Real Estate Agent Commissions - Are they worth it?

There's been a lot of controversy lately about the commissions real estate agents are drawing. Especially during the hot market we saw up until 2006 where it was easy to attract multiple offers without much promotion and effort, one could not but question the value-add agents brought to the table. In today's slowing market where properties are not fetching as much, saving on sales commissions may be even more of a serious concern for some.

Not long ago, 60 Minutes aired a story entitled, "6 Percent," and reporter Lesley Stahl posed the question, "Are they worth it?" The segment discussed full-commissioned Realtors commanding fees that can be up to six percent of the cost of the home, and compared them to less expensive new-age Internet-based brokerages that offer lower commissions and fees and cash rebates.

The online brokers she interviewed said, "No way!" They claim the Internet has cut the amount of time involved in and cost of completing a real estate transaction way down, and the savings should be passed on to the consumer; but the National Association of Realtors begs to differ. The organization points out that Realtors deliver significant value to consumers and that commissions reflect the usual cost of doing business.

Home sellers who choose to compromise on one of the most important transactions of their lives aren't getting the level of service they deserve. All the brokers do is list your property. They don't bring you potential buyers.

He points out that when you hire an agent, not only will he or she list your property, they'll market it as well. Shortly after they put up a sign in front of your home, a lot of work goes on behind the scenes. The real estate professional sends out postcards, places ads in the local papers, distributes the listing information to his or her referral network of agents, local and national, and plans open houses; and that's just the beginning.

According to the National Association of REALTORS 2006 Profile of Home Buyers and Sellers, the median price of a home sold with the assistance of an agent was $298,200 compared to $230,000 for FSBO (For Sale By Owner) sales.

Some suggests that accurate home valuations can only be generated with the help of an experienced real estate agent, as online home valuation tools are not privy to details that directly impact the value of the property.

Intimate knowledge of the property's condition, renovations or legal issues, property surroundings and planned developments in the area that might improve values in the neighborhood are few of the considerations only a local expert can bring to arrive at the best suggested selling price of a home. Most importantly, a professional needs to study the qualitative differences between comparable properties for accurate home valuations, not simply the quantitative information.

These days, the real savvy agent is also a neighborhood expert. And, he or she will market listings online using very advanced systems. While going at it alone may seem attractive, consider that a consumer may be able to list their home on a Web site or two, but they can never list it on thousands of real estate agent sites at the same time, and this is how market exposure is truly maximized to get the top selling price.

The Internet is where a lot of people are starting their searches, so you need to be there in a big way, particularly in the slowing market a lot of areas are experiencing right now.

The software also allows your agent to display dozens of photographs, add virtual tours and provides access to neighborhood information so potential buyers will have at their fingertips important details they need to make a decision. In addition to showing up on the agent's own Web site, the listing can also be syndicated to the Web sites of hundreds or thousands of consumer search sites such as Google, Yahoo!, and dozens of other high traffic sites where consumers today browse for real estate.

A good real estate agent helps you achieve the highest selling price possible by getting the maximum possible market exposure. While an enormous number of eyeballs come from search sites such as Google, Yahoo! and classified ad sites like Craigslist, the cooperative advertising of listings between local real estate professionals (both privately and publicly) generates most of the exposure for home sales. You have to remember that each of those local real estate Web sites has their own marketing budget and local advertising presence. Together, they drive a lot of traffic. Today, technology allows us to track that exposure so the consumer can truly benefit from the power of organized real estate marketing.

With all the technology that can be used, real estate is still a personal business. It's such a large investment, a lot of people also need the 1-on-1 connection to feel good about their purchase. It really makes a difference.

Courtesy of ARAcontent