The Rule of 10%s


There are several long-time adages in real estate. The best known is that the 80/20 rule, is actually the 90/10 rule in real estate. There are so many people with real estate licenses, who close 2 homes a year or less, that they are almost invisible compared with full-time agents. That differential has really played out this year. In Northeast Florida, with 13,000 agents, and historically low inventory of less than 3,000 available homes, it would seem to be a tough year for agents. But, most full-time agents are having banner years! The tasks to get deals closed have gotten really complicated, requiring jumping through new hurdles with insurance and financing changes, multiple offer scenarios, complex video and technology platforms for virtual buyers, and a myriad of COVID protocols. Sellers have been a bit overconfident, Buyers anxious and frustrated, Realtors harried, Appraisers perplexed, Inspectors slammed; and the agents have needed to manage everyone’s emotions during the process. It’s understandable why the BEST have really shown their worth, while the inexperienced have struggled. The Top 10% have done 90% of the work!

For Listing Agents, that experience is evident in a number of areas. The First is in Pricing. Successful agents know their markets better and can usually list in the right range to attract the most buyers. They know that if they’re 10% higher than the “market” believes the price should be, that showings and interest will be much slower. That’s why that first reduction has to be strong, and in the first few weeks, to get the right attention and get within that 10%. The Second area is in Marketing. Full time agents know that they can’t rely solely on a yard sign and Zillow, which is what 40% of For Sale By Owners (FSBOs) do. Certainly, they also use MLS, and additional aggregated websites. But they also use Open Houses, Postcards, Office Caravans, Social Media, print advertising, and their network of other Realtors and customers to spread the word. Successful agents rely heavily on professional photography, and well-written descriptions, and know that 3D Tours, and Video dramatically increase search results for online shoppers.

The enhanced marketing techniques mentioned result in professionally marketed homes selling for 15% more than FSBOs historically. That means that paying an average 6% to the Realtor in a successful sale, still nets the Seller 9-12% more in their pocket ($25-35K greater net nationally) than selling solo (and that number more than doubles when the sale is to a friend).

How does the successful Realtor accomplish this feat of getting paid a seemingly hefty fee, while also netting the Seller more cash? It’s simple, they present and market the home as one that the “market” feels has at least 10% more value. This is due to them managing all the steps in the process to get the owner truly on-board and motivated, and recommending decluttering, minor fixes, and curb-appeal enhancements before the photographer ever shows up. They then manage the photoshoot, and ensure the right angles and aspects of the home are captured. Those images are then presented across the marketing spectrum in a way that will attract the right buyer and compel them to schedule an appointment. The showings are tweaked to be as comfortable as possible (good climate, light, time slots), and the information is presented in a simple easy to access manner. Finally, services include (but don’t stop at) negotiating contracts, handling paperwork, advising everyone on solutions to any obstacles, and hopefully, the closing. When the closing finally happens, and congratulations and keys pass across the table at the Title office, the commission check is delivered. That check is shared though, with the other agent, the brokerage, the IRS, and as reimbursement for several hundred dollars in business expenses. The agent only sees about 20% of that check in after tax income.

So why do we do this, if the commission gets cut so small? The good news is that once a Realtor is established, the business is incredibly rewarding. 77% of Sellers last year only called one Realtor to sell their home because of their reputation/experience. Those Realtors work diligently to help their customers with the most important deal of the year for them (transitioning their home). Often working through lots of emotions, a successful home purchase or sale is enormously significant, and our hard work is very much appreciated. We love this, and when we get you 10% more in your pocket, we get paid too! You should call the very best Realtor you know when you’re doing something this important, and make sure they’re rewarded by delivering excellence!

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