There’s always something to howl about.

Repeat after me: Mr. Realtor, what do you charge?

This is my real estate column from today’s Arizona Republic (permanent link). Today should be a fun day. My editor told me that, in respose to last week’s column, a Realtor called him, threatening to turn me in to the Arizona Department of Real Estate. I can’t imagine what the violation might be, but the hearing would be a hoot.

 
Repeat after me: Mr. Realtor, what do you charge?

Want to foment a revolution in residential real estate? It’s easy to do. Just learn these five simple words: “How much do you charge?”

Sellers have known that question forever. It’s often the first thing they say at a listing appointment. They understand that they are hiring a Realtor for representation and marketing, and they want to know how much it’s going to cost them.

Historically, buyers have not understood that they, too, pay for representation. Realtors have always insisted that the seller pays all sales commissions, even though every dollar on the closing table is brought there by the buyer.

Unless the seller is taking a loss, the buyer pays for absolutely everything. That’s true not just for houses, but everything.

When you buy a bottle of Pepsi, the marketing and advertising costs are not paid by PepsiCo. They’re paid by you as a part of the purchase price.

In just about every other line of business, vendors roll out the red carpet for buyers because they know that buyers make the world go around.

Not so in residential real estate. We baby buyers, telling them tender, loving lies: “Buyer representation is free.” “I’m paid by the seller.” “My services cost you nothing.”

All of this is false. The cost for buyer representation is rolled into the purchase price, just as the cost of marketing and advertising is rolled into your bottle of Pepsi.

There is a difference, though. If you would have bought the Pepsi anyway, you can’t ask Pepsi to scale back its marketing costs.

But if you’re hiring a buyer’s agent to help you buy a home you have already decided to purchase, you should practice those five simple words: “How much do you charge?”

If you’re buying a new build, the builder may be paying “your” agent a huge commission. You should negotiate to make sure that you receive any funds over a reasonable rate.

The price you pay for a buyer’s agent should be proportionate to your needs. But you will not get to a more reasonable buyer’s agent’s commission without mastering those five little words: “How much do you charge?”

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