Commissions and Profits... "I get PLENTY of pressure to reduce rates!" That was one local broker's reaction to last week's dispatch, What Commission Rate Creates Profits?
(Jan 15). But generally, readers agreed that more pressure on fees comes from national clients rather than from local businesses.

Warning: As several readers pointed out, brokers must be careful when discussing fees. "By law, real estate commissions are negotiable. Individual firms may advertise fees. They may not collaborate on fees."

A thirty-year veteran commented, "All politics are 'local.' So it is with real estate, relationships, and commission rates." Another local broker complained about the challenge of working with a national REIT with "6 layers of middle management," which forced him to "match the lowest commission from a national firm..." Not surprisingly, this same broker believes that some national firms do not operate profitably in his local market and may leave in the future.

A long-time corporate services provider writes, "Do RE companies derive profits from each deal? Or from the reputation they enjoy as the result of having an impressive list of accounts for their defined service offerings? The latter may translate into more business from other targeted companies."

A friend concludes, "Smart sellers are better off focusing on net proceeds from a sale and NOT the fees paid to the people that make the market -- brokers." Maybe that's why nobody predicted that the role of brokers and the brokerage commissions will likely decline in the future.

Spread the Word... Many thanks to software consultant Eva Freud at Realize Solutions for sponsoring this week's Dispatch. Sharp-eyed readers will also notice an announcement for Bob Potter's online seminar next week. If you would like to sponsor a Dispatch or make an announcement about a conference or job opening, send e-mail or call me at 415-485-6700.

--Peter Pike