This post came about as I’m seeing many new brokerages, websites and real estate agents try different “marketing” tactics…but are they just turning themselves into a commodity?
I pulled up the definition from Wiki:
The term commodity is specifically used for an economic good or service when the demand for it has no qualitative differentiation across a market. In other words, a commodity good or service has full or partial but substantial fungibility; that is, the market treats its instances as equivalent or nearly so with no regard to who produced them
Basically that means a commodity is sold by many different companies and is uniform in quality. When choosing between commodities, the only differentiating quality is price.
When a client I was working with decided to sell their house with another real estate agent, it got me thinking, so I asked them about it. We went out multiple times to see properties and even put offers in, but unfortunately nothing had materialized.
The main reason, “the other agent offered a substantial discount on selling and a rebate when buying”.
Ok, fair enough.
My own fault for not providing enough value? Potentially.
But how much value, expertise or service do you need to provide to overcome price?
When selling your home, the typical standard for selling your home is 2.5% commission. Then you also have to give 2.5% commission to the co-operating agent. So that’s a total 5%…that has been the industry norm for quite sometime.
Is it too high? Most of the brokerages that advertise low pricing will say something along the lines of “the general public views commissions too high and they’ve come up with a different way to look at things to make it better for the consumer”
Here are some examples I searched over the internet:
Modern Solution offerings 1% listing commission and 1% to the buying agent.
Red Pin says you don’t have to pay the selling commission if you buy AND sell with them. If you’re only buying, they’ll rebate you 15% of the buying commission and if you only sell, it’s only 1.75% listing commission
One Percent Realty offers a flat $6,900 total commission when you sell under $600K. It’s $3K to the listing agent, $3K to the buying agent and $900 “admin fees”.
FeeDuck is a website that lets agent bid on helping you with selling or buying…the LOWEST bid wins.
And then there’s a whole whack of real estate agents marketing lowest commission etc.
The problem with this concept is that there will ALWAYS be someone to under-price you.
At the end of the day, their main differentiation is price…which by definition makes them a commodity.
Is this the way real estate is headed? Is this the “uber-fication” or “disruptive technology” the real estate industry needs?
I don’t think so.
There will always be a percentage of buyers and sellers looking for the “best deal“. This is true in any industry. So these brokers and real estate agents will appeal to those.
The other percentage sees the resources, networking, expertise, service and professionalism the agent brings to the table.
But whether you’re looking for the best deal, or see true value, the main thing is to make sure your agent isn’t just a “licensed agent”…make sure they are a professional, meaning they have YOUR best interests in mind. This is probably your biggest investment during a lifetime, make sure you’re doing it right.
And if you don’t know if you’re with the right agent…educate yourself a bit more with some of these post: