What comes to mind when you hear the phrase “real estate commission”?
We each might have different ideas. We may have had various experiences with paying (or receiving) such a commission. However, when we take a step back, do we really understand how commissions operate, and does the way they function actually make sense?
Unpacking Real Estate Commission
Imagine a real estate agent who does exceptional work. They’ve been in the business for ten or twenty years. They’ve served countless clients, completed extensive coursework, earned many certifications; they are agents with incredible value to offer customers. Then, imagine a real estate agent who has just earned their license four days ago and completed a two week course.
What you might not realize is that both of these agents–experienced or fresh into the industry–can very literally charge the exact same amount of commission.
Now, the agent who has been in the industry for twenty years has great value competency to offer their clients and should, arguably, be able to make more than the less experienced agent. This would be true if the real estate agent’s commission was based on their offered value and not the value of the house.
Yet, this usually isn’t the case. A person who owns the home is often going to make their decision of who represents them often based on their connections. This means that agents frequently influx into and out of the market and around 90% quit by the end of their third year. It’s practically just as easy to get into the market as it is to get out of it.
Rethinking the System
We can put it another way.
What if I took my car to a car wash, and they priced the car wash based on the value of my car instead of the quality and type of wash I wanted? I would probably drive away. I wouldn’t take my car to that car wash becauseI believe the price I pay should be based on the value of the service.
Yet, this unconventional car wash model is how we often do real estate. The real estate commission is often priced on the basis of the value of the house, not on the value of the agent.
Finding the New Mission
I believe we have a lot of value to offer clients. And doing so, we want to go on mission to eliminate commission.
This starts sby putting the customer at the center of the conversation. We asked what it could look like if we charged clients a simple, low flat fee for service real estate. We want the clients to win and keep a substantial portion of the equity.
At Scout, we’re doing it differently. We’re disrupting the traditional real estate model and striving to create a customer-centric company by being on a mission to eliminate commission. That’s why we changed our commission structure; we eliminated it.
It’s for you.