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The Good Part of "Discount Brokers"

By Raymond Patterson

Real Estate Agent with The Patterson Team @ Keller Williams Excellence

October 04, 2007 04:31 AM

I would first like to say I work for the number 1 Discount Broker in the Baltimore area. Advance Realty is growing by leaps and bounds over other companys. We are now hiring agents that have had to leave other discount companys because they closed up shop. We also regularly have agents move from the full price brokers to us for a variety of reasons. With that said, I will give you my opinion on this subject.

My business is built on a referral base of family and close friends. If I have a family member that needs to sell their home I can do that for them and SAVE THEM MONEY. I'm not a greedy person and I don't need to make extra money from the people who are closest to me and trust me. This allows me to build a bigger referral base. Maybe I can afford to work for less because my company charges NO FEES. I don't pay for desk space, paper clips, copies or anything else related to my business. Advance Realty also pays me 70% of the commission as opposed to the 50% I would get at a full price company. Do the math and it makes sense. The company is built on the "List more, Sell more" concept. The more you list, the more you will sell. And when one of my buyers purchases a home, I get the full commission offered by the seller. This entire business is built on volume and when you can offer a superior service at a discounted price, your volume will be tremendous.

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Jennifer Esposito

JenRan Realty, LLC - Woodstock, CT

That sounds very similar to my business model. I'm not a discount company but there are no agent fees. I supply signs, E&O insurance, some ads, website, farming material etc. My agents get to keep almost all of their commissions as well.

I'm not greedy either and on my website we say that our goal isn't to 'get rich' off our clients.

Keep up the good work!

Oct 04, 2007 04:44 AM

Raymond Patterson

The Patterson Team @ Keller Williams Excellence - Lutherville Timonium, MD

President - Patterson Team Homes

Thank you for your positive feedback. I'm sure your company will continue to prosper because your agents are well taken care of.

Oct 04, 2007 04:56 AM

Bill Roberts

Brooks and Dunphy Real Estate - Oceanside, CA

"Baby Boomer" Retirement Planner

Ray, I'm sure that a lot of the members here don't like discounters, but I think the industry is changing. Lower prices for listing and selling are coming. The Internet makes marketing real estate more efficient and less expensive. The consumers of real estate services are going to expect that savings to be "passed along."

Bill Roberts

Oct 04, 2007 04:59 AM

Raymond Patterson

The Patterson Team @ Keller Williams Excellence - Lutherville Timonium, MD

President - Patterson Team Homes

I think that expectation is already here. Thats why the first question out of a sellers mouth is "What's your fee?" Sellers today are much more educated about the industry and want the best bang for their buck.

Oct 04, 2007 05:31 AM

Armando Rodriguez

QUEST REALTY SERVICES - Orlando, FL

Orlando Homes 4 Sale, Real Estate Broker-GRI

Great post! But against what do you compare your discount?

I've been told that there are no set standard commissions. Any broker can charge whatever they want or whatever the market will bear!

You're not saying there's a set rate are you? That would go against NAR policy and anti-trust laws.

Can you charge 10% and call it discounted?

My thoughts ;-)

Take care & good luck!

Oct 04, 2007 05:36 AM

Raymond Patterson

The Patterson Team @ Keller Williams Excellence - Lutherville Timonium, MD

President - Patterson Team Homes

In the old days of real estate the "standard" was 6-7% to list a home for sale. Some of the national chain companys are still charging it. My company charges 1.75% (listing side) and whatever the customer wants to offer for the selling side. Even at 3% on the selling side the total commission is Discounted. There certainly is no set rate and everything is negotiable. However, with the internet access todays buyers and seller can and will do their own research to save some money.

Oct 07, 2007 01:27 AM

Anonymous

Shane Powell

I think the customers have to rely on us, the Real Estate agents, more so than ever in this tight market. I still charge the rate I always have of 6-7% and always offer the selling agent 3% and sell 30 -40 homes per year. I have for the past 5 years consistent. I don't see anyone needing to lower their fees, because the consumer is going to pay them. Until everyone stops taking money out of the mouths of their families and expect to charge what they are worth, you are only making it tougher for the full time agents that do work harder or have higher overhead. You don't see doctors and lawyers lowering their fees and who would want to use a surgeon that lowers his fees that much. What kind of job is he going to do for you. I think if the people lowering their commissions would just analyze what they are worth before lowering their commissions they would be shocked. I bet after you lower your commission to sell the home at 1.50% and spend marketing dollars, health insurance, E&O etc... you are only making .50 to .75%. Figure that in per hour and you may as well go work for Wal-mart. At least you get benefits. Until we have cheaper living expenses like most consumers you sell the home for, health insurance, lower overhead, etc.... you need to set the expectation higher and explain the reasons for your fees.

Oct 07, 2007 01:49 AM

None None

Peace River, SK

Its not about volume. Income is the only thing that matters.

The problem with discount anything is that there is always someone looking to go cheaper. In our market Mr. Lister might offer to list a house in the MLS for $399.00. He thinks he has a bulletproof business then along comes iggyshouse.com and they will list it in the same MLS for nothing.

Robert Kaetzel

Oct 25, 2008 11:41 AM

Raymond Patterson

The Patterson Team @ Keller Williams Excellence - Lutherville Timonium, MD

President - Patterson Team Homes

Hey Bob, Thanks for your comment. This post is over a year old so I can only assume that you found it by searching me out directly.

I have to disagree that income is the only thing that matters. Relationships with people are what matter. GREED is what gives real estate professionals a bad reputation. Service to the customer for a fair price is what consumers are looking for today. That is why my office has led the area in listings and sales every month for the last 18 months. Listings and sales in high volume also produce income while building lasting relationships with the customers. This leads to future business and more referrals. It truly is a win-win situation.

Oct 26, 2008 03:50 AM

None None

Peace River, SK

Ray, Thanks for the response. My point was that the amount of volume someone does is irrelevant. It is only the income that comes from the activity that matters. You seem to imply that charging more commission than you need to survive is greedy. I don't think that is true. I am glad to hear that your company has lead your area in sales and listings, but how are you doing? That is the only question that matters. You don't have to respond to that question it was meant to be rhetorical so that your focus would be on yourself.

If you don't look out for yourself, nobody else will.

Thanks,
Robert Kaetzel

Oct 26, 2008 05:01 AM