Real Estate Agent Commissions: The Industry Is Purposefully Vague

Craig is the founder and Managing Broker of Added Equity Real Estate.  Added Equity is different than any other firm. It charges a real estate agent commission of 1% to list and sell a home. Total.

This is Craig’s blog series exploring why and how most realtors don’t talk openly and frankly about the actual fees they charge. This keeps real estate agent commissions at their longstanding high level (and makes it harder for Added Equity to compete on price). The second installment:

Real estate agents don’t do a very good job of telling consumers what they charge.

It’s a fact that real estate commissions have remained largely immune to the downward price pressure exerted by the internet in other industries. This is obviously in the best interests of real estate brokers, and not consumers. How do they do it?

Real Estate Broker Commission Kept High with Ambiguity

The real estate agent commission will go down only when prices are effectively communicated to consumers so that they can make informed decisions. By keeping commissions ambiguous, real estate agents keep them artificially high. How will consumers know of a better deal? They won’t. Real estate agents have a strong personal incentive to “go along” with the system, charge the same high commission as anyone else, and keep it all from the public’s view.

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