When I started ValueList Real Estate Services back in 1994 I was pretty much out there by myself. To the best of my knowledge, the St. Louis market had only had one discount real estate company that had folded a few years before.
The initial reaction that I got from a lot of fellow Realtors was hostile to say the least. I was told by some of the listings that I went on some of the various things that some traditional Realtors had told them about us. Such as, "they'll be out of business within a year!" or "I wouldn't list with them because no other agents will ever show your house". Some of the comments that were passed on to me were downright slanderous!
Well, it's been over 11 years now and we're still in business! During those eleven years we've sold thousands of listings with about 7 out of 8 of them being sold by other Realtors. While like any other real estate company, occasionally we have a difficult transaction, we've managed to close just about all of them. In working these transactions we've developed strong working relationships with a lot of different agents. This is how come I'm writing this blog. To let the rest of you out there know that you don't have to be afraid of us.
The economics of the real estate business are such that change was inevitable. Twenty years ago when you could buy a home for $40,000.00, 7% was a fair fee to pay. Now with homes going for hundreds of thousands and millions of dollars, it was fair to expect that consumers would seek out more economical alternatives. That's not to say that the entire market is going to go this way. Many consumers still see the value is listing with traditional real estate companies. In the St. Louis real estate market, I'd say that over 70% of all listings still go to the traditional companies.
The laws of economics are that competition will drive prices down to a point where companies that survive are only able to make a "fair" profit. If a company charges too little, it won't be able to survive. If a company charges more, then it's going to have to prove to the consumer that it deserves more because of value added services or it won't survive either.
So, don't be afraid of the discounter out there. Don't say disparaging things about them simply because you think that price is the only factor that consumers take into account when making a buying decision. If you work for a traditional company, point out your competitive advantages. Sometimes you'll lose the competitive battle and sometimes you'll win. It's a huge market out there and there is room for all of us that bring value to the market.