Real estate agents have become a commodity and, quite frankly, they’re overpaid.

They all do the same thing – put a sign in the yard, put it in the multiple listing service, put it online, and PRAY.

Also known as the four P’s of real estate.

That’s all agents have to do and they get to make their own hours. Show a few homes and make a few offers... it’s too easy... right?

Wrong.

You see, the real estate industry can be a little bit of a joke – and that’s coming from an agent.

We see it all the time, people decide they’ll give real estate a shot this year, cross their fingers, and see how it goes.

This is a problem. The cause?

I suspect it’s because of the low barriers to entry. In Washington State, it takes a 90 hour course and a three hour exam to get your real estate license.

What does this have to do with the state of the real estate industry?

Basic economic theory states that as the barriers to entry decrease, competition will increase and this is exactly what we’re seeing today with real estate agents.

The result?

Would-be home buyers and sellers view real estate agents as a commodity - simply because there are so many of us.

The definition of a commodity is a good or service sold by many different companies and is uniform in quality.

When choosing between commodities, the only differentiating quality is price. Which is fine if you’re actually shopping for a commodity, however, real estate agents are not commodities.

You’re hiring someone to help you transact a multiple six figure asset, not choosing between Quaker or Kroger brand oatmeal.

If you choose to hire the cheapest agent you'll potentially leave tens of thousands of dollars on the table in lost sales potential.

As we learn in the 4 Laws of Real Estate, they may pay less in transaction costs but will likely end up netting less money overall.

If you want to net the most money on the sale of your home, look to hire a full time professional who knows their value and it's reflected in the commission rate.

Now, don't worry, here on the Pivotal Team, we have a flexible commission structure but, what we are not, is discount agents.

Think about it like this – if your agent is quick to cut you a discount they’re going to do the same with the buyers who submit offers on your home. They'll easily budge during negotiations and anything else they can in hopes of a quick close.

Is this really who you want representing you in your transaction?

When hiring a real estate agent, instead of trying to minimize the cost, look to increase the value you get for your money.

For buyers, how will your agent either get you a better deal, or, how will they ensure you win your dream home in a competitive environment? 

For sellers, how will your agent get you a higher price and with solid terms?

And, in both cases, how will they make this process, fun, easy, and informed?

Simply put, licensed agents may have become commodities but the true professionals are in high demand.

Who are you going to hire?