In addition to our discussions here at Bloodhound, if you’ve been reading the blogs lately, the commission debate continues. Jonathan Dalton’s post on Agent Genius has recently spawned a long series of comments regarding how agents are compensated.
One comment (below) got me thinking,
“… I fully believe that my service is worth 6%. Clients in my area seem to be less concerned with getting a “deal” on their commission rate than they are with getting an EXPERT to work for them.”
I am not questioning the agent’s value – it’s hard to debate that consumers want an expert. The issue I have with the comment is “I fully believe my service is worth 6%.”
Why?
What is the significance of 6%? As we discuss the issue of commissions, why are we stuck on a percentage of the sale? Why isn’t the number 10% or higher – or in some cases, lower?
In actuality, if you’re cooperating with a buyer’s agent, aren’t you really saying you’re really worth only 3%?
Indulge me for a moment as I share a little story…
In early winter 2007, I happened to represent a client in the sale of his 3-flat in Lakeview – highly desirable area north of Lincoln Park – the building generated solid rental income. I listed the property and generated 2 offers within the first 20 days on the market. The first deal fell apart due to an over-zealous inspector who told my clients the building was worth no more than land value,
Pardon me, but you’re an inspector, not an appraiser.
But that was the least of my problems …
The second deal blew apart 3 days prior to closing. The zoning certificate was incorrect – issued by the city. Chicago stated that that building was a 5-flat. My client was thrilled – LOOK! We can now ask for more! Um – excuse me, but no. When he purchased the building 2 years prior, the city correctly issued a zoning certificate indicating that the building was in fact a legal 3-flat.
The attorney and I discussed Read more