5

21 July 2009

Average Broker Commission Rate: An Indicator of Consumer Perception?

Sales agent’s competency in demonstrating the company’s value proposition greatly impacts a company’s ability to deliver value to consumers.  This in turn impacts how consumers perceive the value of your marketing services. Listing Presentations should include highlights of all products and tools that differentiate you, as well as all listing statistics that show where you outperform the competition (e.g., closed sales price versus original asking price, average days on market, etc.).  This will allow clients to compare your value proposition to that of your competitors and make educated and informed decisions.

Average Broker Commission Rate (ABCR) is the average percentage of commission collected on one side of a real estate transaction. Relatively small changes to ABCR can result in significant changes to Gross Commission Income (GCI) and profit.  In the example below, please note that the increase to ABCR is only .2{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c}, yet the impact upon profit is an increase of $80,000. All other drivers (sides, ASP, {0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} Retained etc.) have remained constant in the model, so the only characteristic manipulated is ABCR.

Rates

Each real estate organization must independently establish its own policies by creating listing parameters and holding agents accountable to performing to highly professional standards. Focusing on the following measurements will help assess ABCR performance and may provide an indication of consumers perception of service delivery.

  • Study ABCR differences between agents within the same location. This may highlight those who are effectively communicating the company’s value proposition.
  • Rank locations by ABCR. Is ABCR being driven up or down by specific regional factors? For those locations where patterns are inconsistent, seek to understand the factors the behind the phenomenon.
  • Analyze listing data by measuring ABCR performance. Measure results with and without outliers such as one-time exceptions, new construction and referrals.

In short, measuring ABCR can present an accurate assessment of how consumers perceive organizational competency.  Consumers hire one real estate company over another based upon their perception of value delivered.  Certainly,  there should be an expectation that the service delivery will always meet and often even exceed those expectations.  Since consumers vote with their checkbooks, a quick study of ABCR could well be the best quality control survey available.

5 thoughts on “Average Broker Commission Rate: An Indicator of Consumer Perception?

    1. David,

      I appreciate your response to my post. A little can be a lot, especially when it come to a little extra service delivery to the consumer.

      Regards,

      Bob

  1. Your first line (and paragraph) says it all to me. A company must provide timely and relevant information and materials to the agents and the agents must be able to fully articulate the company value proposition, as well as their own. Let’s just ask our agents if they understand, believe in, and can implement their brand promise.

    1. Hello Bob, Nice to hear from you.

      I agree. Belief and competency in presenting the company value proposition is critical to our success. I would only add one thing. Once we have asked our agents if they can implement the brand promise, let’s also be sure that they can demonstrate competency in delivering the message. All too often we assume competency where it does not exist and thereby forfeit opportunities to support our agents and promote their success.

      Best regards

      Bob

Leave a Reply

Your email address will not be published. Required fields are marked *