No. Of course not. You’d rather only pay for the time someone actually spends on your specific business transaction.

Tonight, I came across this post about commissions in Zillow Advice and it caught my attention, and in particular the following two excerpts (for different reasons).

The first relates to the reality of overhead in any business, it was by Dunes:

6% of a $700,000 home is $42,000

Do your most common I have to split with yadda…$10,500 for each Agent (Buyer/Seller) and each of the 2 Agencies

Pay for Marketing? and your marketing is? Cost what?

Time? What time? doing what? You figure your time is worth what?..Why?

When Robert pays $42,000 (Agents say the Seller pays right?) he isn’t interested in compensating you for time you spent on other Clients that did not work out..
He’s paying you for the time spent ON HIS Business Transaction, your decision to work under the Compensation arrangement you have is YOUR Problem and…If (Agents/Realtors) do not change it, improve it, better justify it that’s their problem….not a reason Robert should pay $42,000 to a Real Estate Agent/Agency to sell his property

Now, I’m not going to sit here and debate whether it’s worth paying $42,000 in commissions on a $700,000 home. That’s neither here nor there. But what I do want to point out is that the fact of the matter is that with ANY business, overhead is built in to the cost of services rendered. Real estate is no different than website design and development in that regard. Overhead in both cases includes spending time with potential clients who end up not paying a nickel. Do you want to pay for that time? No, but do you have a choice? Unfortunately, not really. Clearly, not every person we speak with at Virtual Results ends up paying us for our services or advice. That’s just the way the world works, and it sucks, but there’s not much we or anyone else can do to change it. With any business, there is a cost of acquiring clients, and that time/money has to be built into the cost of services rendered somehow. Please just accept and deal with that fact.

The 2nd is this dandy by wehelpubuy:

The MLS auto populates dozens if not hundreds of websites and social media is free. I had an open house today and 20 people came through. All I used was signs, the MLS, Facebook and Craigslist. Cost = Zero

I already put my thought on this quote on Twitter, but wanted to repost it here as well. Anyone that thinks social media is “free” is clearly smoking something. Time = money. That’s always been the case, and always will be. Everyone needs to be adequately compensated for their time; real estate agents are no different. Social media done right takes time — and a lot of it. It’s NOT free and never will be so long as a human being is involved. And when there is no human involved, it’s just SPAM (which means non effective) in 98% of cases.

  • Dunes

    “Please just accept and deal with that fact”…

    Yes…I understand Simple concepts

    The point of the Conversation at that point was to justify/explain why it costs $42,000 to List/Sell a $750,000 property but $30,000 for Listing/Selling a $500,000 property…Why is it OK?

    The reasons given at that point were increased Marketing expenses & dealing with the ones who don’t buy/Time…..
    I accept and deal with the Business 101 stuff but it costs $12,000 more in Marketing and “overhead” to sell a $750,000 property than a $500,000 Property?….How?

    That’s what was being discussed and I wasn’t buying the Marketing and “spending time with potential clients who end up not paying a nickel.” justified the $12,000 difference

  • Dunes-
    I appreciate the comment. I see where you are coming from. In many cases, it takes the same amount of work to sell a 500,000 home that it does to sell a 750,000 home — and the commission difference probably doesn’t make sense in some cases. But, I do think, that the people who are good at what they do need to paid for their time. If they weren’t selling real estate, they often could be making just as much money doing something else. And if they couldn’t make the money they do selling real estate, they wouldn’t be doing it because their opportunity costs to doing something else are too great. So you’d end up with lesser quality individuals working on your behalf. And yes, i know full well there are a bunch of real estate agents who are not good at what they do and just do it because they see easy money. Just something to think about. But yes, this issue has two sides — just like any other issue 🙂

  • Dunes

    Yes the issue has 2 sides ..mine and the wrong side lol

    No one is saying or suggesting people/anyone should not be paid what they deserve or what their Services are worth..What the Services are worth in Dollars to the Client, what those Services really are is the Discussion and a legitimate Discussion IMO

    People selling Services should be able to provide some basis/explanation break down for their cost/ each situation for each client when speaking to those they are SELLING Services …with more than I have expenses “overhead” .. now pay me

    I’ll say it again..

    I have posted Hundreds of times that I have always used an Agent..I have always paid 6% or more…I have no horror stories to tell or Major complaints…But

    Agents seem to do a horrible job at actually explaining their value or cost and for a Profession based on Selling Services I find that astounding..They toss out cliches and “I have expenses”..I’m like a Doctor..You must hate Agents….but actually respond to a question or actually break things down?..

    Don’t hold your breath…..most of the time just strap on the Dancing shoes and get ready to hear how you must have had a Bad experience with an Agent if you’re asking questions like…

    What exactly is a person paying you for and why so much?