What does the federal reserve’s deception of the housing marketing mean for you?
Looking at a twenty year history of the value of homes, we can find the average home value–$200,000–in American during the early 2000s. Looking forward to this year, 2020, we see that house prices have increased to $400,000. They’ve almost doubled in twenty years.
The increase for agents
This housing price increase is great for real estate agents working off commissions. If you attach a 3% sliding scale, agents who were making $6,000 in 2000 and now are making $12,000 in 2020. We need to ask what agents are doing to warrant making double the income.
To figure this out, since I’ve been in the business for eighteen years, I asked myself what I was doing even just 10 years ago. In 2010, the average home price was around $260,000 which meant the average agent was making about $7,500 per sale. Since the current 3% agent commission rate on an average home means the agent comes away with $12,000, what differences in services result in the $4,500 increase in pay?
The impact of technology
Working back in 2010, the real estate process was actually much more physical and manual. We had to get wet signatures on physical, paper documents. I had a call log; if people wanted to see a house, I’d write down the name, number, and everything else to coordinate with the seller. We had desk computers, SD car plugins, and perilous MapQuest.
Now, in 2020, we have digital signatures so we can email documents, and with a click and signature, everything stays online and is very easy. We have laptops. We have iPhones to help with photography. We have apps to unlock doors and pull up surrounding listings.
In the ten years as commission doubled for agents, technology has made many things much more efficient, faster, and easier for agents as well. And, this technology has even decreased costs. Often, agents can work less and make more. Unfortunately for the customer, there has not been a clear pass down of benefits.
The results for you
Home values are skyrocketing. That means your equity should be increasing. Whenever the agent has technological advances that makes their job quicker, easier, and more efficient, I believe there should be a monetary pass down to you as the client.
And that’s just what we’ve done for you at Scout. We decided that we just can’t ride this wave and make money off you. We’re just going to establish what we feel like our services are worth and set a very low fee. This has worked; our clients are saving around $10,000.
The bottom line
Don’t allow the agent community to erode your net worth. Be an informed seller, make decisions based on your best interests. And we know you’ll come out ahead on the other side. At Scout, we know it’s about a win-win and hope that we can win for you.