Why Six Percent Realtor Commission is Going Away
This might not be one of my more popular blog posts with Realtors, but there is a harsh reality to face. The days of six percent Realtor commission is in real trouble. As a real estate agent no matter the market, you are likely already fighting for your full 3%. In the DC/Northern Virginia market, 2.5% (or less) is very much normal. There are many factors that go into why Realtors are being asked to lower commissions and I will dig into them shortly. The truth of the matter is technology and other factors start to erode profits and how others make money. We have seen this in other industries. The mortgage industry, for example, was completely revamped after the housing crash. The main changes were in terms of mortgage pricing and how loan officers received compensation. I feel the same type of change is already occurring in the real estate industry.
I want to begin this blog by stating ” I am NOT the greatest Title Sales Rep in the world.” This isn’t going to be about my accomplishments or how I built my business. Instead, this is about something that affects every organically grown Title Company and Title Sales Rep who works their butt off to earn the business of a producing Realtor and to have it potentially taken away on a technicality.
I think we all can admit changes and disruptions have been making their way into the real estate industry. It seems every few months some innovation is trying to change how we do business. The move to the internet and technology–which I’ve talked about for the last 7 years on this site seems to be leading the way. The difference is I talk about how to leverage and use tech to expand your footprint and grow market share. This new form of tech disruption involves getting rid of the Realtor all together. This affects everyone in our industry in many major markets and soon to be nationwide. The iBuyer pandemic is sweeping the country, so much so, that it was the “item of value” mailer for all Brian Buffini coaching clients this month. If Buffini is telling his clients to push this information to their databases, that means something. Here is what Realtors need to know about ibuyers and how they can best educate their clients.
As real estate agents, you are mostly taught to market back to your sphere of influence, friends, family, etc. You should be marketing to these people to get qualified buyer and sellers leads, but there is another segment of potential clients that most Realtors don’t think to market to. People who are vendors, and professional referral sources in similar businesses who help to create business.
There are three major pieces to the Title business that affect the real estate transaction. The first piece is sales and marketing…” business development people”. We are the “gas in the car” and make things GO on the front end of things. The last piece is our closing department. The last people a Realtor and home buyer/seller see in the transaction. This person goes over the closing documents and makes it as fun and uplifting experience as possible. The middle piece is the long lost hero of the Title business. They are the Title Company escrow officer. These people work their butt off doing everything necessary to get your transaction to the finish line. They get little love, yet bare the brunt of all parties in the transaction.
One weird issue in our business that we deal with is 
I was in a large real estate office recently, meeting with two new clients, and it was teaming with people walking up and down halls, doing all kinds of “Realtor” activities. I had a thought as I walked to my meeting room…” most of these people aren’t going to be successful long term.” Many of them need help and guidance to not go the way of the dodo bird. It seems every month something is trying to disrupt the real estate industry and change upon change is coming right at us. Many people forget to dodge and weave when these adaptations and changes find our business. These people are heading towards extinction in the real estate business, but they don’t know it. Here are 5 traits of the soon to be extinct Realtor.
Every month, there are thousands of new Realtors entering the profession. Statistically, most new real estate agents won’t make it a long career–many won’t make it past the first 18 months. Why? There are many reasons, but the main reason is new agents don’t know how to generate their own clients. This is information they don’t teach in real estate school. You pass a test and they say “good luck!” This is also why many new agents join teams so they can gain experience, work with active clients, and learn to generate their own business with guidance from a team leader. If you don’t want to join a team or work at a brokerage where teams don’t exist, then you better be a self-starter and eager to become a marketing king. I want to cover some of the basic ways new real estate agents can have a banner first couple years and get their business off the ground by generating their own clients at zero to little cost.
One way to know the real estate market is doing well is when you hear Realtor teams mentioning they are going to open their own Title Company. Now, I must preface by saying I don’t hear this on a regular occasion but in reality, I should hear this zero times…ever. There are many Realtors who don’t fully know or understand the full scope of what a Title Company does, let alone under the full scope of detail and liability they will be assuming by having ownership in…or fully owning a Title Company. Many see us Title Companies like the “piggy bank” and we rarely pay claims so we must be swimming in cash. That statement is far from the truth. In the hierarchy of real estate, we make less profit than the Realtor and the lender on a transaction. With this said, here are what Realtors don’t know about opening their own Title Company.
Instagram has been around for a while, but really took off once it was purchased by Facebook back in 2012 for $1 Billion. Looking back it was a smart move as Instagram now has over 500 Million active users worldwide. One of the best features that’s added to the platform are its “stories.” Stories are a series of 15 second videos or pictures that are posted for 24 hours then disappears. If you are thinking this sounds like SnapChat, you would be correct. Instagram has done a great job of pulling over the SnapChat users who want the luxury of posting on a larger platform that also allows content to funnel to Facebook. Hence touching a much larger audience for their content. Users have discovered it’s more effective to keep producing short-term content on a regular basis, than post a picture or video that sits on your account indefinitely.