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The Cost of Selling a Home – What’s Really Going On?
Keller Williams recently agreed to pay $70 million to settle a class action lawsuit in Missouri that accused the company of conspiring with real estate associations to overcharge home sellers on commission fees. Keller Williams denies any wrongdoing, but their willingness to settle has raised eyebrows in the industry.
The plaintiffs’ attorney, Michael Ketchmark, claims the goal of the lawsuit is to remove the real estate associations’ ability to “set the cost” of selling a home. However, this assertion seems questionable. Real estate commission rates fluctuate constantly based on market forces. There is no evidence of price fixing or commission rates being “set” by any association.
The average real estate commission in 2022 was 5-6% of the home’s sale price. This rate has moved up and down over the decades without any clear price setting in place. If commissions were truly fixed, you would expect to see less variance.
While the details behind this lawsuit seem murky, it does highlight growing scrutiny on real estate fees. With home prices skyrocketing in recent years, the dollar value of commissions has risen rapidly. This had led some consumers to question whether the typical percent-based fee still makes sense.
The good news for agents is there is still plenty of opportunity amidst this changing landscape. As interest rates continue to rise, more homeowners may struggle with mortgage payments and need to sell. This inventory coming to market presents a chance for agents to provide value and list more properties.
Rather than fret about lawsuits and commissions, smart agents will focus on consumer outreach right now. Call past clients. Make videos addressing market concerns. Send newsletters with useful advice. Proactively helping struggling homeowners to sell can be a win-win.
The market always evolves. Savvy agents roll with the changes while keeping the consumer’s best interest at heart. Provide more value than you collect in fees, and most rational clients will recognize and appreciate your efforts.
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