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"WE SAVED $48,000! THANKS, BRAND X!"

Last evening I saw a television commercial for one of the national discount broker franchises, "Brand X." The couple is sitting in their living room, and they say in "25 words or less" that the sale of their house with that franchise broker saved them, if memory serves me, more than $48,000.

It troubles me that these commercials are allowed to be used when they come with none of the pertinent facts. If I were the God of Ethics, I would say without a second thought that they are in serious violation, and I'd pull their membership in the National Board of Realtors.

Further, if that couple actually saved $48,000, could it be, for an example and reducing it to the absurd, that they are the only success story or maybe one of ten Brand X has? What about the number of listings that didn't sell, or where there any where the couple didn't save anything over the use of a traditional broker? There's no way to know. Those will never be featured in the commercial.

If that couple in the commercial saved $48,000 by using Brand X, by extrapolation, their home had to have sold for at least $800,000 and that assumes they didn't have to pay a selling broker. And it doesn't take into account what charges they paid Broker X for the service. So that home could have brought as much as $850,000. If that's the case, does the couple who wants to sell their $150,000 home know that if there is any savings for them it won't be in parity with the couple's they saw in that commercial?

The commercial also doesn't address whether or not the house was accurately listed with respect to price. It's highly possible that the house was under-priced, and that could have easily eaten into the amount they claimed to have saved by using Brand X.

But finally, if you look at that couple's dress and their home surroundings in the commercial, my guess is that they have never lived in an $800,000 home, so if I'm right, I don't know what comprises the $48,000 they want us to know that they saved. And that's what's troubling to me, and it should be to everyone.

The value of a well-educated, well-seasoned Realtor to a client is enormous when you realize selling and buying a home, with all of the components, is like tip-toeing through a mine field. For the same reason you probably should carefully assess whether you want to use attorneys and doctors who feel the need to run huge ads in magazines, newspapers and the Yellow Pages, you should carefully assess those who you are considering using to help you buy and sell your home.

For me, tradition with loads of years and experience to prove its value, is ALWAYS the correct answer.

www.billcherrybroker.com

BILL CHERRY, DALLAS BROKER-REALTOR. MY 43RD YEAR SERVING TEXANS

972 380-7347

Posted by BILL CHERRY on 05/28/2007 01:51 PM

Comments (13)

buy owner, discount real estate broker, dallas, park cities, traditional real estate, traditional broker

Originally posted at: BILL CHERRY'S GREATEST DALLAS PARK CITIES REAL ESTATE BLOG: "WE SAVED $48,000! THANKS, BRAND X!"

13 Comments on "WE SAVED $48,000! THANKS, BRAND X!"

MAY

2007

Bill, Right on! How does the saying go about believing half of what you read? I think that goes double for what you see and hear on TV.

Cynthia Tilghman, Hubert NC New Home Specialist

Cynthia, I've done this for a very long time. I've trained many agents, and I've worked along side of agents and brokers all over America. The good ones are good and the bad ones are bad. And, while it isn't always the case, anyone who is willing to sell his services cheap does so because he isn't able to attract business on an equal basis with those who are the best.

I remember years ago there was a franchise that a fellow had bought who was an accountant. He had every man, woman and child licensed and under him. And he had no clue how to help them. So, when they got in a trap, he would pack the paperwork and the customer up and send them over to me to get the transaction together and closed. I would give him a referral fee. He never did learn his business. And he went out of the business when an E & O suit broke him. I felt badly for that. It was a gamble no one should be silly enough to take.

Thanks so much for your comments.

BILL CHERRY, DALLAS BROKER-REALTOR. MY 43RD YEAR SERVING TEXANS 972 380-7347

I agree with most of this post. I would like to point out however, we all have a tendency to pick and chooses the testimonials we use. So, we are both guilty of the same thing, to an extent.

These discount brokerages will continue to exist because their are people just stupid enough to believe these ads. Their house could have been worth 800K, been sold for 500K, and the commission savings could still be advertised as having "saved these people money". Fortunately, only a very small percentage of the population believes this kind of hype.

Kind of reminds me on some "flip this house" specials on HGTV. They just don't provide enough information to allow a person to assess whether the statistics are realiable.

Of course you are right, Joe, and I'm grateful you commented because I should have included that in my blog.

In my own case most of the time the person whom I'm sharing a testimonal with can check it out. And further, here in Dallas as in many towns throughout the US, if you screw up, everyone knows it, and if they don't, they can find out in a moment. That word of mouth isn't available in the Brand X commercials, so probably those circumstances are a bit different than ours.

In these commercials for Brand X, we don't even know what area of the country the people lived in, which one of Brand X's people worked with them, or the condition of the market there.

BILL CHERRY, DALLAS BROKER-REALTOR. MY 43RD YEAR SERVING TEXANS. 972 380-7347

Oh, those filp this house programs are a stark raving unconscionable disservice to the viewers.

I frequently wonder how many gross millions have been lost by viewers and others who have thought the term "flipping" wouldn't be one that was better used if it were in Las Vegas rather than on TV.

I can't say anything about that ad because I didn't see it, but in order to be truly ethical, wouldn't you have to make the same requirements apply to traditional agents too? It would only be fair? Can you picture it?

A glowing sunset and the happy couple standing in front of their beautiful colonial style home with the large national brand's sign in the yard marked "sold".

Then across the bottom of the sign a disclosure note: The company who paid for this ad is a national franchising company and has very little control of the quality of the people who buy their franchises. Also, the average seller who sold their home paid out 48% higher commissions that were available with a discount real estate company. blah, blah, blah...

First, nobody reads those disclosures and most people discount advertising to a certain extent anyway. Those glossy commercials from the big franchise companies doesn't bother me and the "I saved" commercials shouldn't bother you either. They're both intended to sell a concept, not to be taken literally.

Bob Mitchell

ValueList Real Estate Services, Inc.

Advertising is all a psycological game, how do you play?

Well, Mr. Bob, I see your point and it's well written and explained. I have no trouble disclosing anything to anybody. And when I think there is even a remote possibility something may be inferred that will cause my client or a prospective client to draw an incorrect conclusion, I do my best to set it straight right off the bat. And I know you do, too.

I still think those TV ads are very deceptive, and I wish they would go away.

P.S. See you're in St. Louis. Years ago I was an afternoon doctoral graduate student at Washington U., the comptroller of a bank in Clayton called the First National Bank, and in the evening, 6 days a week, I played piano in the dining room at the Chase Hotel. My wife was a young concert pianist who frequently traveled to play with symphonies. Interesting the energy we have when we're young.

BILL CHERRY, DALLAS BROKER-REALTOR, MY 43RD YEAR SERVING TEXANS 972 380-7347

Michael, like you, I play as straight as I can. For me, at least, there is no other acceptable way.

BILL CHERRY

OK I dont have the research NAR reported 2 years ago about this to point to. It was someting like this, Research showed that the realty of the above situation is on average a 5% lower sales price and 15-20 days longer on market. I will edit if I can find the report.

Reality is we will never know how much they lost on the value of their home to obatin those savings. people cannot simply look at the end result (the sale) to measure their success. Ex: One person seller "A" sells a property for $100K and pays x-y in fees. Another person Seller "B" sells a similiar property for $145K but seller had to pay x in fees. Who won...looks like Seller "B" paying a full service broker.

Gary

Gary, you did a great job with your mathematical example. Thanks for taking the time to show us.

Bill Cherry

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