The traditional real estate commission is 6%. This is a rule of thumb. It is habit, custom, or tradition. Think of it as tipping at a restaurant. We would say that a 10%-20% tip is the norm, with 15% being the average. ( The difference is that a real estate commission is set in the contract you sign with the real estate broker, whereas a tip is entirely voluntary.) Although the real estate commission percentage becomes legally binding once put into contract form, it is entirely negotiable beforehand. In fact, California state law states that the real estate commission percentage is ENTIRELY negotiable. Therefore, we have come up with a new rule of thumb. We think you’ll like it better. MUCH better. That is, unless you work for our old fashioned 6% real estate commission competition…
WELCOME TO THE FUTURE OF REAL ESTATE! WELCOME TO BARON & CHESTNEY REAL ESTATE!
How We Save The Home Seller Money: (Home BUYERS– please read the section called “But I’m A Buyer” to see how Baron & Chestney Real Estate will save YOU money, too!)
Remember, in a real estate sales transaction, the home seller always pays the real estate broker’s commission. It is traditionally a 6% realtor commission, and THAT is traditionally split with a 3% realtor commission going to the home buyers side broker and a 3% realtor commission going to the home seller’s side broker. If one real estate broker represents both sides (entirely legal with permission from and disclosure to both home buyer and home seller), then that one real estate broker earns the full 6% realty commission. (Each side’s 3% real estate commission may be further split, half to real estate broker and half to real estate agent, and almost always is, whenever real estate agents are involved as opposed to dealing directly with a real estate broker). On a $500,000 property, which is quite modest by San Francisco Bay Area standards, a 6% real estate commission represents $30,000 — no small amount. On a million dollar property, which is much closer to the average home price in MANY San Francisco Bay Area cities, that real estate commission would be $60,000! (On a $750,000 property, which is about the average price across the bay area, the commission would be $45,000). Because many home sellers do not want to pay such outrageous realtor commissions, they instead resort to trying to sell their home themselves, often with embarrassing and /or disastrous results. Some home sellers compromise, and instead use the “help you to sell your house” type of real estate services, which help add a bit of professionalism, and charge a flat commission fee averaging about $7,500 or so, depending on the location of the home and the property value. STILL, the home sellers must do most of the hard work themselves! ALSO, perhaps even more importantly, those “flat fee” prices are simply ONLY ONE SIDE of the TOTAL commission that the home seller will be paying — that is simply the amount that they will be paying to the “help you to sell your home” company! You have to read the “fine print” to learn that you will, of course, ALSO be obligated to pay a commission to the real estate broker who represents the HOME BUYER! And, that will be just as much, and often even TRIPLE what you are paying to the “help you to sell” service! That’s right — the home seller in a real estate transaction pays the ENTIRE real estate commission — BOTH sides of the commission — to their OWN broker, AND to the broker who brings the buyer! Many potential home sellers do not even realize this very basic fact! READ THE FINE PRINT on the contract and FULLY UNDERSTAND the TOTAL real estate commission that you will be liable to pay before listing your home for sale with ANYONE! WORST OF ALL, THOUGH, HOME BUYERS CAN SEE RIGHT THROUGH THESE MONEY SAVING STRATEGIES! To a home buyer, this sends a message– “The home seller is cutting corners. Why?” Or, even worse, “The home seller is saving money, so I’ll come in with a lowball offer! I want a cut of the loot!” So, what is a far better solution? How about a discount price, while still getting FULL service?! That is Baron & Chestney Real Estate’s answer.
THE BEST SOLUTION IS A BARON & CHESTNEY REAL ESTATE DISCOUNT REAL ESTATE BROKER! WE ARE A FULL SERVICE DISCOUNT COMMISSION REAL ESTATE BROKERAGE THAT WILL SELL YOUR SAN FRANCISCO BAY AREA HOME FOR A TOTAL REAL ESTATE COMMISSION OF ONLY 2% TO 4%!!! HOW CAN WE DO THIS? Why is it 2% to 4%?
Actually, our Baron & Chestney Real Estate discount realtors certainly wish that we could guarantee that a home seller would only pay a maximum real estate commission of only 2%. However, Baron & Chestney discount real estate brokers can only control OUR side of the real estate transaction. In a typical real estate deal, one real estate broker represents the home seller, and a different real estate broker represents the home buyer. Let’s say that a Baron & Chestney Real Estate discount real estate broker represents the home seller, for example. We can control our realty commission on that side of the transaction. In fact, we can GUARANTEE that it will only be 1% of the selling price of the property. However, let’s say the home buyers are represented by Mr. Buyersbroker, an old fashioned realtor who wants his traditional 3% share of the real estate commission. We can NOT control this side of the deal. Well, we can, technically — we can offer a low commission on the Home Search (multiple listing service). However, this would be doing our home selling client a huge disservice. If we were only to offer Mr. Buyersbroker a 1%, or even a 2% commisison for bringing a home buyer, he very likely would not show potential home buyers the home. He would INSTEAD divert them to OTHER homes, which will instead pay him his traditional 3% real estate commission.
That scenario would end up hurting our home seller client — especially in a slower, more competitive real estate market where many homes are competing for a limited number of qualified potential home buyers. It would not be a wise strategy to employ. In fact, this is EXACTLY why the “help you to sell” or “assist you to sell” services are jokingly called “HOPE you sell” or “ATTEMPT to sell”, throughout the real estate industry. The fact of the matter is that if you ask the average real estate agent or real estate broker to take any less than a full 3% commission for their “side” of the deal, they will often snub their nose at you. They would rather show a buyer a home that will pay them their full commission. Is this ethical? Is this legal? Is this fair? Although is NOT “fair” to the home sellers or the home buyers that a real estate agent or real estate broker would show homes based on the commissions that they offer (and it IS unethical and even potentially illegal, depending upon the circumstances, but also VERY hard to prove, unfortunately), as one of our old real estate brokers always says, “the only “fair” in life is BUS “FARE” ” — in other words, like it or not, that is the way that many real estate agents and brokers conduct their business. Sad, but true. You can believe it or not believe it, but the truth is, unfortunately, it’s the truth. This practice can also be done subtley — for example, they will show the home that pays the higher buyer’s broker commission FIRST, or LAST, in a series of homes, such that it will make a much stronger impression upon the potential home buyers, while the lower commission homes get “buried” or “lost” somewhere in the middle of a series of showings, so as to weaken their impact upon the potential home buyers. Or, such properties will “conveniently” be “omitted” from a list of potential homes to show the home buyers.
Of course, NOT all real estate agents or brokers would use such deceptive practices — but, like it or not, one can either accept reality or turn a blind, ignorant eye to it. At Baron & Chestney Real Estate, our discount real estate brokers neither employ nor condone such unethical practices. After all, we make a 1% real estate commission per side of the transaction, no matter what — the rest of the money always flows back to our clients, anyway! So, even if we WERE inclined to use such a practice, it would have no financial benefit for us anyway! However, our discount realtors DO feel that it is our duty and obligation to advise our clients as to how to obtain the maximum market exposure for their home — so, therefore, we do not recommend offering a lower commission to the buyer’s side real estate broker. This is the ultimate (and little understood by consumers, unfortunately) “hitch” or “catch” with the “help you to sell” real estate business models. Attracting the hatred and despise of 6% commission realtors by “insulting” them and offering them any less than their traditional 3% commission for bringing a buyer will only do two things — it will make your property “unpopular”, and it will make your real estate company “unpopular”, too. Many such realtors will not even go and show a property that is listed with the “help you” real estate companies!
One look at who the property is listed with, and off their list it goes! SO, how does one overcome this stigma? Instead, in the aforementioned case, Baron & Chestney Real Estate would earn a 1% real estate commission, Mr. Buyersbroker gets his traditional 3% real estate commission, and the home seller would only pay a TOTAL of 4% real estate commission. This much we can guarantee, and that would be the WORST case scenario — a 4% total real estate commission. When Baron & Chestney reduces OUR commission by 2%, it does not take money out of our home seller’s pocket, AND it does not take money out of the buyer’s broker’s pocket, either — hence, they have no problem showing our client’s home to prospective home buyers, which is what we and our client want, obviously. This is why we say that the TOTAL real estate commission will be 2% to 4%. That brings us to the BEST case scenario, which is the 2% TOTAL real estate commission. If one of our Baron & Chestney Real Estate discount realtors represents both home buyer AND home seller, (with full disclosure to and permission from both parties, as required by law), the TOTAL real estate commission would be only 2%, paid to Baron & Chestney, for representing BOTH “sides” of the real estate transaction. SO, then, how do we end up in the range BETWEEN the 2% realty commission and the 4% realty commission? If Mr. Buyersbroker is willing to reduce HIS commission to, say, 2%, then Baron & Chestney Real Estate takes our 1% commission, and the home seller could pay only 3%, for example. You see, for every unethical real estate practitioner who will not show homes that offer reduced commissions, there is a smart one who WILL, because he or she realizes that any deal is better than NO deal, ESPECIALLY in a slower real estate market. Indeed, as the Baron & Chestney real estate business model continues to exert strong competitive pressures upon our old fashioned 6% commission competitors to lower their commissions or face the prospect of going out of business, more and more realtors are realizing that they NEED to do business differently if they want to survive, and that the long-running “6% real estate commission party” is quickly fizzling out.
OUR GUARANTEE, THEREFORE, IS AS FOLLOWS: ON ANY REAL ESTATE TRANSACTION, BARON & CHESTNEY REAL ESTATE WILL NEVER MAKE MORE THAN A 2% REAL ESTATE COMMISSION IN TOTAL. IN FACT, WE HAVE SET OUR REAL ESTATE COMMISSION STRUCTURE AND DESIGNED OUR REAL ESTATE BUSINESS MODEL TO REFLECT THE BASIC PRINCIPLE OF A 1% REAL ESTATE COMMISSION FOR EACH “SIDE” OF THE REAL ESTATE TRANSACTION THAT WE REPRESENT. IF WE REPRESENT BOTH HOME BUYER AND HOME SELLER, (WITH FULL PERMISSION FROM AND DISCLOSURE TO BOTH PARTIES) WE WILL EARN A 2% TOTAL REAL ESTATE COMMISSION ON THE DEAL. IF WE ONLY REPRESENT ONE OF THE PARTIES, WE WILL ONLY EARN A 1% COMMISSION ON THAT DEAL. WHETHER WE ARE REPRESENTING THE HOME SELLER OR THE HOME BUYER, WE BELIEVE THAT THE REMAINING COMMISSION AMOUNTS SHOULD FLOW BACK TO OUR CLIENTS. WE WILL TAKE OUR COMMISSION, WE WILL ADVISE OUR CLIENTS TO OFFER A FAIR COMMISSION TO THE OTHER SIDE OF THE DEAL TO FACILITATE A TRANSACTION, AND WE WILL ALLOW THE REST OF THE MONEY TO STAY WITH OUR CLIENTS — WHERE IT BELONGS!
Basically, the bottom line is this: if you offer less than the full 3% to whoever brings the buyer, your property will suffer from lack of market exposure and your real estate company’s listings will get (“informally”) “blacklisted”. SO, why not INSTEAD offer the full 3% commission to whoever brings the buyer, especially in a tough market? This way, you will not anger anyone. When it gets down to brass tacks, and you have already received an offer(s), THEN you can certainly ask the other realtor to consider discounting their commission. And, this is commonly done throughout the real estate industry. However, the time to ask a 6 % commission realtor to even consider a commission discount is NOT up front, but rather at the negotiating table, assuming you even get there. You need to get there first — and “help you” services have a lot of trouble getting you there! Meanwhile, why not take OUR guaranteed discount, on the listing commission, right up front — Baron & Chestney gives it willingly. You should look to save the money on the LISTING side, not on the buyer’s brokers side. If you try to save commissions on the buyer’s side, you will generally hurt yourself more than help yourself. THAT is the unfortunate truth — like it or not. And, what about our 6 % commission competition? We don’t ever want to take commission money out of their pockets when they bring a buyer to our client’s property. We would never want to do that. That is just plain foolish — for us, and for our clients. Instead, we WILL compete against them fair and square in trying to bring a buyer on our own (unrepresented by another agent or broker) for our clients, via open houses, ads, etc., so that our clients can pay a TOTAL real estate commission of only 2% with Baron & Chestney Real Estate. Sometimes we beat them to it, and sometimes we don’t. It generally depends upon the property and the market conditions. However, we ALWAYS want our clients to accept whatever offer will result in the greatest net dollars back to them — regardless of what agent, broker, or real estate company brings the buyer. The Baron & Chestney Real Estate business model is set up to do exactly that, in fact. Also, as for our 6% commission competitors, we also prefer to beat them fair and square on the listing side of the business — when your store sells the same Pink Bunny Batteries for $2.99 instead of for $5.99 at your competitor’s store, you tend to attract the smart customers over time, and they come back, and tell their friends, family, neighbors, and coworkers, while the store that sells the same Pink Bunny Batteries for $5.99 soon posts an “out of business” sign on the door, OR has to lower their price for the batteries to $2.99. as well… BUT, if they are simply NOT able do so because of an inherent flaw in their business model (like very high overhead and needing to charge 6% because they are splitting commissions far too many times among far too many people), what do you know… that sign will eventually be going up after all… and we are quite content to wait and see that happen slowly over time…
Baron & Chestney Real Estate offers FULL SERVICE discount real estate brokers who will sell your San Francisco Bay Area home for a discount realtor commission of only 2% to 4% in TOTAL. Home buyers who purchase a home using our home buyer rebate program will get a realtor rebate of up to 2% of the selling price of the home. Serving your discount real estate needs throughout 10 San Francisco Bay Area counties, our discount realtors will save you THOUSANDS of dollars in real estate commissions, whether you are selling a home or buying a home, or BOTH! Call a Baron & Chestney Real Estate discount real estate broker today, and let our home seller discount real estate commissions and home buyer discount realtor rebates save you thousands of dollars in realtor commissions on your next bay area realty transaction! Call US first!