Real Estate Agent Fees: Would You Pay $1,000/hour For A Little Convenience?

Real Estate Agent Fees Only Buy You The Illusion Of Convenience

I was inspired to write this piece by the recent loss of a potential client.  This person opted to pay real estate agent fees instead.  This was despite knowing that she would pocket around $15,000 less from the sale of her home than she could with a no commission Assisted Private Sale™.  All this in exchange for a little more convenience, or more accurately, the illusion of convenience. Even if you engage a traditional real estate agent, you have to organise and coordinate any preparations for sale, such as decluttering, painting, repairs etc. You need to do the preparations before each open home and then leave for an hour while groups of mostly sticky beaks stampede through your property. You then have to clean up afterwards. You still have to negotiate with the buyer, through your agent and you still have to complete all the legal paperwork that goes with the conveyancing process. No real estate agent can make this completely convenient and your involvement is required.

Don’t Lie To Yourself By Saying That You Don’t Have The Time

Most people who prioritise convenience when selling their home, say that they simply don’t have time to be involved.  Please don’t delude yourself with such rubbish.  We’re all busy and we all have the same 24 hours in each day.  Instead, be honest with yourself and say that you CHOOSE not to spend your time with this. We all prioritise our time according to what is most important to us.  Instead of saying that you don’t have time to be involved in the process of selling your home, ask yourself how important the outcome is for you.  It is OK to admit that achieving the best possible result from the sale of your home is not the most important thing to you at this time.  As long as you realise that you WILL walk away with somewhere up to $50,000 less from the sale of your home. Whether you want to or not, you will be involved in the process of selling your home.  Seeking to completely outsource the entire process, clearing your hands of it or wanting nothing to do with it shows a lack of interest and will cost you dearly.  Not to mention that this attitude will make you the dream client of most real estate agents.  

The Astronomical Cost Of Real Estate Agent Fees

In an earlier article, I wrote about the Assisted Private Sale and the five different objectives that most home sellers would like to achieve: a quick sale; the highest sale price; the lowest sale cost; maximum convenience, and maximising how much you pocket.  I wrote that it is unlikely that all of them would be achieved and that a compromise has to be made in at least one area.  What most people don’t realise is that the quest for convenience comes with the highest cost and most compromise. Based on the value of the average Australian home and the average rate of commission, most people pay somewhere between $15,000 and $16,000 in commissions alone.  It takes on average, 15 hours to market a home.  If you were to translate this into an hourly rate, you’ll find that most people are paying over $1,000 per hour in real estate agent fees and commissions.  Often this is much, much higher.  Does this seem reasonable to you?  By seeing it expressed as an hourly rate, do you still feel that it’s worth the little extra perceived convenience. Of the five various objectives that a home seller could hope to achieve, I define the best result or outcome as the maximising of how much you pocket from the sale of the home.  This can only be done with a combination of achieving the highest possible sale price at the lowest effective cost.  You will certainly never achieve this result with any agent.  Real estate agent fees negate any financial benefit that they have to offer.

Real Estate Agent Fees Lead To A Lower Sale Price

In addition to the astronomical commissions they charge, there is an even more insidious cost of using a real estate agent.  You are likely to achieve a lower sale price.  This may seem staggering to most people, considering that the prospect of achieving a higher sale price is the only reason many are prepared to pay real estate agent fees. I wrote previously that a real estate commission is actually a disincentive for an agent to achieve the highest price for your home.  This has been confirmed by a comprehensive study conducted by famous economist Steven Levitt, who also co-authored the well known book Freakonomics.  This rests on the fact that there is a significantly diminished return for a real estate agent in fighting for an extra $10,000 for your home, when an otherwise large commission is already at stake.  This phenomenon actually incentivises agents to achieve a quick sale instead of the highest sale price.    In order to avoid paying real estate agent fees, you don’t necessarily have to forego professional help, assistance and advice.  The Assisted Private Sale™ has been designed to offer this while overcoming all the shortcomings of using a traditional real estate agent.  Selling your home is one of the most significant transactions you will undertake in your life.  You may only do this a few times in your lifetime, but each time you do, you make a choice about whether you pocket up to $50,000 more from the sale or $50,000 less than you could.   Now that you know that the convenience offered by a real estate agent is minor, mostly perceived, and very costly, hopefully you will place it right at the bottom of your list of priorities.  The only reason to pursue convenience as a priority when selling your home, is because you find the sale of your home to be relatively unimportant or because you are simply disinterested in the financial outcome. For more information, please visit: www.revolutionaryrealestate.com.au Related Articles:

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