Why commission is always bad for the customer
As someone who started a company purely because I thought the model of travel agents getting paid commission to book trips was dumb, I guess it’s not a surprise that I’m not a fan of commission. But to be honest, it’s not something I’ve thought a lot about these past few years.
Except for recently. My little family (consisting of superhero husband, Shai, and super misbehaved but ultra lovable dog, Layla) is making a cross country move to NYC. We’re leaving behind the green trees and lakes and peaceful (relative) silence of charming Minneapolis for the madness and chaos of one of the world’s biggest cities. Well, it’s probably small when compared to Shanghai or something, but it’s definitely BIG.
So we’re apartment hunting, which is a lousy and no fun thing to do in any part of the world, but in NYC, it flat out sucks. It hurts it’s so bad. I’m sick of arguing about how a queen-sized bed will certainly not be able to be wedged into that tiny bedroom that’s in reality a closet, and sorry, I’m not impressed by this courtyard view that’s actually a dumpster.
What makes the process even worse? All the sleazy brokers running around town claiming to make your life easier but mostly just charging you $3,000 + in commissioned broker fees to open the door to the sh*t-hole apartment that they somehow managed to photograph in an appealing way to list online.
I digress. Let me get to my point: commission ruins everything. If you’re buying a house, picking an apartment, deciding where to go on vacation or even buying shoes. We, as customers, are NOT getting a good deal anytime commissions are involved, here’s why:
Humans are motivated by money.
I had to get a business school degree to learn this fun fact. Yes, you’re right, money certainly isn’t the only motivating factor, and yes, motivating factors do range person to person, but until we can only pay for bread and candy with green-backs, money will always be a motivating factor. This means anytime someone is being compensated entirely or even partially by commission, no matter how good of a person they are or how much they want to help you, their goal is to up-sell you, to get you to spend more money. Sure, the more astute people will learn to value relationships more, and will try to get you the best deal as well, but in my experience, that’s rare. Because again, you can’t pay at the grocery store for your bread and candy with your great relationships. But with money, you can.
There’s no such thing as free.
I love when people try to tell me that so and so is “free” to use, because they’re being paid a commission by XYZ company (not me). So I would be stupid not to use them. They’re “free”! Come on now, are you really that stupid? Do you really believe there’s such a thing as free? Sadly, there isn’t. Nothing, not even the air you breathe, is free. Everyone is looking out for themselves. I suppose if you absolutely have to, go ahead and use this “free” service, just keep in mind you actually really are paying for it, and I’m confident you can find a better deal.
You’ll get no attention unless you have a huge budget.
This one drives me the most crazy, although as you can tell, I’m not entirely calm, either. But really- in a commission world, you’re only as interesting as your budget. Don’t want to spend a lot? Sorry, you’re not really going to get the attention you deserve, because there’s someone else with a way bigger budget, meaning bigger earning potential, so you’re just going to get thrown by the wayside. But whether it be car shopping, vacation selecting, or wedding dress picking, shoppers have similar needs across all spectrums of spending. And the commissioned system ensures that high-end purchasers get a whole lot of attention, while the rest of us fall by the wayside.
The best alternative? The flat fee.
I can’t even begin to tell you, how many times throughout the recent apartment hunting process I thought to myself- I wish we could just PAY someone to do this. To which my friends answered: you can! It’s a broker.
Nope. A broker gets paid in proportion to the rent we accept to pay monthly. A broker’s best interest is to stretch our monthly budget even higher. A broker won’t be that interested in spending time with us, because our budget is pretty modest compared to that fancy couple moving to a glitzy loft in SoHo.
Instead, I’d rather pay someone an honest, flat fee, irregardless of how much I choose to spend on an apartment (or, ideally, if we can figure out a way to motivate him/her to find a place with even lower rent, that would be magical). I want this person to be an advocate for my family- our budget, our needs, our wants, and I want this person to honestly and confidently answer my incessant questions. Not roll their eyes and stop answering the phone (true story).