"Help me understand," said the young homeseller, "why does six percent of the sale of our house go to you and the buyer's agent? After all, the buyer can find the house on the Internet. You two are simply doing the paperwork. I don't want to be rude, but it seems to me that $12,000 to show our house a few times and complete some forms is a little steep."

"Well," responded the agent, "that's our standard commission. There's a lot more that goes into it than you might imagine."

"Not that I can see," said the young man.

The real estate commission is an institution. Six percent of the typical home sale goes to the buyer's and seller's agents for consummating the deal. It is a forgone conclusion. It is automatically assumed. Then why do younger buyers and sellers have the temerity to challenge what has been the way of the world since before they were born?

One simple answer is technology. According to the National Association of Realtors®, 60 percent of real estate customers use the Internet as part of their homebuying process. Of those, NAR research shows, 77 percent found their agent on the Internet. Of that group, nearly nine out of 10 consumers found their agent on a site that also listed the home they were interested in.

With this kind of market penetration, one can't help but conclude that the business model for the average broker is going to change over the next few years. As more and more information becomes available instantaneously, buyers and sellers of all generations will find themselves doing more of the preparation before approaching an agent.

But that brings us to the bigger picture. Those in their twenties and early thirties do not look at the world through the lens of "that's the way it's always been." This younger group has grown up learning to challenge many of the conventions that the older generations have assumed to be set in stone. Since they have met with success using this approach, they feel increasingly comfortable confronting other traditions as they mature through life.

Generation X may not be the first group to wonder about the reasoning behind the six percent commission, but they are turning out to be the first to assert their consumer power over what they perceive as an arbitrary percentage.

Does this mean you now have to start justifying the commission you've might have taken for granted? Well, yes! But how do you account for your existence to individuals who approach you thinking they have already done most of the work?

Here are a few ideas:

Assert your expertise. As with any occupation, there is a body of knowledge that one accumulates with experience. With time, however, we all tend to take our skills, knowledge and expertise for granted. But if we take our skills for granted, others will too. It is common for us to respond, "Aw, it was nothing," when someone compliments us on an accomplishment. But this self-effacing attitude can subconsciously suggest that the accomplishment was, in fact, nothing special to others.

Those with initials after their names are recognized within the industry for their skills and insights. But how about the customer? Can you clearly and confidently explain your skills and experience on the spur of the moment, if you encounter someone who does not seem to think you're nothing more than a tour guide and paper pusher? If not, why not?

Take a hard look at your practices in dealing with buyers and sellers. Just as we can sometimes take our skills for granted, we can also take our customers for granted. Every salesperson knows that when they have said the "spiel" enough, it loses some of its sincerity and enthusiasm. Customers can sense when they are being treated as one of million. When we lose that edge, we can fail to prove our value.

Many Xers treat the sales process as a game. Why? Because it can be entertaining to watch the agent squirm. Asking for a concession in commission may not be something they are realistically expecting. But it never hurts to ask and watch what happens.

Continually remind customers of your value. Taking a little extra time to explain why you doing what you are doing and being patient with every question they have, helps them understand that real estate transactions are a lot more than finding a house on the Internet. They more they understand, the more you justify your existence, without even trying.

Finally, maintain the contact long after the sale has closed. As I have mentioned in previous articles, Generation X typically gathers and shares input with a wider range and number of acquaintances than older generations. Use this to your advantage. But do so with useful information rather than one more calendar or pad of paper. Provide updates on ways to save money on home improvements. Send updates on local zoning laws and community associations. E-mail tips on how to make them most out of their investment.

No matter what you do, the challenge to traditional commission structures is coming. Why not prepare for it now?

Published: May 8, 2002

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