Colorado real estate: The year ahead
If you ask most Americans what their most prized possession is, their answer is their home. An owned home is a place of refuge, a corner of the world in which the owners have the freedom to be themselves, to decorate as they please, to set their own rules.
And even as the real estate landscape in America has changed — plots have gotten smaller, families have moved from the cities to the suburbs and back again — most of us have held on to our dreams of home ownership. Despite ups and downs in the market, a home is still an incredibly valuable asset, and one that many of us feel more comfortable putting money into than the stock market. A home is tangible.
Americans’ ideas about the value of owning a home haven’t significantly changed. Neither has the real estate industry itself.
In 2014, consumers will start to demand better. They’ll negotiate their agents’ commissions. They will be shown any home of interest to them, regardless of what it means for their agent’s wallet. They’ll start saving thousands of dollars per transaction.
Other industries have become more efficient by using technology, which often drives down the price of their product or service. But the real estate industry hadn’t caught on until recently. 90 percent of consumers use the Internet during their home search; 52 percent of them start their home searches online. Most have narrowed it down to a few homes before they even contact an agent.
If consumers are doing their own research — research that used to be their agent’s responsibility — why are real estate agents still making the same commission?
Consumers need to demand better. To demand better, they need to be armed with information.
Some people may feel like they understand how buying and selling a home works, but many have the “rules” mixed up. For years, agents have taken a commission based on the selling price of the home.
It is a widely accepted (and, by some in the industry, a widely spread) misunderstanding that commissions are not legally allowed to be negotiated inside a contract.
The truth, though, is that commissions are negotiable if a buyer or seller asks that they be negotiated — a fact that the Colorado Real Estate Commission recently confirmed. The decision gives buyers and sellers the power to discuss commission negotiation with their agents. It’s a piece of information that many in the industry don’t want to promote because it means less money is finding its way into their pockets.
When a person contacts an agent, he is under the impression that the agent has his best interests in mind and will show any house that he wants to see. Often, though, agents are concerned first and foremost with their own commission — and many of these agents have refused to show their clients TRELORA-listed homes because, as part of our flat-rate model, agents receive a flat fee commission instead of the traditional percentage of the selling price of the home. Ours is a concept that saves the consumer huge sums of money — more than $2.5 million to date — but one that has angered many in the real estate industry.
This will be a year of change for the real estate industry, and for the people who will make their American dream a reality this year. As consumers become better educated about their rights in the home-buying and –selling process, they’ll begin to demand more transparency and gain control over the transaction that is one of the most important of their lives.