100% Full-Service, 100% Consumer Choice
The new cost of a transaction®
We launched RT Brokerage Services with two principles in mind. First, full-service real estate is here to stay. Second, in rethinking the traditional full-service real estate model, any complementary models would need to embrace new consumer-centric practices to attract and accommodate the growing segment of savvy, online real estate consumers.
Tomorrowís consumers do not want less representation. What they want is representation that they believe is fair and straightforward. These core needs led us to a hybrid model for full-service real estate based on consumer choice.
reConsidered: Consumer Choice
We let consumers choose the model that works best for them. Instead of only paying for real estate services in the form of a percentage based commission (traditional model), we give consumers the option to pay on an hourly (fee-for-service model) basis. We believe consumer choice will drive the next generation of real estate services.
The Advantages of Choice
The Traditional Model
Our commission model operates exactly like any other full-service brokerage in the industry. The listing and selling office commissions are negotiated at the onset of representation and only payable if there is a closing. Any agent-time invested or expenses incurred as part of an unclosed transaction are simply written off as a loss.
The commission model works well for consumers who are not entirely committed or confident they can close a sale. The advantage of the commission model is it lets consumers engage an agent, whether buying or selling, with no out-of-pocket costs or reimbursement of the agentís time and expense in the event they change their mind. Up until closing, it is a 100% risk-free relationship on the consumerís behalf. However, after closing the risk-free relationship is ultimately translated to a risk-premium: the percentage real estate commission.
The Fee-for-Service Model
Our hourly model differs from most fee-for-service brokerages in that we 1) only provide full-service representation, and 2) the only way we can offer the service is if the consumer is willing to eliminate our commission risk by paying hourly as the transaction moves along. We only recommend hourly buy- and sell-side real estate services only work for consumers who are 99.9% sure they will close a transaction.
We have found that committed and knowledgeable consumers realize significant commission savings because they end up using less agent billable time and more transaction processing billable time.
Understanding the Math
Translated the Percentage Commission into Hourly Rates
Table 1.1 below translates a traditional 3% (or $12,000) commission earned by a buy-side agent on a $400,000 property into hourly rates. The five hourly scenarios depicted in the table range from a city-level search to simply writing up a purchase and sale agreement with no extra services provided.
|← More Search||Less Search →|
|Service/Type Srch||City||Defined||Validation||None||Doc. Prep|
|AVERAGE HOURLY RATES||$214||$279||$444||$750||$1,091|
These scenarios are intended as an illustration and do not guarantee these services listed can be completed in those times.
The table clearly demonstrates that when consumers are 99.9% sure they will close a transaction and know what they want, eliminating an agentís commission risk, by paying hourly, can definitely pay off to their advantage.
Market Adoption Through Operational Efficiency
Achieving operational efficiency in the real estate transaction requires a new way of thinking. At RT Brokerage Services we have set our sights on achieving operational efficiency by: