Marquis + Farwell Homes
Though Shall Not Pay More Than 2%

Though Shall Not Pay More Than 2%

  • Leonard Steinberg
  • August 15, 2024
Thou Shalt Be Paid No More Than 2%!

Please read this except from Compass Chief Evangelist, Leonard Steinberg...

The Consumer Federation of America -  a non-profit organization founded in 1968 to advance consumer interests through research, education and advocacy - came out with a bold proclamation recently stating that when negotiating compensation with buyer agents, buyers should settle on a dollar amount that pays buyer agents no more than 2% of a home's sale price. Why 2%?
 
This very well-intentioned organization obviously wishes to bring down home buying costs for the consumer, and who can blame them as wages have not kept up with inflation in areas and the rising costs of everything over the past few decades has driven a big chunk of the US population into further wealth disparity. Could you live off a $20/hour wage before taxes in New York City and pay for health insurance, housing, education, transportation? While baying for 'no more than 2%' buyer commissions, why did they not address the costs agents incur to do business too? Why no limits on those costs? Advertising? Health insurance? Transportation? Technology? Insurance? Legal work? The list goes on. Have they ever promoted a "No more than $_____" for a cab ride? An airplane ticket? A lawsuit? Tips? Are the commissions retail staff get paid disclosed? Surely they have to understand that often the purchase process extends well beyond the obvious, often starting YEARS before a transaction occurs? This narrative perpetuates the myth that agents are paid merely for facilitating a transaction and that ALL that commission lands in their bank accounts without splits, taxes or any expenses. Did they factor all the work agents do that never culminates in a transaction ....or any payment?
 
Commissions are negotiated. They always have been negotiated. Buyers have always had the option to go it alone. Limiting what you pay someone exists almost nowhere else in the US economy - a free market system - so why real estate buyer brokerage commissions? Many of these organizations promote minimum wages for almost all workers: if they are promoting a maximum of 2%, why not a minimum too? What about all the work many agents do that result in ZERO pay? Shouldn't they promote an hourly pay in the event a buyer does not buy?
 
I am asking lots of the questions none in the media seem to be asking: one has to wonder why......? 🤔

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