So,

I'm having my coffee this morning, enjoying the fact that it is raining which meens my better half is not all over me to get the yard mowed... : )   Now I have some time to catch up on my reading.

While surfing through this weeks Inman News an article catches my eye. Discount Broker call it quits.

 According to Inman. The nations largest discount broker, Foxtons, is going out of business.

The article talks about discount brokers working on smaller margins and how we should expect more of this as the market continues to struggle. Of coarse, many of these firms are young having been started in the recent boom years. Foxtons was about 5 years old.

Are you seeing the small discounters in your area struggle?  I am seeing as many discount broker listings as before... maybe even more.  The newest is now offering an amazing array of ala-cart services and I am seeing their signs everywhere I look.

I worry that with the fall of the discounters we will see more and more FSBO's as these discounters give historically poor service and that actually does more harm to our industry than the discounters as the public does not have a firm grasp on the difference between discounters and full service brokers.

Just made me think a little and made me very curious.  So what are you guys and gals seeing in your area?

 

14 Comments on Discount brokers going out of business... what do you think?

OCT
07
2007
129,532 Points 3 Featured Posts Outside Blog
There is one in the area that seems to be thriving. Other than that one, I'm not seeing much activity.
11:29am • #1
444,676 Points 5 Featured Posts Localism Sponsor Outside Blog
During the boom times when it was relatively easy to sell a house, discounters could thrive.  Now, when it takes time, skill and effort to sell a home, full service agents have the advantage again.
11:31am • #2

Al,  How is the Atlanta market?

Brian,

I 100% agree with you. It takes a lot more today than it did 2 years ago. 

11:33am • #3
In the Naples, Florida area I'm seeing them slowly disappear.  It is so expensive to listing a property in this market, I don't know how they can survive. 
11:33am • #4
151,311 Points 4 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

There are a ton of sellers out there right now who cannot afford to pay typical commissions.  I'd much rather see a "discounter" try to sell it before it gets foreclosed than a bank after the fact. I have encountered many sellers who are upside down on equity before commissions are considered and if I cannot or will not work them on commission, they need to have options. 

I'd like to add that the only models I don't like are the ones that still have FSBO signs in the front yard. In Texas, it is completely legit to do it, but it confuses things and I am sure the seller is taking more calls for listing solicitations than they are buyers. 

11:53am • #5
413,522 Points Localism Sponsor Outside Blog Hit Router

A more worrisome model for me is the Brokerage that charges a very small monthly fee and does not care what the fee is that the agent charges because the fee stays the same. No supervision, no involvement, just hundreds of agents paying $50.00 per month and keeping 100%. You can just imagine what the listing presentations sound like.

Unhealthy, Recruiting schemes, to achieve economy of scale, or to chase the phantom of residual income has not helped our industry.

Discounters will always be a fact of life, I don't think more of them are failing than are regular Brokerages.
11:53am • #6
In my area I see many FSBO's turn to the discounters much of the time.  They don't seem to have as many listings as they did 2 to 3 years ago.
11:58am • #7
569,044 Points 1 Featured Post Localism Sponsor Outside Blog
Hi David,  Here in Fort Myers Beach, Florida it seems that everybody is struggling.  SOme of the discounter have already gone, a well known national brand is gone and a couple of the " recdruit everybody you know " offices are rumored to be downsizing or worse.  Not sure I agree with your comment about FSBO's being better than the discounters though.
12:06pm • #8
141,731 Points 10 Featured Posts Localism Sponsor
Struggling is sort of the standard of the day, but I think that discount brokers had to focus on volume and just getting things moved. They did not have time to focus much on one property. The current market does not support that idea. Things are not moving like the did before and require more hands on attention to get them out there and sold. I have noticed a big increase in calls I get from folks who have tried selling with a discount broker and have had enough and just want someone who does it all and gets it sold.
12:18pm • #9

Bill,

I did not say I thought FSBO's were better than discounters.  In fact I said just the opposite.

"At least with a discounter you get to deal with another REALTOR, not an emotionally attached and unprofessional seller."

Is that the statement you were referring to?

 

Corie,

I agree. Discounters are a way of life.  One could make the argument that they are needed. In fact Amanda did a good job on that.  Some folks just cannot afford us. Discounters are better than foreclosures.  The only people who win on that are the investors... but that is an entirely different thread!
12:23pm • #10
2 Featured Posts
They are certainly not flourishing in this area. But I do disagree with one of your responses Dave, you don't always deal with another agent here with the "LIMITED SERVICE" brokerages. Most put right in the MLS to deal directly with the seller. Otherwise, right on.
8:20pm • #11

The limited service brokers's duties differ from state to state.  Like Andy said, In Maryland they can list in the MLS but not give ANY service.

In Missouri they have to actually give service.  There is a limited service part of Missouri real estate law that says the brokers have to be involved in the transaction.  They cannot just be a toll-booth to the MLS. 

I'm curious what other state laws are like.
9:55pm • #12
151,311 Points 4 Featured Posts Outside Blog Attended Rain Camp Called Shot Master
In Texas, our minimum service requirement is that we have to present the offer.  Offers can be delivered to the seller by the buyer and/or buyer agent but not negotiated. 
10:01pm • #13
OCT
08
2007
231,708 Points 13 Featured Posts Outside Blog
In Maryland, we are still competing with the discounters, because there will always be those sellers out there who only care about how "cheap" they can get us to work for, even though the service (from what I hear from my clients who have worked with a discounter before me) is usually HORRIBLE! 

BECAUSE...................

IN LIFE YOU ALWAYS GET WHAT YOU PAY FOR! 
6:13pm • #14


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David Nichols, Lee's Summit Real Estate

Lees Summit, MO

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The Nichols/Ersery Home Team, RE/MAX Heartland

Address: 1579 NE Rice Road, Lee's Summit, MO, 640686

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