Commissions. You hate them. I need them to survive. You only pay one when you sell a home, I only receive one when I sell a home. That much we have in common. I must start off this discussion and admission by stating the classic "commissions are always negotiable" phrase. There, I said it. Now onto the truth about commissions. There's a battle going on in the real estate industry between traditional brokerages and a la carte brokerages. The traditional model, which I operate under, charges commissions to sellers for selling their homes, and assumes 100% of the cost and pressure of marketing and selling the property for the seller. Buyers don't pay fees (except in some odd buyers agency agreements that make little sense to me), rather the listing broker offers compensation in the form of a commission split to the selling broker. Easy enough right? Traditional brokerage arrangements favor the seller, as a fee is only payable upon the successful completion of the sale. It's a terrific model, one that motivates agents with financial gain if they are successful for their clients. It's what we call in the "biz" a "win win". (read that while conjuring up images of the guy from The Break Up when he takes Jennifer Aniston out for apple martinis).

The new "fee based" model being talked up online and in start up offices everywhere is based on the consumer paying only for services and time used, and in turn, avoiding the big ugly traditional 5% or 6% commission. Seems to make sense, but only on the surface. Consider this. You're a seller, and you list your house with XYZ Annoying Broker. You're attracted to their a la carte business model, and like the idea of only reimbursing them for their advertising and the time that they spend actually working on your property sale. You hire them and they get to work. They list the property in the MLS, list it online on various sites, place ads, set up showings, blah, blah, blah. They work for a couple weeks and you get your first bill in the mail. Yes, they bill you for their services. The bill is for $650. Your house isn't sold, you haven't had a showing, and by now, you don't really like your agent. You still owe them $650. Pay up. Maybe your house will sell next month. If it does, you might save a bunch of money by paying a fee based broker, but what happens when your home doesn't sell? What happens when it's month 10 of trying to sell your home with no results. Month 10 of paying bills for the "service" that your broker is providing for you. Month 10 of going broke trying to sell your home. In the traditional model, you won't have paid a penny to your broker in month 10, even though your broker is probably out thousands of dollars in expenses and countless hours in time invested. See why the traditional model is best, and will probably always rule the real estate industry?

Commissions as a whole are interesting to me. It's no secret that brokers would like to charge 6%. The classic, historical 2.4% co-broke commission split is based off of the 6% commission. The seller pays his broker 6%, the broker splits the total commission 60/40 with the selling broker, thus the 2.4% commissions split. This isn't a secret, and it doesn't undermine the fact that commissions are always negotiable, it's just the truth of the matter. Personally, I'm not ashamed to admit that I haven't worked on a 6% commission for several years. I just don't do it because I need to compete in the market place and convince sellers that they don't need to go to a big bad real estate company to sell their home, and they certainly don't have to pay 6% to get the job done. I reduce my commissions, but I don't shout it from the rooftops as some inexperienced brokers have grown quite proficient in doing.

There's one last secret in the business that you as a seller need to be aware of, whether you're an owner in the Lake Geneva market, or an owner elsewhere in the US. Let's say you're listing your lakefront home on Geneva, and the broker (it should be me, I mean, my kids are gaunt and my tires balding for crying out loud) is, out of the kindness of their heart, willing to work for a 5% total commission. They'll work for that commission, but there's one thing you need to be aware of. Watch the commission split. If they'll list for 5%, you need to be aware of the exact commission split they're offering the selling broker. Ask your agent directly if they're splitting the commission at the average co-broke rate. If they're not, there's a good chance the prospects of your sale are being diminished since you're not offering a competitive commission split to cooperating brokers. It's not price fixing, or anti-trust violating, it's just making sure your property will be getting a fair shake from other agents. Make sense? I hope so, because it's really something you need to watch out for. In fact, our listing forms now mandate that we provide the seller with the co-broke rate that we'll be offering in the MLS. If it's that important to the WRA, it should be that important to you.

For now, I see black helicopters circling my Abbey Ridge condo.