Your 6% Partner

In my varied life as a business-person, I have had partners from time to time.  The form of business might vary –  sole proprietorship, limited partnership, even corporation – but in our guts we knew what we were:  partners.

As partners we had a division of labor:  I’d do things I was good at and my partner(s) would focus on areas in which they had expertise. And, as partners, we shared expenses and split profits.

My own partnerships were pretty simple and the split was usually equal among the parties.  Working with other businesses, however, I’ve often seen splits that were weighted one way or another 60/40 or 51/49 and so on.

Has it ever occurred to you that when you hire an ordinary real estate agent, you are taking them on as a partner in your property?  Really:  if you are agreeing to split with the agent on a 94/6 basis, you’re taking them on as a partner in your property.  Maybe you’ve been in it, improving it, investing in it for five years.  This agent is coming in during the final 3 or 4 months of your ownership,  and somehow is entitled to 6%* of what you’ve built!

And here’s the big kicker:  we’re not talking about splitting your profit 94/6 with the agent.  You’re going to pay them 6%* of the gross!  Of the Sale Price.

Let’s assume the house sells for $400,000 and that you have a $300,000 mortgage that must be paid off at closing.  The agent’s 6%* commission is $24,000.  Ouch!  That’s 6%* of the Sale Price.  But after you pay off your mortgage, you won’t have $400,000, you’ll only have $100,000 and it’s from that that you must pay the agent.  That $24,000 commission is almost 25% of your proceeds, your net!

Are you really going to give away 25% of your net to an agent who will put the property on the Internet, fill in the blanks of the contract, manage the inspections and keep things moving to closing?  Really??

I’m not.  No way.  There is not that much value in the relationship.  Don’t get me wrong:  Realtors are incredibly valuable in the equation, but 25% of your net valuable?  Hardly.  I”m going to pay a Set Fee to sell my house.  You know a Set Fee, like what my dentist charges to fill a tooth, like my doctor charges for an office visit, like my mechanic charges for an oil change. I’m going to pay a flat $5,550* to sell my $400,000 house – the same $5,550 my neighbor with the $350,000 house will pay.  And for that, I’m going to get full service, great marketing, agent representation and hand holding every step of the way.   I’ll be saving almost $20,000 over what that ordinary agent was going to charge me!

So how about you?  Do you want to save thousands?  Are you tired of having a new partner swoop in at the 11th hour of  your home ownership to claim a big chunk of your equity?  If so, here’s what you do:

Click the link up there in the top right of this page where it says ‘Find a Help-U-Sell Office.’  You’ll be glad you did!

*Real estate commissions, whether percentage based or set fee, are always negotiable between the consumer and the broker.  They are not set by law or Realtor rule and there is no ‘going rate.’  The $5,550 I used to illustrate a Help-U-Sell set fee is just an example.  Help-U-Sell fees vary by office because different marketplaces behave differently and require more or less effort and marketing expense.  Having said that, there is one great truth here:  you will almost always save big on real estate commissions when you work with Help-U-Sell.  Savings is what we are all about!

Are You Ordinary?

Well, the nasty-gramms have already started to roll in. If you are Help-U-Sell you know this comes with the territory: we scare the be-jabbers out of ordinary REALTORS so they tend to hurl Molotovs when we make ourselves heard.

My last post – the one about building a landing page for Sellers – contained some blunt but honest words about ordinary REALTORS. I named a handful of national brands, lumped them all together and said they were ordinary and that there was not one whit of difference in their consumer-side operating systems. There may be some behind the scenes areas of differentiation, most frequently in the way agents are paid and how they are encouraged to help the broker recruit, but the consumer doesn’t see that and doesn’t care about it. The consumer experience is identical whether you are Keller-Williams, Coldwell Banker or Exit. And trust me: that is not a good thing.

So I had a couple of people tell me I don’t know what I’m talking about because their brand is anything but ordinary! I had an old friend from my Century 21 days tell me I’d probably never work in the legitimate real estate business again. Now that’s a hoot, isn’t it? Because in that pronouncement he labelled the Brand I love, which is the one viable alternative to the tired agent-oriented real estate business model (Help-U-Sell), ‘Illegitimate.’ I think I’d rather be illegitimate than extinct, wouldn’t you?

I think it’s time you put your own real estate career to the test. All of you. It’s a simple set of 10 yes/no questions. If you answer ‘yes’ to more than 3 of them, then, no doubt about it, you are ORDINARY – and therefore headed for extinction sometime in the next decade. Ready? Let’s Go!

  1. Do you charge home sellers a percentage based commission? I’m sure you’re doing it because you’ve never questioned whether it made any sense or not. I assure you it does not.  If you need convincing, start HERE.
  2. Do your sellers pay the full percentage based commission specified in the listing agreement even if there is no outside selling broker or agent to pay?
  3. Do you allow your sellers to actively seek their own buyers if they choose?  And if they are successful, do they pay less?
  4. Does your office management team spend the bulk of its time recruiting new agents and training unsuccessful agents?
  5. Does your office incentivize agents to help in recruiting?
  6. Are agents in your office responsible for doing their own marketing and generating their own leads?
  7. Are  the mediocre agents in your office – ones doing, say, 8 deals a year or fewer – on  commission splits greater than 50%?
  8. Have you changed offices in the last 2 years?
  9. Do you put all of your listings in the MLS?
  10. Does your office own or have an interest in ancillary services (termite, title, escrow, mortgage, etc), and does your management team pressure you to pressure your clients to use those services?

Seriously:  3 yeses and your REALTOR DNA is probably so twisted you may never recover.  The only hope would be if Don Taylor – the founder of Help-U-Sell – were to open up a Betty Ford type clinic for recovering 6%ers . . . and I’m sorry, but he has his eye on other prizes.

So, what do you do if you do get more than 3 yeses and have to admit that you are, in fact, ordinary?  Here’s an idea:

  1. Take your gross income from last year.  Go ahead, take it right off the 1099
  2. Divide that by 52.  It’s ok to use a calculator for this and subsequent steps
  3. Now estimate how many hours you put into your real estate career in a typical week
  4. Divide the Dollars (the answer you got when you did the division in step 2) by the hours (step 3)
  5. That’s how much you made per hour last year in real estate . . . Gross, before taxes, insurance, business expenses, and so on
  6. Now compare that with minimum wage, or with starting pay in any salaried job for which you might qualify
  7. There’s no easy way to say this . . .  if the hourly wage is higher than what you grossed per hour last year, get out of the real estate business

Finally, I also got taken to task for ‘hating real estate agents.’  I’m sorry:  that’s just WRONG.  I love good real estate agents.  I think they are more than essential.  I think they are heroes.  What I can’t stand are mediocre real estate agents who continue to bump along, almost failing year after year.  They deliver inferior service, drag the image of the entire industry down, and sap business from good agents who could serve those buyers and sellers so much better.