Top Local Agents.
Save Thousands in Commissions.
Sell your home for top dollar with top local agents for as little as a 2% commission.
Sounds compelling right? Unfortunately as is often the case, the details are in the fine print. Here is Ideal Agent’s fine print.
“Our agents will list for 2% and offer the typical Buyer’s Agent commission in your market ranging from 2% to 3%. The average Buyer’s Agent commission nationwide is 2.5%. If a buyer calls on your house directly without an agent, our agents have agreed to do the entire transaction for only 2% total. Homes under $150,000 will have a minimum list side commission of $3,000.”
In Ohio, over 95% of buyers in residential real estate transactions are represented by a buyer’s agent, so the chances of not paying a buyer’s broker commission is highly unlikely. When the chances are that improbable you can’t truthfully advertise your commission at 2% by just adding an asterisk with fine print and downplaying the details. It’s misleading and by definition false advertising.
Real Estate Commissions Explained
The average listing fee rate in Ohio is between 5-6%. Ideal Agent’s total commission is reported to be around 4.5%. At first glance this might appear to represent a savings, but this doesn’t reflect the entire picture and here’s what you need to understand.
Ideal Agent and companies like them (real estate agent finder services) partner with those agents who are willing to pay them a referral fee, typically in the range of 25-35% of the total commission charged on your transaction side (listing or buying side). So in addition to any commission reduction their partner agents provide, these agents are also kicking back 25-35% of the commission to Ideal Agent (or the agent finder service involved). To understand why this isn’t beneficial to you as a seller you need to understand how real estate commissions work.
There is no national conspiracy to set real estate commissions at 6%! Homes sell for top dollar because of extensive, skillful, and highly polished marketing. Some people believe that after a home sells the real estate agents receive checks equal to 3% of the home’s value, and deposit them into their respective bank accounts. This is not the case. When we realtors sell a home at 6%, we plan to make about a 1% profit. Generally 3% goes to the buyer’s agent and 3% to the listing agent. Of the 3% that goes to the listing agent, approximately 1% of this will be taken by the agent’s broker (that is the company the agent works for), about 1% will be spent on advertising, and the agent will ultimately receive a check for approximately 1% for making the whole thing happen (that’s pre-tax earnings).
When listing agents attempt to compete on commission, they are actually competing with what would be the marketing dollars for your home, and as a result gambling with your home equity! Obtaining the highest price for your home involves providing far-reaching exposure to a qualified audience of motivated home buyers. This requires a targeted and comprehensive marketing plan the includes tradition as well as advanced modern tactics.. The days of putting a “For Sale” sign in the front yard and running an ad in the newspaper no longer apply. While these traditional marketing methods are still employed, they are not nearly as effective in reaching today’s buyers as some of the more modern, innovative tools we employ. Each of these marketing efforts allows us to reach a different segment of home buyers, some reaching buyers who might not have even been looking! Eliminating any one of these efforts reduces your homes market exposure which is likely to not only result in a lower sales price, but could also delay, or even lead to your home failing to sell. The more buyers who see your home as soon as it goes active, and the sooner you receive an offer the better the outcome is likely to be.
When a listing agent pays out a referral fee, and/or reduces their listing commission where would you guess that reduction is drawn from? If you guessed the marketing budget for your home you’d be right.
With this understanding, consider that Ideal Agent already requires it’s partner agents agree to a 2% listing commission, an amount equal to approximately half of what should be the marketing budget for your home! They then take 25-35% (real agent finder services – Ideal Agent referral fee) of the 2% (listing commission). Thus by paying out this referral fee these partner agents are effectively eliminating the marketing budget for your home!
The simple fact is this… Getting top dollar for your home is about creating demand, and as agents we create demand by generating exposure for our client’s home through paid marketing.
Ideal Agent Service is NOT Free
When an agent closes a deal for a customer Ideal Agent referred to them, Ideal Agent takes a percentage of their commission on the sale — what’s commonly known as a referral fee.
All agent matching services make money via referral fees; it’s how they generate their revenue and provide their services to consumers.
The company recently announced a partnership with Incenter to offer branded mortgage and title services. This will likely create an additional stream of revenue for Ideal Agent.
Not a Discount Brokerage…?
In their commercial they state, “We are not a discount brokerage”. This is a way for Ideal Agent to make themselves sound like a full service brokerage when in fact they are nothing more than a middle man making a profit off of referral fees. Discount brokers are those who charge a reduced fee, but who do little, if nothing to market your home beyond taking photos of the property which they inserting into a template marketing brochure (which they will typically require you print out yourself), before uploading the home into the MLS, and perhaps syndicating it out to sites like Zillow, Trulia, and Realtor.com as a standard free listing.
Remember, these partner agents have reduced the listing commission, eliminating the 1% that would be the marketing budget for your home and thus they do not have the ability to cover the range of expenses required to effectively market, and expose a home to today’s homebuyers. Examples of these marketing expenses might include: hiring a photographer to take professional photos of your home, hiring a graphic designer to edit these photos to create editorial grade photos that will make your home stand out from the competition, shooting and editing a video of your home, running social media ads (studies show U.S. homebuyers spend less than 8 minutes per day on sites like Zillow, but over 2.5 hours per day on social media sites), paying for premium placement on the consumer portals such as Zillow, Trulia, Realtor.com and others, and the list goes on. When you work with Ideal Agent (and similar real estate agent finder services) you by definition are working with agents offering discounted brokerage services.
Ideal Agent’s Claims about Savings
Ideal Agent makes what could be considered misleading claims about how much you can save with its service. For example, it suggests on it’s homepage that you could save up to $20,000 on the sale of a $500,000 home when the buyer doesn’t have an agent.
Ideal Agent fails to mention that roughly 90% of buyers work with agents, so it’s unlikely you’ll be selling to one who doesn’t have an agent. Your savings over a traditional 3% listing expense will likely be closer to $7,500 rather than $20,000 on a $500,000 home.
Why do Agents Work with Companies like Ideal Agent?
Agents spend a great deal of of time and money on marketing to generate business and bring in new clients. Agent matching services like Ideal Agent are essentially marketing companies that have their own real estate brokerage license, a requirement for collecting real estate referrals fees.
These agent matching companies are highly proficient marketers who craft slick, and often misleading sales pitches that typically include the promise of substantial savings in the form of commission reductions or rebates, leaving out important details, such as the fact you will also have to pay 2.5-3% to the buyer’s agent on top of the 2% rate they suggest they will sell your home for (for more on this read, Who Pays the Real Estate Agent).
Using slick marketing, Ideal Agent finds clients for agents, which means agents save time and money that would otherwise be directed to marketing.
For agents who are onboard with this type of bait and switch marketing that advertises one rate (leaving it to the consumer to search Ideal Agent’s website to locate their fine print which is not included in their commercial), but at the point of sale reveals the true cost to be more than double the suggested rate.
But agents who are willing conduct their business in this fashion can increase their client totals, allowing them to close more deals. Partner agents of these finder services are only required to pay out the 25-35% referral fee if and when a transaction is closed thus allowing these agents to reduce the risk of losses on ineffective marketing. by limiting.
Should you Use Ideal Agent to Sell Your Home
We are able to offer superior agency at a lower cost to you, without the expense of a referral fee, and with the complete range of services needed to get you top dollar for your home by maximizing its exposure.
We will list your home for a 2% commission, while allowing you to choose the commission offered to the Buyer’s Agent, and thus the potential to reduce the total commission below 5%. In the event we locate and represent the buyer for your home we will reduce the total commission even further (and we have strategies we can employ to enhance the chances of this which we’d be happy to discuss with you).
If you’re looking to net the best combination of quality, service, and savings, we invite you to email us, or give us call at 614.332.6984!
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Downtown Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Galena 43021 Hilliard 43026 Lewis Center 43035 New Albany 43054 Pickerington 43147 Polaris Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235