Chicago real estate broker commissions represent a significant aspect of real estate transactions, influencing the overall cost and process. As architects, licensed brokers, and property developers, we bring value and transparency to the property purchasing and development process, ensuring that every step is clear and beneficial for our clients.
A significant shift in real estate commission rates and transparency is underway. Starting in August 2024, listing agents will no longer be able to include compensation offers on the Multiple Listing Service (MLS). In the past, the seller’s agent set the commission rate, which was then published in the MLS and split between the buyer’s and seller’s agents based on the property’s sale price after closing. The courts have ruled that this practice contradicts transparency and the principles of a free market. However, this change presents an opportunity for us, as both architects and licensed real estate agents, to guide you, the buyer, toward a more transparent and successful approach to property development.
What to Keep in Mind Before Purchasing Property
A typical real estate broker faces two significant limitations when it comes to property development or renovation. First, they are often no longer involved by the time you reach the design, permitting, and construction stages of the property, which means they lack the in-depth knowledge that comes with seeing a property through development. Second, they are incentivized to focus primarily on closing deals as quickly as possible, so it is not in their interest to be contemplative about potential future development complications. This isn’t a criticism of real estate agents but rather a reflection of the industry compensation norms and a factor behind the court’s decision.
When you hire an inspector, their job is to identify deferred maintenance issues, building code violations, and previous water damage. This information is then used during negotiations between the buyer’s agent and the seller and their agent to remedy the issues or provide a credit. However, in most transactions, no one looks into factors that could impact your future plans for the property. Many people complete real estate deals without considering factors such as what could be built on neighboring properties, the correct zoning of your property (often misrepresented in the listing), setback requirements, height restrictions, density restrictions, parking requirements, egress, or even whether you can build on the property at all.
As architects and real estate agents, we bring value by addressing these considerations. We’ve closed real estate transactions, worked as the architect through design and permitting, built properties as general contractors, and managed them as landlords.
Transparency in Commission Rate for Buyers and Our Clients
As your architect, our priority is thoroughly evaluating a property’s potential opportunities, constraints, and pitfalls. We’re not here to rush you into a sale just to close a deal. Our primary focus is the design and construction of your eventual property. To ensure your best interests are served, we simply charge an hourly rate, eliminating any risk of added costs tied to the purchase price or the whims of the seller. We take a long-term approach and are committed to your interests now and throughout the construction process.
