Discounting commissions is not necessarily a gimmick. Numerous discounters, such as Help U Sell and Assist 2 Sell have been around for decades. I have no beef with them, especially since my own commission for selling their listings is no different from other firms. This blogger is also a successful discounter, and is even defending his higher priced colleagues in his post. However, I had to respond to one sentiment of his, and I have copied my comment below:
As I’ve written about before, I’ve never been able to have someone justify why it costs three times as much to sell a $300,000 home as it does a $100,000 home. Is there 3 times as much work involved? I don’t think so.
Compensation is not a measurement of labor. If it were, the CEO of a company who makes $250,000 would have to work 5 times as much as the employee who makes 50k. The CEO cannot work a 200 hour week. However, he or she oversees the exchange of large amounts of money; that, the commerce, is the point. A CEO oversees millions changing hands and to a degree is less replaceable than a grunt. A rank and file employee oversees their limited duties and is replaceable to the extent that their job can be performed. Anyone can make a widget. Not anyone can run the company. Anyone can sell a $1000 used car out of their driveway. Not everyone can sell a mansion. Compensation, therefore, is measured by the amount of money one can affect to change hands.
If an agent brokers a $1,000,000 transaction he or she is absolutely entitled to a proportionately larger compensation than in a $200,000 deal. More money has changed hands, more commerce has been engaged in, more title insurance has been sold, more homeowners insurance has been brokered, more taxes have been paid, more upkeep will be paid, more mortgage money has been sold, more money has been deposited and subsequently invested, more cars will be parked in the driveway, more amenities like pools, media rooms, & upscale appliances will be consumed, and, in short, everyone going forward will reap more from the million dollar deal than the 200k deal. The agent should not be exempt from this.
There is also an issue of liability and exposure to risk, errors and omissions that is magnified in a larger transaction. Again, the greater the risk, the greater the reward.
I won’t go into detail about the feeding and care for a million dollar client as opposed to a $100,000 client. There are two different universes. I have yet to have the attorney for a starter home purchaser send me on a wild goose chase to ascertain the HOA and subdivision rules on mineral rights.
Far be it from me to second-guess Mr. Mitchell’s chosen way of doing business. Anyone who has lasted in their current model for 13 years is certainly credible. That said, Mr. Mitchell is paid what he believes he is worth on a given transaction. I am paid what I am worth. If and when Mr. Mitchell decides he is worth more, there are certainly examples out there, myself included, who will give him ample justification.
J. Philip Faranda
