Should Real Estate Agents Discount Their Fee?

Do you really believe that your service is better than the service offered by your competitor? Have you got anything to prove that you can sell the property for a higher price or in less time? Can you prove that you can provide better value? If so, the value of your service exceeds the fee you charge.

Unless you are convinced that you are worth what you charge, you may find it difficult to defend your fee.

Prove it with concrete evidence

Agents will not have to reduce their fee if they can defend what they charge with solid proof. The service offered by an agent has many components and each one of these components has a value in dollars. When agents compare the value of their service to their fee, they will not have much difficulty convincing the client that they are worth what they charge.

Agents who want to earn like champions can't give away their fees. Still, many agents don't demand even a decent fee. They readily offer discounts to attract clients. Remember that when you adjust your fees, you are giving away your net profit.

Risks associated with being an agent

Consumers as well as agents often fail to realize that in the real estate industry, the agent assumes all the risk. The agents risk their time, energy, money and knowledge despite knowing that all that effort may lead to nothing. If the sale doesn't happen, the agent won’t get the fee. Note that the agent is not paid for showing the home or negotiating with potential buyers. The agent is paid only when the property is sold. And when agents assume all the risk, their commission should reflect the risk they bear.

An agent may show hundreds of homes in a year, but the actual number of sales may be much lower. As a result, agents have to amortize the cost of their service over relatively fewer transactions.

Expenses

In addition, in most cases, the agent doesn't receive 100 percent of the commission. That amount is usually split with a co-op agent. The agent's broker may also receive a certain percentage of the fee. The agent should also take into account other expenses associated with running a real estate agency.

Take tax liability into account

The agent has several tax liabilities as well. In fact, many agents pay over 50% of their net income after deducting the expenses to taxes. And when you calculate your real earnings after deducting all of these expenses, you will understand why you cannot adjust your fee.

Discounted fee equals inferior service

What is more, you cannot cut your fee without compromising on the quality of your service. It simply isn't possible to provide exceptional service for a discounted fee.

In fact, agents who charge lower commissions also offer somewhat inferior service. Most consumers who hire an agent who charges a lower fee do not realize that the quality of the service will be low. They expect great service for low fees. But this is not possible. In short, a seller who chooses a discount agent will unwittingly compromise their safety and their chances of getting the best possible price.

If you want to be a successful real estate agent, you should believe in the quality of your service and fee structure. You do not have to discount your fee just because some other agents do it. You need to tell yourself that you are worth every cent you charge.

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Why Energy Efficient Homes are the Norm Today

Builders conduct quite a few studies before launching a residential project because the stakes are usually high. They do feasibility studies and analyze the market. And only the most viable projects are approved. Still, all that pro forma work merely reduces the risk; it doesn't eliminate it.

Until recently, builders only needed to focus on codes for guidance on ensuring energy efficiency of their homes. However, in many markets across the country, houses with third party energy efficiency certifications are attracting more buyers. In fact, some prominent builders now only offer homes with energy efficient certifications. This has made it necessary for builders to incorporate some form of energy efficiency into their projects.

In today's housing market, the number of buyers who factor in the cost of ownership is steadily increasing. Since energy efficiency is crucial for reducing utility bills, more people are looking for homes boasting of Energy Star certifications.

What if you don't already offer energy certifications on your homes? That is no cause for major concern now because you can choose from several certification options. The National Green Building Standard is a voluntary certification developed by the International Code Council and the NAHB in 2009. This has been approved by ANSI.

Over the last 5 years, about 30,000 new houses received NGBS certification, and almost 2,000 homes are waiting for approval.

Since the certification is non-prescriptive, there is no way builders can take short cuts. That also explains why NGBS is the only green certification approved by ANSI.

There are several other competing standards and each one has its proponents and benefits.

Depending on the kind of competition you face in your local market, you need to know more about each of these certifications and choose the one that allows you to differentiate your products from your competition.

This year will be remarkable for builders in many ways. The housing sector is expected to register exponential growth in 2014. This year, buyers of all segments are expected to enter the market. In 2013, the real estate market received a major boost from investors who purchased a large number of properties. This helped dry up the existing inventory and also drove the prices up.

In 2014, the market will see the participation of more entry level buyers. And then we will also get to know more about the specific buying preferences of people aged 18 to 32. Since many of these buyers have waited several years to enter the market, they will have a decent understanding of the products. They will also be more interested in learning about ways to make their home more energy efficient and comfortable.

There is enough evidence to prove that buyers are showing greater willingness to pay slightly higher prices for homes that possess energy-efficient certifications.

In fact, energy efficiency has become the norm today, and builders can no longer ignore it. The year 2014 will be a great year for builders who have exciting projects on offer. But the risks associated with the trade are also becoming bigger. Not offering homes with energy-efficient certifications is the biggest mistake that builders can commit now.