Discounted Home Sale Commissions Put Pressure On Real Estate Photography Prices

June 5th, 2016

ContratorPayHere is a recent article in the Washington Post explaining that Commissions of 6 percent for home sales once were the norm. That’s changing. The article says:

Technology has changed businesses in ways that were unimaginable a decade ago, but even industry insiders say that residential real estate practices have yet to fully adapt to the reality that buyers and sellers have unlimited access to property listings and other information that was once held firmly in the hands of realty agents. That access has led many consumers to question the fees they pay for the services of an agent, commonly 6 percent of the home sales price, including payment to a buyer’s agent and a listing agent, or $30,000 on a $500,000 property sale.

This pressure on real estate commissions isn’t new. It’s been going on for a long while. The same day that Mike in North Carolina pointed this article out. Jordan in Minnesota pointed out the following:

It is such an interesting dynamic here. There is one single brokerage who markets 4% commission rates and nearly every agent is threatened by this and will lower their commission rate because of them… when the payout is only 4% (2% for listing side and 2% for selling side), nobody is spending any marketing dollars.

Another data point in this area is France. Recently Eric in France was wondering why there weren’t any real estate photographers in France. As I understand it, the reason is in France listings aren’t exclusive but rather many agents list the same property but only the one that sells the property actually gets paid so French listing agents don’t want to risk spending money on marketing. I think France is the only country that works this way.

Has anyone else noticed this increasing downward price pressure coming from discount brokerages?

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20 Responses to “Discounted Home Sale Commissions Put Pressure On Real Estate Photography Prices”

  • I would like to see if any real estate photographers have tried marketing their services to the homeowner/property owner. Has any homeowners hired you and you allowed them to have rights to use the photos for any agents that listed and re-listed the home or property (and keep them as keepsakes) . I would think while they are spending the money to prep the property for sale they would gladly spend money on great photos.

  • @Brad – Yes, that happens occasionally but in the US the convention is that the listing agent handles the marketing for the home seller. It is more common in AU for the home seller to hire real estate photographers.

  • Yes, in France listings are rearely exclusive and many agents list the same property but only the one that sells the property actually gets paid. Exclusive listing contracts are maybe 10%, but since it isn’t the usual thing to have extra marketing, it is rare to spend anything, so there are very few pro photographers. (but some exists, mainly for the owner directly selling) I don’t know for other countries in Europe.

  • and commissions also get down from 6%-8% to around 4%, but this has been compensated by a doubling of home prices between 2000 and 2010, and the greater market share of professional agents (vs. homeowner direct sales), so there are more agencies, and thus more competition, leading to lower commissions.

  • In my area (Atlanta) many homeowners are going the FSBO route to save on realtor commissions. I have been hired more frequently by the sellers directly. Most of the homeowner clients have come to me by word of mouth but I’m thinking that I might start marketing directly to them myself. They are easy to work with but the downside is they aren’t repeat clients like my agents are. As someone who is getting ready to list my own home for sale, that $30k plus commission does sting a bit, since it will be MY photos that get the clients in the door 🙂

  • In my area of Canada, Southern Ontario, there are bidding wars and homes sell above listing. The turn around is so fast, sometimes in a matter of hours, that listing agents don’t need the professional photography, as homes sell with just iPhone photos. It’s been tough to break into this market.

  • I think the need for quality media will always exist. With the median home price of $189K in the United States, even a 2% commission is still nearly $4K. The need to market the property really doesn’t change. Professional photography may or may not be a part of it. For above average listings, which is likely what we are all shooting anyway, there is still enough money in it for everyone to walk away with something. Personally, I think this will have minimal impact on our industry.

  • Regarding real estate commissions:
    If the commission is 6% it is split equally between two agents. After that the money goes to the broker and they will pay the agent anywhere from 50-60% (except for a few successful selling agents who get more). Meanwhile the agent has spent time and money marketing the property for sometimes as long as a year or more. The marketing includes photography, flyers, ads, postcards, open houses and lots of time. Often after 8 months the seller will decided to move to someone else. This is the cost of being an agent. In Delaware commissions range from 5% to 6%.

    For sellers this is a case of you get what you pay for. Discount agents provide minimal services to their buyers and they will spend as little as they can. The sellers do not benefit from this.

    Should photographers price for the discounters…absolutely not, unless you are cutting the amount if time you are spending with them.

  • An interesting question. I know that in my area, it is an uphill challenge to get agents to pay for real estate video even on multi million Dollar properties where even adding the video to the still photography fees are a drop out of the commissions. But they do have to advertise in the local print probably more to prove to the owners that they are actively working on selling the property and that costs a great deal more than my photography fees per property.

    I recently sold a small vacation property in southern France. I can’t speak for the country as a whole but with the local realtors we spoke to there they all charged a flat fee, mostly 10,000 Euros regardless of property size. We finally found a great agent who charged 5,000 Euros (approx 5,5000 USD) on a 180,000 Euro property. She would have shot the property with her iPhone. But since I wanted the sale to go quickly I supplied the photos and video. She marketed the property mainly on the web while her agency did the local paper ads. No local magazine advertising. And no virtual tours either.

    In fact I called an architectural photographer in Nice figuring it would be a market for the more modern advertising techniques and practices and he (who also shot properties for real estate) had never heard of such a thing. I sent him the links to some of the ones I had done here in the US and he expressed the wish virtual tour companies existed in France.

    So I discovered that I could make a Virtual Tour hosting both stills and video with my supplier, TourBuzz based in the US with a .com domain name, and while the school listings did not work, everything else did from maps to satellite views but description in French. When the property sold within 10 days, the agent was sorely amazed.

    So I tend to think that low commissions would probably cut into what realtors and agents would spend on all advertising including photography. I wonder if owners paid for the photography, would that allow owners to play musical chairs with realtors more easily. On the other hand, since they don’t pay for the photogaphy, I have noticed that they tend to discount the value and investment involved in high end photo work.

  • Helping sell the listing is only part of the value in professional real estate photography. I constantly hear agents tell me, “Oh, I do my own.” I then ask them how impressed that makes the seller? Do you think your seller will tell their friends and family about the great job you did marketing their home? Most homeowners don’t know how to pick and hire a professional photographer. To me that’s one of the services that an agent can offer that brings value to the transaction and helps differentiate them from other agents.

  • I am an independent real estate broker, I charge 1% to list a home in my area (Redfin charges 1.5%) plus the standard buyer fee of 2.7%. Why should I charge 6%? I work out of my home, I do not have the overhead the big franchises have. I was recently recruited by Keller Williams, I would have to pay them almost $30,000 to work there, part of the reason why the commission is so high. I think the 6% commission is a big rip off. The listing agent and the buying agent are doing the work, the brokers are collecting half of the commission, for what? I provide all of the same services the big box stores do and as more brokers go independent there is going to be more pressure on the commission rate, as it should. 90+% of real estate sales are done through buyers agents, FSBO sales are at the lowest point they have ever been. Buyers end up paying the commission by paying the price of the home, they need to demand the change but that would mean going up against a huge special interest group, the NAR.

  • The primary force driving down real estate photography prices is all of the part timers that are charging ridiculously low prices that could not support their standard of living if it wasnt for a 2nd/3rd job or a spouse with a job with all of the benefits.

  • Regarding Rohnn’s comments about independent brokers, it seems to me that all, or nearly all, of the top-producing real estate agents in the US work with an established brokerage, often one of the major national brokerages. That being the case, what does Rohnn know that these top agents do not?

  • So Rohnn, I have to ask as this thread is about how this will impact us already poorly paid photographers of real estate, how do you see your position vis a vis hiring good photographers whose work reaches out and grabs potential clients both owners and buyers?

  • Good point, @David E.

    I’m curious as well – all of my best clients work with big brokerages (Remax, Century 21, Sotheby’s, etc).

  • Way to keep up with the pulse of things. I’ve been feeling something is different here in St. Louis. I’ve even contacted Tony Thompson in Kansas City, Justin Jordan in Louisville and Greg Utton in AZ and they’ve felt similarly. This article may be the reason for a slightly slower market.

  • Marketing to FSBO’s can be a waste of money. If you have worked on making your web site rank high in your area, they will find you. An FSBO is going to be a one sale job where signing up an agent or broker may lead to many jobs which amortizes your advertising/marketing costs much better.

    A 6% commission is for the both the listing and buyer’s agent. Since the listing legally (US) belongs to the broker, they get a portion of the listings agent’s half. The agent will also likely be paying “desk rent” to the brokerage office on top of their marketing investment. The Man® is going to take around 1/3 of what’s left. For a $300,000 home, the agent might clear $2,000 after taxes depending on the broker’s cut.

    Getting one’s broker’s license and working independently can pay better, but not having the name recognition of a national chain is an impediment. There is also a bunch of back office support being an agent/broker associate at an office. I expect that the local market will be a big part of the decision of whether to go independent or not.

    I consider my prices very fair for the service I provide. I will not entertain requests for a lower fee because the agent/broker is willing to accept less commission. That’s like paying a higher price for groceries because the supermarket is paying twice the rent for a fancier building over their competition a couple of blocks away.

  • The core challenge for realtors is a need to maintain a value-add contributor to the overall process. We’re waiting to close on a home right now. As buyers, we found near-zero value-add from the first two agents we worked with. Only the third was willing to do any work. We literally provided all the homes we wanted to see, the first two couldn’t keep up and/or grumbled about doing more than a couple showings a day…all the while staring at their cell phone while we toured.

    I’ve no problem paying a commission but, as we’ve found in our current purchase process, real estate agents need to demonstrate clear value-add. If they don’t, they’ll go the way of the dodo bird.

    Here’s the funny thing though, more and more FSBOs are calling me. About 1/4 of my business this year, plus one this Thursday, are from private sellers. Oddly enough, they see the value while many real estate agents do not. The trend is starting and it doesn’t seem to be harming my earnings this year.

    Unfortunately, the challenge with marketing directly to private sellers, is that it is very hard to target them specifically. Fortunately PFC and other advertising mediums exist.

  • @David. First of all there are thousands of independent brokers. Specifically 1. I have been self employed most of my life, I just have to answer to myself and my family. 2. I have been recruited by several franchises, I would have to incurr expenses that I dont have to now, i.e. Keller Williams of almost $30,000. 3. Politics and BS within any large organization, which I do not have to put up with now. 4. I can do anything the big companies do and can be more flexible with my clients, which are my first priority. 5. What does a large company offer?
    At my latest recruitment, I asked the manager “What should I tell my clients why they should list with your company”. His response was “Thats a great question, no one has ever asked that before”. Then he said “They would not be listing with us, they will be listing with you”, kind of an odd response. In the end, if they are going to be listing with me, what do I need a big box for? Retail real estate is about half of my business, investment real estate the rest, I am as busy as I want to be.
    @Peter I am not sure what you are asking, I do not have any employees. I just try to produce the best product I can, do your best and be your best and God will take care of the rest.
    I do not understand the complaints about working FSBO’s one at a time. That is what most agents do to find clients, are RE photographers lazier?

  • To answer the original question (many above replies are off-topic), in the greater Chicago area, there is no downward pressure on commission rates. 5% to 6% are normal. During the recession when many of our listings were short-sales and foreclosures, 6% was the norm because the banks and Fannie May, etc. would pay 6%. The market here, especially in the up-scale and lakefront Chicago neighborhoods is hot.

    However, there IS greater competition for RE photographers. There are new faces in the western suburbs charging low fees for low quality photos. I have not changed my fees (higher than all my competitors), and am still working at capacity — thanks in part to the skills and techniques I learned from this forum over the past year,

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