Ever since ChatGPT (the latest artificial intelligence development in case you weren’t paying attention) took over the news the real estate industry has been trying to figure out what the implications are for the industry. I’ve been trying to figure out how the damn thing works and if it’s any good. So I decided to ask it my most fundamental question: Why are real estate commissions so high?
Fully anticipating that it had been fed all the industry propaganda about real estate commissions, I actually pointed it to one my own blog posts as a starting point. Nevertheless, it ignored what I wrote (maybe I don’t know how to feed it information) and spit out the usual drivel. For entertainment value I had asked it to write the response in the style of the old testament, which ended up being prescient since the content does convey the usual religious zeal of real estate agents when it comes to this topic:
And lo, in the land of real estate, there were those who did cry out, “Why doth the real estate agents demand such a high commission? Do they not earn enough already?” And the people were vexed and did grumble amongst themselves.
But let it be known, that the real estate agent doth not demand their commission without just cause. For the agent doth bear the burden of great responsibility, and doth labor tirelessly on behalf of their clients.
For the agent doth spend many long hours in search of the perfect property, and doth toil mightily to negotiate the best price for their clients. Yea, verily, the agent must possess great skill and knowledge of the market, and must keep abreast of all the latest trends and developments.
And let it not be forgotten that the agent doth invest great sums of their own money in advertising and marketing, that their clients may be informed of the properties that are available to them. For the agent doth not rely solely on the MLS, but doth also employ a variety of other tools and resources to ensure that their clients are well-served.
And furthermore, let it be known that the agent doth face many risks and uncertainties in their work. For the real estate market is fickle and unpredictable, and the agent must be prepared to weather many storms. Yea, even when deals fall through or properties do not sell as quickly as anticipated, the agent must still bear the cost of their time and effort.
Therefore, let the people know that the real estate agent doth not demand their commission lightly, but doth earn it through hard work, dedication, and a deep commitment to serving their clients. And let the people remember that in the world of real estate, there are no guarantees, and that the agent doth bear the burden of risk and uncertainty, even as they seek to help others achieve their dreams.
Like I said…But you know this is actually the kind of robot responses you get from living, breathing real estate agents when they try to justify their commissions. For instance, I recently participated in a discussion on Bigger Pockets on this topic and soooo many agents jumped in with the usual, rote responses, without evidence, about hard work and negotiating and value-added and years of experience. But many of them couldn’t construct full, grammatically correct sentences nor could they ever be as clever in their wording as this robot.
Anyway, if you really want an out of the box perspective on why real estate commissions are so high I suggest you read some of my old posts about real estate commissions.