This post inspired by a post by two ActiveRainers: One who takes a pretty aggressive position against what he calls discount brokerages and FSBO's. The other who write a blog to counter that position.
The message of the first blog is to realize that discount brokerage and FSBO are per definition a bad route to take when thinking of selling a home. Various arguments are given that would support that message.
The second blog basically discounts, no pun intended, that message.
I feel the need to add some of my own thoughts to this, particularly to the first blog. I totally agree with the conclusion of the second writer as you will understand when you read my thoughts.
The writer of blog 1 takes a very interesting position, be it just a tad arrogant. There are several assumptions being made here that may not reflect the real world. Understandable, yet not proper. When I started in real estate with a traditional company some 9 years ago, I would hear the same arguments over and over. Those working for a so-called discount brokerage offer less service than we, the full service brokerage.
So let's start with the assumptions I believe are a little off, to say the least.
A discount brokerage offers less service than a full service company. Ask yourself, are these people doing less or have they just settled for a lower fee, because they have a business model that allows them to charge less? E.g. Could their overhead be low enough to warrant for less commission with similar results?
When I used to work as a manager for a large office I found that the traditional model they used, wasn't necessarily designed to benefit either client or agent, but more to benefit the owners. Nothing wrong with that, as long as the people choosing to work for such a broker understand that. And this company ranked in the top ten for years in our market, yet a lot of the agents offered a minimum in marketing solutions while charging a full price (whatever that may be).
Assuming that a higher price implies a higher quality is another mistake I would warn you for. Although it may be true to some extend, it's dangerous to assume. E.g. a brand new agent working for a full service company (for lack of a better description) charges in general the same as the experienced agent working for the same company. Should that new agent charge less, because of the lack of experience or should the experienced agent charge more? It is a mistake to belief that just because someone is more expensive, the results will be better. It is a fact that people with more money like to spend more for something than a less wealthy person. As my millionaire client told me, even though rich people put on their pants one leg at the time, their psyche doesn't allow them to belief that a lower cost can warrant the same quality.
But only a true picture of past results will in the end decide whether the price paid is too high or too low.
Point and case: Toyota has been selling cars for years at prices that initially were lower than their American and European counterparts. Toyota became a huge success because of the quality they offered, which exceeded the competition. Now they produce Lexus for a higher market segment (more expensive). The most important part of the car is still the engine. Most if not all parts used are found in the Toyota brand as well.
I won't go into the arguments made on either side of the aisle about HUS. I will say that each agent has an idea of their own value. In the end the consumer decides which value is best for them. As agents we just need to stop painting pictures that are based on hot air. Let's just use facts and not disparage brokers who belief that there is a different way to do the job. There are plenty of so called full service brokers that don't live up to the picture painted, as there are definitely brokers in the "discount" section who realize the results that outperform some full service agents. The agent and customer decide in the end what price will be paid. If the price is too high compared to perceived value, the customer will move on to someone else. The agent decides what price is acceptable to perform the agreement with the customer. If that price is lower than what someone else charges, than that's totally up to that agent.
My rates are completely different from what the market sees most often. Yet I can make it work with those rates with a full marketing packet, including virtual tours, SMS flyers and web presence. How? By accepting that it's okay to have a little less more.
Comments(4)