Commission-Free Real Estate: The Right Thing To Do

For more than a century, compensation for real estate professionals has been based on a percentage of the property's sale value. Is this the most reasonable way for an agent to be compensated? At TRELORA, we realize that today's buyers are finding their own homes online, and most agents are serving as advisors and facilitators, so savvy homeowners are questioning the high costs of real estate representation.

Let's start by defining an agent's responsibilities, which are most accurately categorized as "sales" or "service." 

Commissions are common in sales industries. If you sell widgets for XYZ Corporation, you are most often compensated with a percentage of each sale you make. If you're a talented agent, you earn a cut of your client's earnings on every job you book because you are driving activity and a result, which would not have happened otherwise.

In theory, percentage-based commissions are designed to attract aggressive and persuasive personalities by giving them a stake in creating results. For example, a car dealership wants to move as much inventory as possible, so it uses a commission structure so its salespeople will urge customers to buy quickly and spend more.  

But is this how a real estate agent works? Can an agent really convince someone to buy a home they don't want? Can she or he magically inflate the market value of a home to fetch a higher price for a seller? With buyers, sellers, and the housing market driving all activities, the only salesmanship employed by agents is to attract new clients and keep them happy.

In today's highly commoditized economy, real estate services have been redefined. 

They don't "sell" homes in the traditional sense of the word; they provide a service to those buying and selling homes. The vast majority of service-based industries offer their skills with a fixed-fee structure. For example, you might spend $40 on a piano lesson or $100 to have your teeth cleaned at a dentist's office. That fee is based on the knowledge, time, and material costs involved. It is a fixed, flat fee, regardless of your earnings.

Which type of service are you seeking in a real estate professional? Are you looking for a cutthroat high-volume salesperson — someone who might be aggressive on your behalf, but would be just as eager to have you sign a bad deal to move on to the next client quicker — or do you seek an agent as a knowledgeable adviser to help you navigate the process and make an informed choice?

Most people see an agent as an adviser, expecting to buy or sell a home based on a fair and reasonable market rate with the agent's help. They rely on their agents to avoid being ripped off. They see their agent the same way they'd see a financial adviser or counselor, providing a service for a fee based on the work performed.

At TRELORA, we recognize that the price of a home is immaterial to the agent's job: it doesn't take five times as much effort to sell a $1 million home as it does a $200,000 home. In that case, real estate commissions don't make much sense. You wouldn’t pay someone to file your taxes based on a percentage of the income they're adding up.

Any homeowner who is still paying a percentage of a home’s value in order to buy or sell should take a hard look at the services they are receiving and ask themselves — what would these services normally cost in any other industry? How much should an agent earn per hour or per sale? Is there a reasonable flat fee that encompasses first-rate service?

What does it really cost to represent a buyer or seller in today's market, which is so rich with technology and information? 

In the Denver market, educated buyers and sellers are realizing that the representation of a real estate professional should be based on a service fee, rather than a percentage of a home’s value, which is what TRELORA provides.

Most real estate professionals are responsible and honest, and most consider themselves knowledgeable experts in the market, not slick salespeople. They want to make a decent living and help their clients get a fair and positive deal.

TRELORA sees that the incentives and structure of the industry aren’t working, and it's time to change that. TRELORA offers first-rate service at a flat fee. We’re redefining the industry, and keeping your equity in your hands.