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Fee-Based Income Expected to Increase in Real Estate Brokerage

Posted by 15789465 on

The Inman News' Research Report on "Work and Pay in 2011" is out. For the first time ever, some of the results are available at no charge. The free portion of the report is a series of charts that do a great job of showing a wide variety of compensation related issues for real estate agents and brokers. I was particularly interested in the survey result regarding fee-based income.  According to Inman, a whopping 36% of the people polled believe that fee-based income will increase over the next five years. I've thought for years that if we are going to develop as a true profession, and if we are going to survive in a world of discount and online brokerage, we better start re-thinking our avenues of compensation.  Does a lawyer give away anything for free? Does a doctor?  Does your dog groomer?  Why do we give away EVERYTHING for free unless we receive a commission if/when a property sells?  If this topic interests you, please let me know and I'll expore it more fully.  Also, please click one of the "Share" buttons at the bottom, and let's get more people involved in this discussion. To read the Inman News free portion of their report, click HERE.

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  • I agree completely. We don’t want to nickel and dime people to death, but we do want to think about what’s included in a typical listing agreement, for example, and what extras might add value. My vet, for example, charges extra if I want my dog to have more than two “play times” per day. I’m willing to pay it, and glad the vet thought about ME and what I might want for my pet. For listing agents, I think YouTube video marketing should be extra. Also, personal showings vs. lockbox showings. Also, staging, arranging for yard work, arranging for cleaning services, storage, etc. For buyers’ brokers: creating neighborhood profiles for targeted properties (school zones, distance to child care, parks, dining, major arteries, photos of neighboring properties, copies of any restrictive covenants, local community events, etc.) For services unrelated to brokerage: BPOs for FSBO sellers, BPOs for refinancing owners, event planning (yes, we’re good at that, aren’t we!) For property managers: exit interviews with departing tenants, market analysis to recommend rent increases and sales or purchases.

    deniselevans on
  • We are seeing it everywhere…
    Banks: a consultant once told them that there was gold in Fee Income…they didn’t have to rely on interest from assets (loans) as their sole income stream…we see where that went.
    We also have seen where the airlines have taken fee income…luggage, meals, preferred seating.
    Association Management companies have begun charging for a la carte services that were once included in the “per door” charges.
    I’ve seen at least one brokerage locally that now includes a “Paperwork Processing” fee in addition to their commission. Virtual and Video Tours are extra charges, too. My guess is Fee Income is a coming thing, and the challenges will be a)to show why those fees are appropriate IN ADDITION TO commission for sellers, and b)to prove “value” to buyers and not run them off. This might be a good forum to discuss some of the work which is not necessarily “linearly related” (for lack of a better term) to commissions, for which fee income could be charged. Here are some ideas to get the ball rolling in terms of services which would be “for fee”:
    providing recent comps for tax appeals; paperwork processing for a standardized packet of disclosures, waivers, inspection reports, etc.; specialized advertising/marketing above some “base” level of same (this could also create a counter-balance to the impatient seller who wants “more open houses” or "another email “blast”); weeks of designation as a “Featured Property” on agent/broker websites or print ads; providing research results. There are some ideas for starters…anyone else have some suggestions? There will have to be some consistency in array of and rationale for “for-fee” services (but not in pricing, of course) for, as Ben Franklin said at the signing of the Declaration of independence:“We must, indeed, all hang together, or most assuredly we shall all hang separately.”

    Joe Savage on
  • Absolutely would like to learn more.

    Charles Holliman on
  • Hi Regina, Good point. I think that if we just discuss the concept of fee for services, and the different kinds of services we can reasonably add to our portfolio, and steer clear of what $ amount to charge, we’ll be okay. We went through similar issues in the late 1980’s in the business center industry. At that time, word processing work was a big revenue item. We developed a flat rate system for charging clients that basically established customary times for particular types of work. For example, a one page business letter, double spaced, without any technical jargon, might have a “flat rate” of 20 minutes. Each business center owner established their own hourly rates, but we all pretty much charged 20 minutes of time for such a letter. That is because industry studies established that as the average amount of time it took. We cleared the practice through some Justice Dept personnel, who said that as long as we didn’t agree on a $ hourly rate to charge, we weren’t going to get into any trouble.

    Denise L. Evans on
  • Denise,
    This is a veryyyy delicate issue. As you know, this has to be done w/just the right wording in order not to violate the anti-trust act.

    That being said, it’s a problem I’ve thought about for years. I got in R E sales in the mid ’70’s. Compensation is the same or LESS than it was then!!

    Regina Bush on

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