If you had to guess, how much would you think was paid out in real estate commissions nationwide last year alone?
Over $105 billion.
How? With over 5,340,000 homes a year sold at an average purchase price of $385,000, real estate agents make around $100 billion dollars in commission. Now, having worked in the industry for 18 years, I love real estate agents. I love this industry. I believe we’re worth what we make. However, when I see $100 billion dollars, I think this represents something: someone’s college fund, a retirement plan, a down payment. And this commission seems a little unbelievable.
How did we get here?
Technology has driven down costs and made things faster and efficient. As agents, we’ve had the benefit of technological advances. However, there’s not a clear pass down for consumers. When almost any other industry experiences such technological advances, competition ensues and the clients, in a sense, pay less and get more.
For example, I used to go to camp, get a long distance card from my mom, and have to be aware of the minutes I’m paying to use. Now, I have a cell phone and pay for an unlimited plan with email, texts, and more. It’s easier for me, the consumer, than it would have been before technology.
But what about real estate?
Typically, when technology advances, it drives down costs and significantly benefits the consumer. I’ve just not seen that happen in the real estate industry.
In 2019, we had this $105 billion paid out in real estate commissions. So, we have to ask the question: why? When is the industry going to start being advantageous for the customer to be able to retain their equity and net worth to be able to use it towards milestones or life aspirations?
I believe in real estate, and I believe that we as an agent community must start to have a shifted perspective: this is the client’s equity, not our commission. And I’m acting for this, as I talk about our fixed fee for service model. At Scout, we don’t charge for real estate commissions. We charge a flat fee.
I’ve found that, a lot of times, the rest of the real estate community is not like that. They really want us to stay in line and charge commissions. Yet, what I think you, as a customer, must understand is that whenever you have an agent who charges commission, there is an eroding factor to your net worth. That’s why at Scout, we want to help you retain your money. We want to charge this fair fixed fee to be able to fund your lifestyle goals.
This is the $100 billion dollar problem. The future of real estate is being on a mission to eliminate commissions so that you can have more equity in your pocket.
After all, the money is yours. Not ours.
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