We need to face it. When it comes to real estate agents, some key questions are being overlooked.

What is a real agent truly worth? How much should they actually cost you? Is their commission too high or too low?

Many start the conversation around real estate agents through this lens of commission. When asked, many agents will reply “Yes, I’m worth my commission.” However, we counter that with “Great, but how much is that? How do you quantify it?” Often, agents respond that their commission is determined by the value of the house.

This begs the question. Is an agent’s worth, then, dependent on the value of the home, not on the value of the service they as an agent provide?

Typical Commission Structure

We can make this more tangible.

Imagine you have an agent who sold twenty houses last year which were all listed at different price points. One may have been priced at $1.5 million, one at $500,000, and a third at $300,000. Out of all the houses a particular agent sold, look for the home with the lowest price point. If this was a $250,000 house, with a commission rate of 3%, the agent would have earned $7,500.

This home sale which earned the agent $7,500 effectively establishes the basis, the lowest rate, for which the agent was willing to work in the previous year. If their commission is based on the selling point of the home, then all of the remaining homes yielded a higher commission for the agent. 

The Overlooked Problem

Now, if the agent selling the home at a higher price point (and thus earning a larger commission) can articulate the enhanced services they’ll offer and the larger amount of time this will consume compared to the lower priced homes, then this situation is very understandable. They should be paid more for such a sale. However, if the services are the exact same, it doesn’t make sense for the real estate agent to charge a higher price for the same service.

Your Tangible Solution

What does this mean for you? First, you can start by more fully understanding what you’re paying the agent to accomplish. Are they charging you based on their competence and the services provided or solely on the price of the home, potentially at a rate much higher than their base point shown by their sales record?

Practically, you can determine this by asking the agent about the houses they sold last year, finding the house with the lowest price, running their commission rate, and then asking questions. Ask what additional services they will be providing to earn the higher sum. If they have answers, great! We love paying agents their due. If not, you are protecting yourself from paying essentially a much larger tip than necessary. Why should you pay more, just because you have a bigger house?

Our Scout Difference

We hope this insider information saves you a substantial amount of money. We want it to equip you to receive a fair fee from the service agents provide by giving you the tools to run a price match based on their sales record. We’re here, looking out for you. 

Welcome to the Scout difference.