Many folks in the media have recently been writing sensational headlines declaring an end to buyers’ agents and the “standard 6% commission.” The minute you say that, everything else you write has to be questioned, because it’s inaccurate and misleading to the public. Let’s get into it…
For starters, the vast majority of real estate agents probably think twice about using the word “standard” to describe anything in life, let alone real estate commissions, just to be on the safe side. Agents aren’t allowed to even say words that suggest there’s a standard commission, let alone conspire with each other and agree there’s a “going rate” of some sort.
More importantly, it’s not factual. According to Statista, the average real estate commission hasn’t even reached 6% since 1992, and they vary from year to year. So, no, 6% is not the “standard” commission. In fact, while those are nationally based statistics, they vary from one area of the country to another, and from one agent to another, and often from one transaction any particular agent is involved with to another.
Now that we have that cleared up, there are few things that are standard for real estate agents you might want to keep in mind as you write headlines and report on the industry — especially in relation to commissions or the current settlement:
It’s standard for agents to take on the risk of showing someone houses for weeks, months, or even years, and never end up making a dime for the time and advice we freely gave to the client.
It’s standard for agents to disregard how much money we’ll make working with one client versus another — and work with a buyer regardless of their price range — often helping first-time and low-income buyers to become homeowners with no money out of pocket. (Unfortunately, depending on how things play out, these buyers could find themselves having to buy a house without their own representation because they can’t afford to hire an agent, while wealthier clients will have the ability to pay for a professional to be on their side.)
It’s standard for agents to help their buyers remain calm while trying to buy one of the few houses available for sale, amidst tremendous competition with other buyers due to decisions (or a lack thereof) that the government has made which impact the housing sector. The government has certainly had more to do with the lack of inventory than agents have, by not doing more to promote new houses being built, and having mortgage rates climb from all-time lows for many years, to where they are currently.
Yet it’s standard for agents to be the whipping posts when the market isn’t great, and our usefulness is diminished when the market seems to be thriving. On that note, it’s also standard for agents to ignore the hate as much as possible, and focus on doing the best job we can for their clients, despite how we’re often portrayed as the villain…
…because it’s also standard for agents to have clients who truly appreciate our help, and end up forming lifelong relationships with them on both a personal and professional level. Considering that “90% of buyers would use their agent again or recommend their agent to others,” according to research from the National Association of REALTORS®, is there really that much hate for agents? Or is it something the media amplifies without merit?
It’s standard for agents to continue giving our time, advice, and skills to clients pro bono during the years a client is living in their home and not in the market to buy another home… possibly ever again. Whether it’s helping them decide on some updates or renovations they’re considering, the market value of their house, or helping them figure out how to keep their home during a financial crisis, agents are often happy to help our past, present — and potential future clients — without being compensated for it.
And that’s just six “standard” things we do, to keep with the theme of that magic number… but rest assured, there’s more we do that goes unlisted and often unnoticed.
Oh, and by the way, the average agent earns between $44,951 and $58,528 per year, working more than 40 hours per week with rarely a day off, let alone a vacation. So please keep that in mind if you’re thinking of portraying us as money-hungry vultures who deserve a massive pay cut.
So, rather than villainizing agents, perhaps take another look at what has transpired due to the recent class-action lawsuit, and question whether this is actually a good thing for homebuyers or not.
And, if you wouldn’t mind, could you also take a closer look at the lawyers who are filing all of the class-action suits? Please find out how much they’re making off of their clients, versus how much their clients are actually benefiting financially from the settlement while you’re at it. Rumor has it they often charge all of their clients the same “standard” percentages for their services, which would be ironic. So, it’d be super cool if you could do some digging and shed some light on that…