Can you compete in this new landscape? Recent changes in our industry have decoupled the seller agent fee from the buyer agent fee, throwing the traditional model into question. If you haven’t adapted your business, you may find yourself uncompensated for the time and resources spent on your client.
So how can an agent from a traditional model like at Coldwell or Compass compete in this new climate? The game has changed – it’s now about value, competition, and capitalism. Agents must demonstrate their value in order to attract potential buying clients.
Buyers are now more price, experience and resource conscious. The money they pay will be more visible, and they will demand the best service. This could create a challenging environment for agents at traditional brokerages, who might find their commission eaten up by high fees.
For instance, a Coldwell agent could lose almost 45% of their commission, while at KW it could be 35%. How can these agents compete when they have less to invest back into their business compared to agents at low-cost brokerages?
The answer is uncertain. Only the best trained and most resourceful agents will survive. This is a tough competition, and if you’re serious about being one of the surviving agents, you need to prepare for the challenging times ahead.
I moved to REAL to reduce my expenses and become more competitive. If you want to learn how to protect your business and prepare for the coming market changes, feel free to reach out to me.
Will you be able to Compete?
At this point, I am sure that you are aware of what just happened in our industry. Things changed overnight… Well kind of overnight. They changed, but the stay of execution has been held off until July.
The lawsuit has made it so that the seller agent fee and the buyer agent fee has been decoupled. I have gotten a couple good laughs with people saying that nothing will change and to control your controllables and get back to the phone and call some a lead!
But how can you say nothing has changed when there is a good chance that if YOU haven’t changed the way YOU do business that when your buyer finds a house that they love… You won’t be offered any compensation for your time and resources spent to acquire, nurture and work with that client.
My question is how is an agent that works for a traditional model like at a Coldwell or Compass that has lower splits or someone that pays a monthly mortgage payment at a RE/MAX going to be able to compete with an agent that works for a lower per transaction cost and lower capping brokerage.
Your questioning, how so… Right?
The game has changed in a couple ways with this decoupling of the fees in the transaction. It’s now a game that is all about value and a person’s ability to demonstrate that value. It’s a game of competition at its finest.
Capitalism has been unleashed in our industry. You will see a barrage of agents look to adjust their compensation models and do things to offer potential buying clients more value. This way that potential client chooses to work with them over another agent. Because the days of 70% of buyers working with the first agent they meet is gone.
Buyers paying for the services will be front and center. This means they will be more price, experience and resource conscientious. Now that they are paying… They are going to demand the best. It’s so stupid, because they were always paying… They just couldn’t see the money.
Think about it for a second. The buyer would come to the closing table with a boatload of money. They would then give it to the seller who divides it up and pays the agents, the lawyers and even the state in the form of a transfer tax! But whose money were they paying everyone with?!? The buyers! That’s why I find this all so funny. The buyer always paid the fee.
So back to my question, will an agent from a traditional brokerage be able to compete?
Maybe. Ya, that’s a hard maybe. Just hang with me for a second.
The starting splits at a Coldwell are 60/40 with the 8% royalty. A KW it is 70/30 with the 6% royalty fee.
To make my life easy… On a Ten Thousand dollar commission, that means a firm like Coldwell is taking the first nearly 45% or $4,500. At KW that is nearly the first 35% or $3,420 of the deal. At RE/MAX I feel like it’s even worse. Ya, they only take $500… But you have to pay that fee that feels like the equivalent of a second mortgage whether you sell something that month or not.
So if you are an agent at one of these places, how are you going to compete in this new world when you have to offer more value to the potential buyer, but the house is taking the first 35 or 45%? Compare this to the agents who are only paying 20% at a company like eXp or even agents like me at REAL that are paying 15%.
To put it another way, the agents at those lower cost brokerages have an extra $2,500 to $3,000 to invest in their business.
I will say it. Because it seems like so few will. But not everyone will make it.
Those that make it will be the best trained and have the most resources.
It’s a dog fight. And the people that you are fighting with are your fellow comrades that were sitting next to you at your most recent ra ra sales event.
If you are serious about leveling up. If you are serious about being one of the agents that make it, then you need to prepare for the soon to be all out war. You need every advantage that you can get.
I personally made the move over to REAL so that I could reduce my expenses. Become more lean in order to offer the consumer more options and better resources.
If you are interested in learning more about how to bulletproof your business and prepare for the changing market that is coming next, then let’s chat, confidentially of course. You can give me a call at 617-775-7687. And all my other contact info is below.
Until next time.
Jeffrey Chubb
2024-03-29 20:37:47