Are you transparent?

A recent Realty Times suggests that the lack of transparency in both real estate and healthcare is a big part of what drives consumer discontent in each arena. In both, she suggests, the average consumer is unable to figure out the true cost of providing certain services and is therefore unable to determine whether or not the price being paid is reasonable.

A great article in the New York Times helps explain how hospital billings will vary depending on the consumer, not the procedure. For example, Medicaid will pay a hospital a set amount per procedure, sometimes less than what the hospital believes its costs to be. Private insurers will be charged a different amount to make up some of that gap. But if you’re uninsured, you’d get charged the “full” cost of the procedure with certain deductions if you qualify for financial assistance. Same procedure, different costs. Not transparent.

In a real estate transaction there is almost the opposite effect.  Different brokers and agents with different levels of experience and varying strengths are competing to sell vastly different homes every day. Yet the perception of many consumers is that most brokers are charging the same commission rate for every transaction despite all the inherent differences. Different transactions, same costs.  Not transparent.

An article on NAR’s REALTOR® Magazine is one author’s attempt to be transparent by itemizing the time and effort spent on a typical listing. But when he gets to explaining why his average commission is so much higher than his average investment, his first argument is to point out that some homes don’t sell and he doesn’t always get paid. So…his first defense is to point out that this consumer is helping to make up for the failure of other transactions? Strikes me as a value to the broker, not the client.

Wasserman lists some questions that clients might want to have answered:

• What do your services actually cost?
• If I do all the things you ask me to do in terms of preparing and pricing my home, why do I pay the same as a seller who doesn’t?
• If a commission is payment for services, why does it cost me twice as much to sell my $600,000 home as it does my cousin across town who sells his $300,000 home?

How would you answer those questions? Are your answers designed to define how those fees provide value to your client or do they simply list the ways in which the fees benefit you? Are you transparent?