Look around at what has happened to the price of the real estate transaction over the past 8 years in Jupiter. Start with the price of the real estate. In 2010, the median single family home in Jupiter cost $320,000. So far in 2017, that same median priced home is up to $460,000. Just about everything associated with a real estate transaction has gotten far more expensive for both buyers and sellers. Service fees charged by closing agents, appraisals, title searches, surveys, inspections, estoppel fees, you name it. All up, and not by just a little bit. Some brokerages even charge “transaction fees” to add more expenses to their clients closing statements. We are making the cost of closing on a new home very, very expensive.
But, not everything about Jupiter real estate is more expensive over the past 8 years. In fact, the amount spent on real estate commissions has fallen dramatically for sellers of single family homes in Jupiter. Year, after year, after year, after year. For eight straight years, the number of sellers paying a 6% commission has dropped. Eight years ago, the percentage of sellers offering a 3% co-broke commission in Jupiter for the sale of a single family home was 77%. As of today that percentage has fallen steeply to 34%.
Without looking at each and every closing statement we cannot be sure what “total commission” was paid, but for this article we are assuming that the amount offered to the selling brokerage was the same being paid to the listing brokerage. Keep in mind that real estate commissions are 100% negotiable, as are the services provided for those fees. The amounts paid to listing brokers and selling brokers may differ, and at this minute we see commissions offered to selling brokers for properties listed for sale in Jupiter ranging from 1% to 6%. That being said, the vast majority are either 2.5% or 3%. If the selling and listing brokerages are compensated equally this equates to a total commission paid of 5% or 6%.
Every year, since 2009, the percentage of sellers paying a 6% commission has moved lower. While the median cost of a single family home in Jupiter has increased over the past eight years by almost 44% the percentage of sellers paying lower commissions to accomplish the sale has increased dramatically. So what has caused such a sensational increase in the number of sellers paying lower commissions?
Much has to do with competition and brokers who think outside the box to provide a higher level of service for more favorable fees. It’s called efficiency and it’s happening in real estate. Today’s consumer is more informed and demand value. We should also point out that the caliber of marketing during this same period has improved dramatically. Lower costs and better quality. Not much of that going on today, but it is going on in Jupiter real estate. Take a look at the “average” Jupiter listing in 2009 and today and you will see a marked increase in the number of listings with professional photographs and well written property descriptions. Almost 90% of all home buyers shop on line before reaching out to a real estate broker and if a listing isn’t jumping off the screen, then that is a problem. These on-line shoppers do not care if a selling agent is being paid 2.5% or 3%. They see a house they are interested in and if the interest is strong enough they will be taking the next step.
Certainly the cost of property is a big factor. A 3% commission on the median priced $320,000 house in 2010 paid the selling brokerage $9,600. A 2.5% commission on today’s median priced $460,000 home pays the selling brokerage $11,500. The number of agents has increased. Competition has increased. More people fighting for the same dollar. More information is available for buyers on-line but much is bad information and the reality is never in this age of “over information” has the value of a qualified broker been more important.
The fact is, real estate commissions paid by sellers of single family homes in Jupiter, have dropped for 8 straight years. Sellers need to understand commissions and services are negotiable and should always interview at least three brokers and get educated. Ask questions. Find out not only what a broker is going to charge you, but what they are going to do for that money. What have they done for their most recent clients. Have them show you those listings and tell you the results they got. Not every market is the same. Not every seller’s needs are the same. Not every house needs to be marketed in the same fashion. Ask questions, lots of them.
We tell everyone to get educated, not sold. If you are anywhere in Palm Beach or Martin County, Paradise Sharks would be honored to help educate you and have the opportunity to earn your business. You can reach us to set up your complimentary interview anytime at firstname.lastname@example.org or 561.308.0175.