Why I Became a 1% Real Estate Agent

Home sold by Jennifer Beeler

The other day I was on the phone with an agent from my office. He asked me a question which I had heard before. The agent he was working with asked why he works for a 1% real estate agency, eluding to working harder for less money. My coworker wondered if I’d been asked this before? Oh definitely, I responded. Thinking about it, even the week prior I was on the phone with an old colleague from a traditional 3% commission firm talking about a property and she asked me the same thing.

Having worked for a widely recognized, traditional 3% real estate company prior to joining The Cascade Team in 2016, I feel I have a good perspective of the brokerage world and trends to come so I was able to share a lot of perspective with the newer agent. Responding to that question made me feel like blogging some deeper thoughts on the topic here. Before I really dig in I’ll lay out traditional real estate commission models, how this is changing, and how sellers benefit from a 1% real estate agency such as The Cascade Team. Most of the widely recognized real estate companies are “traditional” in a sense that someone selling their house with them would pay 6% of a home’s purchase price as commission at closing. 3% would go to the listing (seller’s) agent and 3% would go to the purchasing (buyer’s) agent. On a $300,000 sale that means a seller would net around $274,500 if we estimate 2.5% of the sales price as closing costs ($7,500) and $18,000 in commissions.

With the majority of property searches taking place online, and the contract process going digital through services like DocuSign. Some of these same technology companies were creating the benchmark for property search capitalized on the millions of visitors using the search by getting into the real estate business as well. As is common with the Silicon Valley “disruption” approach to entering and gaining foothold in new sectors, commissions were lowered or partially offered as “cash back” to the customer at closing. This is appealing to customers because they save, and also set some tones throughout the real estate industry that the 6% commission standard may no longer dominate the market. Then we saw firms such as The Cascade Team dedicated to providing the best possible service by combining the best parts of traditional firms, the latest real estate technology, and commission savings for the customer. Of course you can say I’m biased but I believe going with an independent agent such as myself is setting clients up for better success than one of the online based real estate companies. I look at it from the perspective of I could go work for one of those companies, but I prefer to work for a company with local roots that gives me the flexibility to meet the needs of my clients. I want to be there from A-Z to ensure we all know what is going on at each step in the transaction. My experience tells me that having a dedicated expert such as myself means less headaches for everyone.

Now let’s break down how much someone selling their home with a “1% agent” such as myself, saves them. To start off, when the term “1% agent” is used it does not mean the buyer is paying 1% of the home’s purchase price as commission. What it means is as the listing agent, I only charge 1% listing commission vs. the traditional firms or agents that typically require a 3% listing  (seller’s) agent’s commission. I still recommend a 3% commission for the purchasing agent (buyer’s) side of the transaction which means someone selling their home with me is paying a 4% commission vs. the traditional 6%. Using my services for the same $300,000 sale example means a seller would net around $280,500 if we estimate 2.5% of the sales price as closing costs ($7,500) and $12,000 in commissions. That is
$6,000 back in the seller’s pocket compared to using a traditional agent. The more a home is worth the more a homeowner will save by using my commission model. Check out the table below for a breakdown of how much my clients can save by paying 4% total commission when selling their home:

Homeowner savings when using my 4% total (buyer + seller) commission vs. the traditional 6% model

So why did I make the switch? I saw the trends in the industry changing and I saw former colleagues losing clients because their past clients knew how much they could save elsewhere. Ever since I made the switch I’ve had more business opportunities and built relationships (that have lead to more) which has lead to great growth. Most importantly I’ve connected with awesome clients and couldn’t imagine not being a part of their lives during the big transition that is buying, selling, or both. For me personally I have been able to tap into markets I wasn’t able to reach with a traditional brokerage. I have been given a chance to connect with more clients which is what excites me every morning. It also puts me ahead of the curve in an industry that is changing. I’ve seen those same traditional firms now lowering their commissions on the buyer and seller side all the while stating they are worth the 3%. Times are changing and I get to win business not by negotiating my commission but by offering a very competitive cost for full real estate services.

I’ve shared my views on why I believe there is no difference at all in the level of service , but it is also great when this is reaffirmed by my own customers. Recently when I was about to close on a home for my clients, we were on the phone and they shared that they were extremely happy with my communication and the services I provided throughout the transaction, but they also felt I had worked harder for them than any of the traditional 3% commission agents they had hired in the past! Making transactions as smooth as possible while getting the best price for a purchase or sale is always my mission for my customers so feedback like this always flatters me and also tells me I am working under the right real estate commission model.


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