REALTORWEEK MAGAZINE

Revolutionizing Real Estate: How the Hourly Fee Model is Disrupting the Industry
Agents Lose. Consumers Win. How the Real Estate Industry is Changing.

5/23/2024
By Tyler Beaulieu

In an industry where tradition reigns supreme and change takes legislative action… There is a new model that is breaking the mold and reshaping how real estate transactions are conducted. It’s all thanks to a class action lawsuit and settlement as well as guidance from the Department of Justice. The handcuffs have been removed and entrepreneurs have been unleashed. The traditional model of “free” buyer agency where seller’s pay the buyer agent fee is disappearing. No longer will a seller be allowed to advertise any buyer agency compensation. In other words, it is up to a buyer to pay their buyer agent that is representing them when buying a house.

This new model is challenging the longstanding norm of charging the buyers a 3% commission on the sales price at closing. This innovative approach is not only shaking up the market and the industry, it is also helping buyers save thousands, if not tens of thousands of dollars by allowing buyer the option to have an agent represent them for an hourly fee.

The Traditional Model: A Costly Affair
For decades, the standard real estate model has required buyers to pay a 3% commission to their agent. That fee is typically baked into the sales price of a home. On a $500,000 house, this equates to a hefty $15,000. For many buyers, especially luxury buyers with large budget, this commission savings can be a significant expense.

A New Perspective from an industry titan: The Hourly Fee Model
Enter Jeffrey Chubb, a seasoned real estate veteran with over 15 years of experience. He has helped more than a 1,000 families move while amassing a reputation as one of the top agents in both the state of Massachusetts and the country. Chubb’s innovative model offers buyers the option to pay an hourly fee for his team’s services, akin to how attorney bill their clients or go it the traditional way of a percentage of the transaction. Chubb says “I was trying to create a solution where everyone wins. I have always felt that consumers win when they have more choices. This is a model that allows a consumer to choose the level of service and the amount of guidance they are looking for in a transaction.”. The transparency in pricing allows buyers to see exactly what they are paying for and often results in a substantial savings.

Why This Model Works for Buyers
         1. Cost Savings: The most obvious benefit is the potential for significant cost savings. By paying for services as they are rendered, buyers can avoid the large lump sum commission at closing. This can make a considerable difference in the overall affordability of their new home.
         2. Transparency and Control: Buyers have greater control over their expenses. They can decide how much time they want to invest in each stage of the home-buying process, whether it’s property searches, viewings or negotiations.
         3. Customized Service: With an hourly model, agents are incentivized to work efficiently and effectively. Buyers receive personalized attention tailored to their specific needs and can ensure that their agent is fully engaged and focused on their best interests. For buyers that do a lot of their own leg work, this is a win-win.

Industry Disruption and Competitor Reactions
As with any significant industry disruption, the hourly fee model has ruffled feathers among traditional real estate agents. Many agents are concerned about the potential loss of income and the pressure to adopt with similar price structures. Chubb feels “…that the status quo needs to be challenged. Yes, this upsets a lot of colleagues, but I refuse to be the guy making wagon wheels as the first Model T rolls off the assembly line”. The hourly fee structure pushes the industry towards greater transparency and consumer-centric practices.

A Consumer-Driven Revolution
This shift is particularly enticing for savvy home buyers who are keen to maximize their investment and minimize unnecessary costs. The idea of paying only for the services they need, rather than a blanket commission is a game changer. This philosophy more aligns with broader consumer trends toward transparency and cost-efficiency that have been seen in other industries and sectors.

Why You Should Consider the Hourly Fee Structure
If you’re in the market for a new home, the hourly fee structure offers a compelling alternative to traditional real estate services. By opting for an hourly fee structure, you can save money, gain greater control over the home-buying process while receiving customized high-quality service. This innovative approach not only can make financial sense, but also represents the future of real estate transactions.

Conclusion
Jeffrey Chubb is seen as the first agent in the country to offer the hourly fee model. It challenges outdated norms and puts the power back in the hands of the consumer. It is what is seen as a bold and disruptive force in the real estate industry. As more buyers become aware of this option, the traditional 3% commission structure may become a thing of the past. For those looking to purchase a home, this revolutionary model offers a smarter, more economical way to achieve the dream of homeownership. 

About Chubb
Jeffrey Chubb and the Chubb Homes Team is affiliated with REAL Broker. He is a licensed agent in the state of Massachusetts.
Contact Details:  617-775-7687  |   [email protected]

Reach out to Jeffrey Chubb / the Chubb Homes Team

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