The End of Commissions? I hope so!
Since we started taking on the traditional role played by a real estate salesperson (but without charging commissions), we’ve noticed a few things. First, some real estate salespeople have dropped their commission. I’m not saying it’s a direct result of us entering into this new space, but I would sure like to take credit for it! We love saving dentists money, so why not 😉 ? Second, some real estate salespeople have started to charge purchasers either a commission OR a fee of some kind for the ‘privilege’ of putting a bid on the practices that they are showing. I actually think these types of tactics limit the number of prospective purchasers that will be able to see their listings (counter-intuitive in my view). Also, it doesn’t detract from the main point: commissions are way too high, any way you cut them (e.g. on the buyer / seller). Third, some real estate salespeople have warned dentists against using lawyers (and even accountants) because we will not do as good a job at selling their practice and get them the highest price. That’s a bit funny to suggest because we do the same thing that they do (e.g. online and offline marketing, open houses, etc.); indeed, we also have lots of our own clients who are looking to buy practices and, if we represent the seller, we simply send the buyer to another law firm to complete the deal. Finally, some real estate sales people have suggested that it’s a conflict for lawyers to be marketing the practice that they are also selling. Now isn’t that the pot calling the kettle black! We don’t appraise practices, nor do we earn a commission (something real estate salespeople in the dental industry typically do); doing so inherently comes with conflicts.
So with all of these things being said, where do I see us going from here? The end of commissions? I believe so. Perhaps back in the day when it was harder for practices to sell, when there were too many sellers and not enough buyers, when interest rates were high, etc. it would have made sense to get some extra help marketing your practice. But today is different. Anyone can hop online and see what’s for sale. Information is available. Sometimes the sellers try to market themselves (not generally a good move, but they try anyways to cut out the middlemen and women). And we have a handful of real estate brokerages (some old, some new) that have moved into the space because they see how relatively ‘easy’ it is to perhaps sell a practice. But here’s the problem: good practices, particularly in a seller’s market, practically sell themselves. So why do you need to give up 10% of the purchase price (which is typical) to sell your practice?
We live in a different age. It’s an internet age. And with all the access to information available at our fingertips, we no longer see as much value in the middlemen and women. It’s happening in other industries too (e.g. buying a vacation online through a wholesaler, buying legal services online using automated legal software, having accounting services replaced by TurboTax, Uber replacing taxi services, etc.). This has resulted in big savings to the end user, improved education, and greater competition. So why should the dental industry be any different? I think commissions in the context of a purchase and sale transaction should be done away with; the sooner the better. And dentists should hope so too.
So if you want to get educated, protected, and make / save the most, it’s a no brainer: you should give serious consideration to engaging DMC LLP. We only charge fixed fees. We give you a quote in advance and we stick to it come hell or high water. So let’s work together to drive change in the dental industry for your benefit and the benefit of future generations of dentists!