This morning in my companies sales meeting, an agent brought up a story about a limited service/discount broker and the affect on the seller. The story goes..... A seller decides to list his home so that he can retire in Utah. The seller interviews several agents and decides to go with the broker that suggested the highest sales price. As part of the listing agreement, the seller had to pre-pay the listing company for their services. The total came to $2,995.
The home was listed for over a year and the seller was paying on two mortgages. His new house in Utah and the listed house in Colorado. This story has several items that need to be addressed including:
1) The seller went with the highest suggested list price and the lowest commission. Who was the only party that benefitted? The listing company! Pre-paying for real estate services cannot be a motivating factor for a listing company. They already have their money and their performance is no longer relavent. Anyone that disagrees, consult your human nature handbook.
2) The listing company had only one goal, to get the up-front $. The success fee that full service agents receive is just that, a success fee. No sale, no $.
3) The seller moved to Utah, bought another house and watched his retirement savings dwindle. It is unknown if the listing company offered any substantiated service while the seller was in Utah. No accountability, no success but still paid (a discounted) commission.
4) Eventually the seller got fed up and decided to consult with another agent. One of the same agents that had interviewed for the job over a year earlier. The agent recommended a price that was $70,000 less than the limited service/discount broker. By the way, the price recommended by the 2nd agent was the same price that he had recommended a year earlier.
5) The 2nd agent ended up selling the home close to his recommended price and within 30 days. The seller could have saved himself a year's time, a year's worth of mortgage payments, $2,995 in unearned commission and a tremendous amount of grief.
I am by no means saying that only limited service/discount brokers are the only one's guilty of ethics voilations but the structure of this particular listing company lends itself to potential conflicts or questionable ethics voilations. No services rendered before commissions earned, clearly poor market analysis and any seller would hate to walk away from the $2,995 that they already invested into the sale of their home.
Re-print from one of my other websites 6/12/2007
Comments(10)