Just this week there are changes coming to the Denver real estate market thanks to Redfin, a Seattle based real estate brokerage. Redfin has decided to roll out a new commission platform in which Redfin will drop its listing fee for homes in metro Denver to 1%. With the average listing percent of a home ranging from 2.5%-3%, this change could put more downward pressure on area real estate commissions.
Redfin first entered the Denver market back in 2011 with a listing fee of 1.5% while newer flat-rate firms such as Redefy and Trelora charge a set price of $2,500 to sell a home. But Redfin does have some particulars when it comes to this new listing price commission: they will charge a minimum-listing fee of $3,000 on homes priced at $300k or lower. But above that level, every property will have a guarantee of 1% of the sales price.
When asked what would all of this 1% entail when it came to the work put into the seller’s home, Redfin says the lower listing fee includes a full-service agent, open houses, professional photography, printed brochures and a digital marketing campaign that allows potential buyers to see a virtual-reality scan of the home.
This isn’t the first company to offer a 1% listing fee, many firms have come and gone in the Denver market, none of them surviving long term. As a seasoned REALTOR®, I can understand why a firm might not make it that long at those listing prices for various reasons.
In today’s market, the average real estate agent’s commission is 6%. Now, that does not all go to one agent, it is split between the buyer’s agent and the seller’s agent. The buyer’s agent gets around 2.8% while the seller’s agent gets 3.2%. Many people do not understand that even after that split, the money is then divided out again. When you hire a real estate agent, you are paying for their time, energy and dedication. With those commissions, your agent is paying out their firm, using the money to market your home and is going towards all the blood, sweat and tears they put into your property with writing contracts, dealing with other agents, hosting open houses, taking you to look at houses and so much more. How can a REALTOR® negotiate, be your advocate and dedicate their time and attention to your transaction for only 1%?
If you are an expert in your market then there will be a demand for your services. I always tell my clients, it would be like if you went into your work tomorrow and your boss asked you to do the same amount of work you are doing now but have your paycheck cut by 40%, would you be ok with that? In real estate especially, this is a line of business that buyers and sellers cannot do alone. There is a reason all real estate agents are required to attend 180 hours of school and have continuing education every year because Colorado believes in grooming good real estate agents to help the public. When you pay for a REALTOR®, you are paying for so much more than just their expertise and they can be the best agent they can be for you because they are being paid accordingly to their skill set. If any real estate broker was making 1% of the transaction then they would not be able to sustain their business efficiently as they would be working hard to make deals close quickly so they could make more money which would cause quality of service to go down and client relationships to suffer.
In this world, you really do pay for what you get. If you want to work with a REALTOR® who can give you top notch service then hire a REALTOR® and pay for all their time and efforts that will in turn make for a smooth transaction. If you feel you are ready to put your place on the market, feel free to shoot me an email or give me a phone call and let’s grab a cup of coffee and discuss how I can help you as your REALTOR®.