“Price is What You Pay, Value is What You Get” . . . . When it Comes to Realtors, Too
“Price is what you pay, value is what you get.”
–Warren Buffett, Berkshire Hathaway Chairman (Note: Edina Realty is a Berkshire Hathaway subsidiary).
When someone with a couple blocked arteries needs a heart surgeon, their first question isn’t, “how much do you charge?”
When someone is accused of a serious crime and needs a defense attorney, they don’t ask (at least not right away), “how much will this cost?”
Yet I’d estimate that at least 25% of the time when prospective home sellers interview real estate agents, their first question is, “what’s your commission?”
Value vs. Price
I think that mindset results from two things:
One. Misperceptions/Misconceptions.** Everyone knows how to tell if a painter is good: you look at a room or wall they just painted.
At the other extreme, it’s notoriously difficult for laymen to know if an electrician is good (although it’s hard to find a really bad one. As a veteran electrician I know once said, “they’re all dead”).
The catch for Realtors is that everyone thinks their job is like painting, but in fact it’s much more like what electricians do (i.e., behind the walls scenes).
Behind the Walls Scenes
Reason two is poor education . . . by Realtors.
Of course, it’s incumbent upon agents to get credit (and paid!) for what they do.
Good ones do.
They lay out the sales process clearly and completely, explaining all the services they perform/oversee along the way, all to make sure that the homes (and homeowners) they represent get top dollar, as quickly as possible.
And that’s net of the sales commission.
As savvy home sellers know, it’s not what you pay your agent.
Rather, it’s what you ultimately get for your home, how fast, and whether the process goes smoothly or not.
**In economists’ jargon, the public often thinks real estates sales & marketing is a commodity — that is, a fungible (interchangeable) good or service.
Tons of steel and bushels of wheat are classic commodities.
By contrast, real estate sales is a very unique, individualized set of services that vary greatly depending on the practitioner’s skill, experience, and work ethic (and “ethic ethic”).
See also, “Realtor Job Description.”
