apologize. From the last reply, itâs my opinion that youâd be fine. The only hiccup I could see is the licensing with NAR, and only they will be able to answer questions about how that works.
I do wish you the best of luck. Hope I helped in any small way.
I am not a lawyer. Please donât take anything I saw as legal advice. Iâm just sharing my perspective and opinions.
Iâm not 100% sure what the next steps are, I do know one article mentions Realtors not working on a commission basis, but I know that hasnât actually happened yet, as both my mom and sister are still doing commissions.
