Currently, a new Internet real estate idea was given air time on 20/20 and so were some pros and cons. Red Finn like Catalyst promises to give the Buyer back a rebate for their commission. All the Buyer has to do is drive around find the house view the house and email the Red Fin agt. to write the offer. Red Finn advertised that the Buyer can save up to $10,000.00 on a price of $500,000.00
Sound great doesn't. Well this will too come to pass just like Catalyst that offers a 3% commission 1.5% to each agent... Well that didn't fly well because the agents did not want to lose valuable salary so why would they want to show a home with a discounted commission. The public does not know that the Real Estate commission is split 4 ways. 25% to the Buyer's Agent and 25% to the Selling Broker,25% to the Listing agent and 25% to the Listing Broker. That does not leave much fro a sale that wants to cut 40% off the Buyer's agent commission. This is why the Catalyst concept is a fading novelty.
I have sited many examples of the cost of $50,000.00 or more from not having a full time real estate professional looking for you 24/7. Please read my blog on Buyer's Discount brokers for detailed info of the dangers of this..
Number one problem that Red Finn and Catalyst can not compete with is timing. Their clients have trouble getting in quickly to properties because the Realtors are going to help our paying clients first. Why would we want to show a house to a client were there is no possibility of a paycheck. This downtime is the number one cost of money to their buyers. In essence, they are missing out on the properties that are prices well and are getting the over priced or poor location, poor conditioned properties because they do not have a runner out their fighting for them to get in the door of the great buys. Estimated cost in sales price and resale to a Buyer as in my last example-minimum of $42,500.00 Not to mention the fact that if their Realtor is not familiar with the neighborhood they may be in a bad location for resale. WE have many of our different cultures in Palos Verdes who will not buy certain houses due to location because of culture beliefs. SO there goes you resale. The unsuspecting Buyer might think they are getting the best buy in the area and wonder why it is not selling..Without a educated hands on professionals -there goes your resale value and your hard earned dollars.
Now you can see why I get so upset at these discount brokers who sit at on their fannies behind a desk and claim to save you money. You get what you pay for and I do not want to see any real estate investor not be educated and lose money on their real estate investment. Yes, You will find me also encouraging all my clients to not sell any real estate and hold on to all the investments they can because I as my last client's friend put it" I am a Realtor of integrity." Intergrity is a more valuable git to give my client than any discount on commission.
I have saved my clients $30,000.00 last month by being the first one in a great ocean view property. I also had the seller's credit 12,500.00 in repairs from my inspection company and engineering specialists reports. Repairs were minor but because I am familiar with the area and so are my inspector's we were able to help the 3rd time buyer and assure them the home is safe. I know the City Planning Commission well and the issues that are currently existing in my cities. Hands on is still the best and can not be beat for an Internet blind transaction.
SO will be Red Finn but for a different reason. IF you are a experienced buyer in the real estate market and have bought and sold numerous properties in the area you are buying with Red Finn yes, you may save money.
What is going to happen to the first time buyer, 2nd and 3rd time buyer?
Don't be decieved if they are not protected by a real estate professional It is very scary. The dangling carrot of $10,000.00 can turn into a 50,000.00 or more nightmare. IT's "the Money Pit" movie gone wild. can sell real estate sitting behind a desk in another state. Errors and Omission Liability Insurance can not protect such a thing that I am aware of. Who is protecting their clients? As one of my associates put it- The short version- No one.
So just like it's other off springs this will die and fade out..Unit then It's Buyer's beware. of this little known fling in the Internet. Please read my other blog on the dangers of flat fee real estate for the seller's issues.