It’s just 3% right? It can’t be that much. When you do the math it’s $10,000-$25,000 in the Denver Metro market. That’s right, you’ll pay a real estate broker $10,000 or more depending on the sale price of your home just to list your home. Then you’ll pay a the buyers’ agent another 2.8%-3% for their work. All totaled the common practice is 6% total commission to real estate agents upon the sale of your house. You pay that!
Yes, the Denver market has been incredibly kind to homeowners over the past few years. It’s not uncommon for homeowners to walk away from the closing of the sale of their home with significant six figure checks. Because Denver home values have appreciated so quickly many people are simply not noticing how much they’re paying in commission to real estate brokers. I think it’s too much! And I hope you do too.
Do the math: Let’s assume a $400,000 sale price for a home. (Note: $400,000 is the lower end of the many areas of Denver. The numbers only balloon up.) We’ll just focus on the listing agent commission. If it’s 3% then you’re paying your listing agent $12,000 to sell your home. $12,000!
Depending on the part of town you’re in, your price point, the condition of your home and how aggressive or reasonable you are with your list price your home can sell very quickly. I’m sure you’ve heard about it. Someone on your street listed their home and they had multiple offers above list price the very same day it went on the market. They sold it in a day and the real estate broker is gong to get a $12,000 pay day.
So, how much is that per hour? On average I spend about 12-15 hours working with a client to get their home listed and walked to closing. Let’s use the low end and say 12 hours.
That’s $1,000 per hour for a $400,000 home. $1,500 per hour for a $600,000 home and $2,000 per hour for an $800,000 home.
One more time, at the low end that’s $1,000 per hour. It’s your call if you want to pay that much. There are stacks of brokers out there who will appreciate your business, send you nice Broncos magnet calendars every year with their picture on the front of it. If you really like those magnets then you may want to stick with the $1,000+ per hour agents.
I think it’s too much. Especially in this market. Your home can be listed with professional service and industry expertise for 1%-1.5% rather than 3%-3.2%. Or, $4,000 rather than $12,000. That’s $8,000 back in your pocket.
Realtor’s all have the same access to the MLS and same marketing channels. Buyers don’t care whose sign is in the yard. Homes are selling quickly and at great prices when priced, staged and marketed well. Ask an agent trying to charge you 3% why they can’t charge you less. The answer is always interesting.
The industry is changing. This market is changing. The status quo says list for 3% or more. Businesses are built around maximum commissions. And you’re paying for it. So, find a way to pay less.
Note, be aware that there are differences between firms at all levels. There are low service firms who don’t offer much. The barrier to entry into real estate is very very low. So, ask a lot of questions and be sure you find someone with real estate acumen, the heart of a teacher and who will help you understand the ins and outs of the selling process, and will help you best maximize your return on your investment by structuring commission to your advantage not theirs.