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70 Comments on Does Deep Discounting and Internet-Based Brokers improve Client Service and Representation?
Thanks Rich! You stated exactly how I feel. Thanks Maureen for posting that link. :)
Rich: Thanks! I choose not to play the discounting game. I believe my service is worth something and am happy to let the bargain shoppers of the world work with someone else.
Hi Rich, Your overview and well thought out post are excellent. Some things/services do not lend themselves to discounting.
Rich - Amen! Even though I'm not a Realtor, I work with Realtors so I know many of them work really hard and smart for their clients. I also disagree with James in that most consumers (a) already have access to the necessary information (most don't) and (b) many can intrepret the data as well as the average agent (sooo untrue). As for marketing a home correctly, many times, it's the seller (especially REO banks) who can interfere with a Realtors ability to market the home effectively.
I don't live in WA but rather SoCA and the Realtors I work with are busting their butts everyday to service their clients (buyers & sellers) and to compare them, their services and their talent and abilities to an internet discounter is indeed an insult.
I also agree with you. INteresting post here
Thanks
Don
I know what my fees are and I stick with them. I've been in business for 14 years and I know that I'm one of the most educated, experienced, professional REALTORS around. I earn every dime of my commission. If you want cheap, that's not me. When we start acting like professionals then we'll be treated as such.
James Lupori: I greatly appreciate your 'different' point of view, and agree with your points.
For too long our industry has selfishly and protectively held the keys to the kingdom, and limited consumer access to information. Thankfully, that is changing, and rapidly.
Claiming to be a 'Full Service' provider does not provide any guarantees that the client will actually receive superior service and representation. In my opinion, I think our industry as a whole does a miserable job of justifying our commissions, and defending the value of our services. We may be convinced and believe in our hearts and minds the truth of that value, but we haven't been able to collectively communicate that value to the general public.
The point of my post was not to necessarily debate the merits of Full-Service brokerages vs. Limited-Service models, but to stimulate further discussion on NAR's recent decisions, and the DOJ's rationale for the lawsuit.
Rich - a mentor of mine has been trying to beat it into me that discounting is not the way to a full client roster (I am a Real Estate Virtual Assistant) - and she's right. Now that I finally charge what I am worth (but still well within the middle of the road as far as VA fees), I am able to pick and choose my ideal clients, and concentrate my efforts more on improving their business - they might pay a slightly higher rate, but they get much more value for the money. I think discounting on commission fees etc...takes us down the same path - as you have stated. You're not going to get the same attention to detail, quality service that you get by working with an agent who feels like they are getting paid a fair fee and feels valued by his / her clients.
Rich,
I think that discounting is fine. However, there needs to be disclosure of the services that will and will not be provided at the time the listing is taken. Occasionally, we will discount a rate to either stay competitive in our local market or to help a seller from going upside down. In these cases, we provide more value for the dollar. The market has been so saturated with agents that close 2 or 3 transactions a year. Unfortunately, it has led us the creative market place that we now work in.
Remo Group: Again, nothing wrong, per se, with discounting or business models that vary from Full-Service. To each their own. I just feel it isn't necessarily accurate to state that reduced commissions or so-called 'innovative' methods necessarily equate to an improvement in client services/representation.
The key here is that we all need to do a better job of articulating our value, regardlless of what side of the service coin we fall under....
Can't disagree with that statement. Unfortunately in my market, many agent offer very little to their clients but the name of the franchise that they belong to.
I believe that my work speaks for itself.
Consumers can shop for the lowest fee all day long. They will not be represented by me or any of the experienced brokers in my network.
We're not indentured.
Rich, I couldn't agree more with your take in the discount brokerages. Don't get me on my soap box! I still don't understand why homeowners trust the sale of their home to someone who can't even negotiate their own commission. In Middle TN, some of the realor remarks for a discount listing on MLS say: Limited service listing TCA 62-13-401 compliant- buyer's agent will not, by law, do any more work than on any other listing. My foot, I've represented the buyer for a home listed by a discount broker. There was more work because I had to send paperwork to the home owner and the "listing company". To top that off, the house was priced rather low (back before the market changed). THis was great for my buyers but the owner could have asked more. I wonder how much money the owner REALLY saved.
I don't agree with "deep" discounting with their is no representation.
Rich, I agree that competition is healthy. And I think that in this market, whatever price/quality options an agent chooses to offer, disclosure to the consumer is totally crucial.
Wow What a soap box. Everyone here complaining about discounters probably live in a wal-mart. It amazes me agents talk about how they do more work than anyone else in the transaction and then that flows to discounters as well. What one could ask is what do you do for a million dollar home that you wouldn't do for a hundred thousand dollar home. If you ethics say nothing but the same then why does one pay 70,000 and the other pay 7000. Not I am not a discounter but I don't see the problem if w eall are held to the same standards.
Hi Rich, Whew! What a whirlwind of comments. The ABR magazine recently had an article about what a BB was expected to do when selling a discounters listing. The gist of it was 'suck it up. Do whatever your client needs to allow her to secure the property'. I was taken aback by that attitude. 'Tho I realized that is exactally what I have done because of my fiduciary relationship as a BB. Of course when I've seen the perfect house for a client and realized that it was a discounter's listing I admit to a feeling of dread, knowing that I would do all of my duties as well as many of the discounters duties to their seller. ie- seller contacting you because they know that the discounter would charge them additional fee(s) if they called him! There is also the issue of representation. You don't rep. the seller and cannot advise them.
Too often, real estate agents and brokers are considered to be like indentured workers. We are supposed to give the top level service and be satisfied with what the seller, listing agent determines to pay us.
NO ONE SETS MY FEE BUT ME. If the seller/listing agent wishes to offer less than I charge, I don't show that property or my buyer pays the difference. My buyer knows this up front and they decide if they wish to see a house with a low co-op.
I have absolutely no problem with brokers who charge on the low side. It's their business model and they can do as they like. However, when their buyer calls me and wants me to open up a house for them to see and then their "agent" will write the contract, they hit a brick wall.
These companies are "fringe". Always have been, are now and always will be. Real estate brokerage is too complicated for buyers and sellers. An experienced agent/broker who does the job right is entitled to what ever pays them for their time and level of expertise.
I don't discount service and I don't discount fees.
I have moved to Coldwell Banker, as my broker says to us at our meetings..."We are not a discount brokerage, and we never will be." I love that, as my motto is, "You pay for the service that you get." If you want great service, I will give it too you. If you want mediocre service, that's just your choice, and will be another brokerage. We offer top class service, it might cost you a little more up front, but we will definitly give you the best service...
Sorry to hijack this post Rich. I must respond to Charles.
Charles, Darlin'. The reason we charge so much more for a $1,000,000 property than a $100,000, about 10 times higher, is because the RISK is about 10 times higher.
It is a time honored custom for about 1,000 years, that brokerage fees are a percentage of the value of the transaction.
Property values increase based on a leveraged amount, a percent of the previous value, not a dollar amount. Brokerage fees are leveraged based on the value of the property sold.
Works for me.
Of course, flat fee or lower percentage brokers are free to follow their own business model. They will have a percentage of the market, almost a leveraged percentage. However, the institutional and traditional brokerage model serves the consumer, pays the broker and their agents sufficiently well for them to make the investment in the infrastructure that serves the public.
Fact is, our broker fees are often negotiated and if I wish to do so, I can discount my own fee. I often do so on new construction sales. because my duties to my buyer client are significantly less than on a resale transaction. There is also significantly less risk.
I'm a broker that charges for risk. The higher the risk, the higher my fee. Otherwise, the consumer can use another broker.
One thing is constant. Brokers are free to follow their own business model.