This is part 2 of a multi-part series (click here to read part 1).  In part 1, I discussed FSBO marketing techniques and the new trend which is to basically remain a FSBO, but also to have your home listed on the Multiple Listing Service (MLS).  While this may seem like a way to have the best of both worlds, there are some negatives to this approach.

Did you know that some of these brokers that will place your home onto MLS for a fee are not even headquartered in New York, much less on Long Island?  If the agent that you choose isn't even on Long Island, do you think that they will be of much help when it comes to understanding the Long Island market?

Let's say that you do overcome this hurdle by hiring a company that is located on Long Island to provide access to the MLS.  There are still challenges that you will have to overcome when choosing to go this route.  In this segment, we will discuss the biggest obstacle to using a flat-fee service broker, which can be summed up in one word - INCENTIVE.

As the homeowner, you obviously have a motivation to sell your home.  In the full-service real estate model, the agent or broker is motivated to sell your home because they have an incentive to do so in the form of a commission.  The biggest difference here is that a full-service agent or broker doesn't get paid anything unless your home is sold, whereas the flat-fee brokers are paid upfront for their services.

In an ideal world, you may think that these brokers have an incentive to help get your home sold because if they are successful, they will get your referral business.  However, the real estate industry mirrors other industries that have various models to choose from; the restaurant business is a good example for comparison.

Many people choose a fast food restaurant because it is inexpensive.  The fast food industry is basically run by minimum wage workers, the services provided are minimal and the food quality is average at best.  When you eat at a fast food restaurant, you must place your own order and pay the cashier before receiving your food.  Once you have paid for your food, you move on, and so does the cashier to the next customer.

A fast food restaurant is transactional, and doesn't have expectations of word-of-mouth referrals.  Their business is based on generating a high volume of business from people with very little in the way of expectations.  The minimum wage workers don't receive tips, and don't have the same incentive to provide outstanding service.  Ask yourself this...when was the last time that a friend asked you for a recommendation for a fast food restaurant?  It most likely has never happened to most of us for obvious reasons.

However, if you are looking for a fine restaurant, you will most likely reach out to friends, family or colleagues to get some recommendations.  After all, these restaurants are more expensive, and thus your expectations are higher.  When you walk into a fine restaurant, you expect to be greeted by a host or hostess and led to your table.  You expect the waiter or waitress to come by promptly to start taking your order and also to let you know about any specials that are available that day.  You expect a level of service because you are paying for it. 

When you dine in a fine restaurant, you pay for your meal once you are finished with it.  A fine restaurant builds its business by providing outstanding service and food, which inspires people to spread the word through referrals.  While fine restaurants may also advertise their business, they could not survive without relying on repeat and referral business, just like a full-service broker does.

In a capitalistic society, money is a motivating factor.  A flat-fee broker that has been paid already has as much incentive to get your home sold as a fast food restaurant worker has in having you become a regular customer.  A full-service broker, on the other hand, is extremely motivated to help you sell your home because it is the only way that they will receive payment for their services and also to inspire you to refer other business to them in the future.

In a buyer's market, where it is more difficult to sell a home, are you more interested in working with someone that has already been paid, and has no incentive to ensure that your home gets sold, or someone that needs to sell your home to put food on their own table?

It is very likely that your home is your most expensive asset, and should be treated as such.  You will only get the chance to sell this asset once, and using an incomplete marketing plan may very well cost you thousands of dollars in the long run, even though you think that you are "saving" money.

This post should be giving you "food for thought" when making your decision about whether to use a flat-fee broker or a full-service broker when selling your home.  Think of it this way...if you were going to go out to celebrate a wedding anniversary or some other special occasion, would you go to a fast food restaurant or a fine restaurant?  The choice is yours!

In part 3 of this series, I will discuss some of the other challenges to selling a home on your own, or with a broker whose only function is place your home onto the MLS.