Have you considered selling your Outer Banks home? There are a lot of things to consider before you put your home on the market. Perhaps, you believe one real estate broker is as good as another to maximize the profit from the sale and to complete the sale in the shortest time.
Not true. The skills, market knowledge and motivation differs greatly from one agent to the next. A single agent may be able to sell your home, but a team pulls together additional resources and skills to expertly market and use technology to gain efficiencies. Each agency defines what services they provide and at what cost.
How do real estate commission work?
The standard commission in the Outer Banks is 6%. So, that is $6,000 for every $100,000 of the sale price. That is a lot of money! The average sale price in the Outer Banks is $410,819, as of the last MLS statistics. So, a seller will need to pay over $24,500 in agent commissions for the sale of their Outer Banks property.
The commission is typically paid entirely by the seller; but 3% goes to the listing agent and 3% goes to the buyer’s agent. On each side of the transaction, the commission is typically shared with the brokerage to cover overhead and costs; so, each agent may only realize a fraction of the full commission.
While a seller lists their home with one firm, typically the buyer may be found by an agent at a different firm. The firm representing the buyer is completely independent of the listing firm and could be any one of hundreds of real estate firms.
So, what do you think will happen if you disclose the seller will only pay 2% (or less) to the buyers’ agency? Less traffic, less interest and a listing that may lag even though everything else is done right. Of course, it is not ethical not to show a buyer a property because the commission is reduced. Many times it may not be a conscious choice by the agent. The buzz and excitement generated by other listings just cause it to fall out of favor.
As a seller, you need to maintain the status quo to keep buyers agents motivated. In the past, I have even offered a bonus to the selling agents to increase interest, create buzz and sell the property faster.
How much will it cost you to sell?
Consider this: Does it cost twice as much to sell a million dollar property compared to a half million dollar property? At 6%, that’s $30,000 vs $60,000! Cost to sell a high dollar property may be incrementally higher but not likely double. After all, doubling the amount of advertising may only be throwing money away if it is not well targeted.
Does it cost twice as much to sell a million dollar property compared to a half million dollar property? At 6%, that’s $30,000 vs $60,000!
We at Eillu believe, the additional cost to show, market and sell the higher value property does not justify doubling the commission cost. That why we have lowered the listing commission to 1.5% (with a $15,000 cap) and included an incentive to buyers who use an Eillu Associate of 25% ($5,000 cap) of the Buyer’s Agent commission, payable at closing.
This is likely to be disruptive to the Outer Banks real estate market. No one likes change. Real estate is no different and the 6% commission has been the status quo for as long as anyone can remember.
Real Estate has changed
What most people fail to realize is the real estate market is vastly different than when this commission model was put in place. In the past, real estate agents had a monopoly on the MLS. So buyers and sellers did not have information or the network access. While there is not public access to the MLS directly, the internet provides a multitude of listings, information and resources available for buyers and sellers to educate themselves and perform analysis without the use of an agent.
Technology and the internet has drastically changed the real estate market. The internet puts buyers and sellers directly in the driver’s seat with access to up to date information. Today’s buyers and sellers are much more educated on the market and the process before they contact an agent. Over 98% of buyers today begin their search on the internet and hire an agent after educating themselves.
Buyers can research the market and take virtual tours of distant properties very easily. This allows buyers to do a lot of the work before even contacting an agent. They can pre-qualify for a mortgage and know how much they can afford. They can narrow down their search to just a few properties in the area that meets their criteria.
In the past, buyers may not have been as educated and needed to see a dozen or more properties before finding one to place an offer. They needed an agent to walk them through the process and typically did not pre-qualify before embarking on their search. This required a lot more of the agents’ time and attention and did not always result in a sale. Therefore, the higher commission rate offset work where the agent earned no commission.
Today, rather than a buyer visiting a dozen or more listings; they have done the work prior to hiring an agent. At Eillu, we recognize the effort buyers have made for themselves and believe in giving back. If you use an Eillu Associate to buy your Outer Banks home, we will reward you with 25% of the commission earned (up to $5,000) by the buyer’s agent. It’s like free money, right when you need it most. You can use it for closing, home improvements, new furniture or a vacation.
What exactly does the seller get for his/her money?
Agent Fees are Negotiable
Agent fees or commissions have always been negotiable. In the past, most sellers did not ask or attempt to negotiate the commission. In a booming market, an owner attempting to negotiate a commission may not find an agent to accept. If one did find one to accept, what kind of service would be provided for the lower commission? Not likely the agents’ best effort especially when they had other properties they could sell that would yield more for them.
Discount or Flat Fee Services
Nationally, there are several real estate agencies advertising discount or flat fee services. There are some agents who are adopting a “pay-per-service” or even hourly billing. This structure allows the seller to pick from a menu of services, like MLS listing, open houses, yard signs and fliers, and pay accordingly.
In Chicago, Lucid Realty has a sliding scale for commission and also an hourly rate. Redfin is also a major company adopting a discount commission model. Some companies, reduce the services provided with the discount commission while others include “full-service”. For some companies, full service may include staging, professional photographs, video or drone tours and for others it does not. There is no standard definition of “full service”.
Sellers should be aware of what exactly is included in the listing agreement and what the commission will be before selecting a listing agent for their home.
Eillu is Full Service for Buyers & Sellers
At Eillu, we have created a boutique real estate firm using a specialized team of professionals. We have built a new type of agency from the ground up. We invested in technology to get a seamless network.
Our Customer Relationship Management (CRM) system allows us to track, react and respond within minutes to all inquiries on our website. Our communication and document management system makes it easy to store and access all documents or messages with one easy interface accessible from any device. This makes it easy for buyers, sellers and our agents to be productive from anywhere.
Our team of professionals include seasoned and experienced Agents as well as many people you will not meet. These are the technicians keeping the network and website optimized or the marketing professionals creating a customized campaign to sell your home. All of this is put in place to create efficiencies to streamline and simplify the process. This makes it easier for all involved in the transaction and translates into savings. We believe in transferring these savings to our buyers and sellers. We want to be your agency of choice for life!
Eillu Full-Service Includes:
- Current Market Analysis with Listing Price Strategy
- Measurements & Notes of Property Features
- Staging and curb appeal
- Profession Photos
- Aerial Drone Video (> $500k for select locations)
- MLS Listing
- Listing on Syndicated Realty Sites—900+
- Coordinate Showings
- Advanced Marketing Team to write copy, blog, create advertising, brochures, email marketing, and social media
- Dedicated Web Page for your listing
- Zillow 5 Star Premier Agent
- Follow-up After Showings and Communicate Feedback
- Review Offers in Detail & Negotiate
- Follow-up with loan processing, inspections and all buyer deadlines
- Attend home inspection
- Communication to Seller every step of the process
- Secure document storage, signature and retrieval
- Attend and Represent at Closing
- Broker with over 20 years’ experience in OBX market—over $1 Billion in Real Estate sold
- Host Open Houses
Our commitment goes beyond buyers and sellers. We have designed a real estate agency to motivate and reward agents based on customer satisfaction. Eillu Associates can elect to earn a salary and other benefits rather than being an independent contractor that receives a portion of the commission. We believe the team approach and flexible compensation structure provides security for agents and motivates them to provide the best level of service.
We also believe in giving back to the community. We have recently applied to become a certified B Corporation. A B Corp is a new organization structure that recognizes a company can still be profit driven and contribute positive change in the world. A B Corp is certified by the non-profit B Labs that the company meets the highest standards of social and environmental performance, accountability and transparency. We love the Outer Banks community and continue to reach out and give back locally and globally. In fact, 5% of net company commissions are designated toward philanthropy.
Choosing the best real estate agency to represent the sale of your home should not be based only on price. The services you receive in exchange for that price is important to get the most value for your dollar. Most important though, is to have trust. Confidence that your most valuable asset is in the best hands possible. Not blind trust. At Eillu, our actions speak louder than words. List with us and find: honest communication, transparency, and fairness to all parties.