About commissions: March 2010 Archives

A recent post on Active Rain initiated a wide ranging discussion of how REALTORS® get paid. Two ACRE® colleagues, whose judgement in such matters I respect, happened to notice my little contribution to that discussion and suggested I reproduce it here...

To me, our method of remuneration is inextricably tied to how we see our role and how we practice. Perhaps adding a little context will usefully extend the discussion in this thread.

There was a post this week on Active Rain from an agent explaining how when asked, he will not cut his commissions. By weeks end, there were nearly 200 comments to his post, some agents cheering him on for his stand, others arguing the opposite, some comments from lenders, appraisers, and home inspectors arguing for and against.

But of the 200 some odd comments on the subject of cutting commissions, only two brought up the idea that maybe there is a choice other than cutting or not cutting commissions - from ACRE® Ron Stuart and myself.

Here's what I said:

The problem with discussing commissions as payment for services is that the consumer doesn't buy the reasoning. If it's a million dollar home, can you honestly say that you do four times as much work as you do on a $250k listing? We, in the industry defend it because what we make on an expensive listing makes up for all of the work we do with homes that don't sell and buyers that don't buy. While that makes perfect sense from our vantage point, you can't blame the seller for saying "What's in this for me? Why am I subsidizing the deals that don't close?"