Happy New Week, from Chicago!
Just a question - Are we Realty Professionals worth more to clients now?
A couple of years ago, may agents around Chicago were discounting, some heavily! We resisted, and maintained our fee (NEVER call it "COMMISSION" Levels) at the same moderate rates they had been for many years, and our business continued to grow.
Now, in a transitioning market, slanted heavily in the buyer's favor, prospective listing clients are looking far less to the "cheapest folks in town." I am getting far less resistance to what we charge - and clients seem to know, more than ever, that they get what they pay for.
Let's do five seconds of history. As late as the early 1970's here in Chicago, before Anti-Trust kicked in, each of 8 local real estate boards around our area SET their board commission rates. Seems hard to believe now - but it was true! I believe, way back then, the North Side of Chicago Board "set" a commission percentage of six. Discounters complained, court challenges ensued, the rest is history.
Over the coming 2 1/2 decades, Realtor fee percentages dropped precipitously, as housing prices increased. Some, on average, in excess of 25% off their earlier levels. The boom market of a couple of years ago increased pressure to drop even more.
To be a successful real estate practitioner today, there is far more to do, and far more headache. Web coverage. SEO. New Technology. And on . . . and on! We have to work harder to generate and market the listings we have, and, with increasing buyer demands after the contract gets accepted, along with tighter lender's guidelines, keep most deals together through the inspection and loan commitment contingencies. Sellers, themselves, have challenges, especially with those threatened with financial distress, and foreclosure.
My hair stylist just raised her fee 20% with the New Year. My health insurance deductible has gone up 250% - to $2,500 annually - to keep my near four-figure monthly premiums for my wife and I somewhat stable. Hell, even the Chicago Cubs, for which I am a Season Ticket Holder, raised their ticket prices 28% - last time I checked, the Cubs didn't really win anything (choking in the 2007 Divisional Playoffs barely qualify here).
Several of my Team members are concerned that taking an increasing posture on our compensation will scare prospective clients away. Some have intimated we will be viewed as not being sensitive to the many distressed sellers in today's market, including those faced with short-sale, or foreclosure. A few others agree that we're worth more now, but none without concerns or reservations.
I would be very anxious to hear your take - are we worth more in today's real estate market? Please let us know!
DEAN & DEAN'S TEAM CHICAGO