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Douglas Trudeau , Assoc. Broker
Prudential Foothills Real Estate
64 N. Harrison Road, Suite 160
Tucson , AZ 85748
Mobile: 520-954-2209
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60 Minutes - What Everybody Ought To Know About Real Estate Commissions

Today I watched a tabloid style presentation from 60 Minutes about Chipping Away At Realtors’ Six Percent. There are dozens if not hundreds of people incarcerated for this perspective of preconceived notion. During my 20 plus years in the Criminal Justice System I was taught to investigate to find the person innocent. If s/he is guilty that guilt will stand out. 60 Minutes took a very slanted approach to the subject she reported on. The questions posed to the REALTOR® were more like an interrogation.

First, not all commissions are 6%. Some are lower, some are higher. I have listed numerous homes for 7%. There are Realtors who manage to get 8% or more. Commissions are negotiable. I have had clients tell me that I should have charged more. I don’t want to charge more. What I charge is fair and reasonable for that client. Commissions are negotiable. Its not a fixed rate.

You get what you pay for. I worked for a Discount Broker when I first started in Real Estate. Sure there were some clients who were satisfied. There were more who were disgusted with the level of service they got. My clients deserve more. Which is why I joined the company that is Number One for results in Southern Arizona. That is not to say that there aren’t some decent discount services out there that can meet specific consumer needs.

Not everybody drives a Lexus. Some people prefer Honda, Chevrolet, Ford, Nissan or any other car on the market. As people have different taste in vehicles, clothes, music, appliances, etc. they also have different perspective in how to buy or sell a home. Discount services don’t meet the needs of everybody. As full service brokerages don’t meet everybody’s needs. There are some risks. Just like investments, the higher the return, the higher the risk.

When selling your home consider the risks you are taking. Is it really worth it to not use a REALTOR®? Ask yourself…

How do I know I am getting a good deal?
What are the hidden aspects of the sale that could get me into trouble?
Am I getting my home out to enough people to draw attention?
Was there that one buyer I missed by being on my own that may have offered more?
Am I asking way to much for my home and it will sit on the market for months only to sell for less in the long run?
Did I do or say something that is going to create a liability for me later?
Can the buyer come back after me after the sale?

REALTORS® like doctors have to pay the equivalent to malpractice insurance. In Arizona it is called Error and Omission (E&O) insurance. REALTOR® take a big risk with every property they list and sell. Was there sufficient disclosure? Did I sufficiently advise my client? Was there something I could have done better. With the litigious society that we live in REALTORS® have to make sure every t is crossed an i is dotted. In Arizona and Tucson there are forms to cover everything to not only protect the REALTOR®, but, to protect our clients as well. When you are on your own, you are on your own selling your home by yourself.

Safety is another factor to consider. Most companies encourage their REALTORS® to meet clients at the office. Some even require photo copying a driver’s license or other form of ID. I haven’t heard of any that go as far as a background check. As a home seller without a REALTOR® to protect you, how do you know that buyer isn’t casing your home for a burglary or worse? Is that person at your door really a buyer? In Tucson we use a lock box that tracks who opens it. They can be controlled to prevent access during certain times of the day. If a concern arises from my client, I can go back and track who accessed the home. On a combination lock what tracking is there? I encourage my clients to turn away buyers who show up at the door. Its hard not to be a protector after 20 years of doing nothing but protect the public. Safety is an element most people don’t think about when selling a home.

Not all the commission goes to the REALTOR®. Being a full service REALTOR® it isn’t cheap. There are advertising costs, signage, postage, office overhead, fuel, insurance, company fees, and even Uncle Sam gets a portion of it in taxes. To me its an insult to offer less than 3% to the other side for bringing a buyer. Sometimes we REALTORS® commit commisionectomies. To get the deal done and make it reasonable many REALTORS® have paid for a variety of expenses to save the seller and buyer. Drives my accountant crazy. I know its not tax deductible, but, its just part of doing good business. Then come the countless hours of working with buyers that just turn out to be non-serious or sellers who really don’t want to sell. Those are usually the ones calling daily asking, “Why isn’t my home selling?” Hours and hours away from family. Telephone interruptions when we are with family. The one who said she worked four hours for a commission didn’t impress me as the type who gets up at 5:00 AM and doesn’t stop until 11:00 PM to make sure client’s needs are met. Most REALTORS® work extremely hard for what they get paid.

So, 60 Minutes, next time you want to attack REALTORS® I suggest you look at both sides. There are a lot of good hard working REALTORS® out there who earn every penny they make and then some. REALTORS® who look out for the best interest of their clients. If I have to pay a fee to be in an MLS, I paid for that right. My clients understand that. What right does a non-paying member have to that information to take food off my table and put food on his or hers? Its not unlike the high medical insurance many of us pay and taxes we all pay that subsidies Emergency Rooms at the hospital. Why should medical services we pay for be sucked dry by to those who illegally enter our country and who do not pay taxes? Now that is something worth reporting about.

More to read on this…

Gregg Swann from Bloodhoundblog best defined what clients should look out for when choosing a real estate service in his April 2^nd blog Redfin.com’s Real Estate Consumer’s Bill of Rights: A wolf in sheepskin clothing . . .

Rich Schiffer from Swathore, PA has a nice list of blogs on this topic 60 Minutes — “Et tu, Brutae?”

Whitecomb Dot Com of Lombard, Il isn’t even a Realtor and he had some words on this topic Is ActiveRain the Best Advocate For Real Estate?

Jay Thompson from The Phoenix Real Estate Guy makes a strong point for you get what you pay for in Redfin, 60 Minutes, whatever…

Marlow Harris from 360 Digest in Seattle eloquently wrote Waiting for the dust to settle…

This entry was posted on Sunday, May 13th, 2007 at 8:21 pm and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

This is a very well written article. I see it standing up well amongst the real estate community on the blogosphere. Carnival?

May 13th, 2007 // Jim Cronin
Thank you Jim. I try to be a good student. This topic has blown the charts from all the blogs I have read.

May 14th, 2007 // Doug Trudeau
Doug - It is indeed well written, and covers a lot of great points. Not to be the grammar police or anything, because Lord knows I pooch that stuff all the time, but watch your tenses and “typos” –
“Not everybody drive a Lexus” and “who earn every penny the make and then some”. Just a friendly word of caution to not put too much faith in spell checkers. Please don’t get me wrong, this is *very* minor stuff, the “meat” of your article is far more important to me (and most, but not all readers).

You *should* submit it to the Carnival of Real Estate….

May 14th, 2007 // Jay Thompson
Thank you for the critique Jay. I made the changes. Must have learned that from our son’s teachers; i.e., thought not spelling.

I added another link of interesting reading from a non-Realtor who unknowingly promoted himself to Ambassador.

May 15th, 2007 // Doug Trudeau