Offering Home Sellers a Menu of Services - BAD IDEA!!! (IMHO)

By
Education & Training with Sell with Soul

Have you ever heard the commission-negotiation-avoidance strategy of creating a menu of packages for a seller to choose among? For example (all figures are illustrative only), you might offer a 4% package which includes minimal services; a 5% package which has a moderate level of service and a 6% package that includes a kitchen-sink level of service.

Sounds good, doesn't it? After all, it demonstrates to the seller what you actually DO to sell a house and probably reduces the likelihood of his asking for a discount. If he wants to pay less, he gets less. HIS choice.

Sorry, but I think this is a lousy idea. Why?menu

Oh, let me count the ways...

You want to sell the house don't you? Yes? Well, then why are you asking your SELLER how to market it? As the expert in selling houses, YOU know what needs to be done and you, as a professional, should do those things.

You should also know what doesn't sell houses in your market. And you shouldn't be offering and charging for those services if you (as a professional real estate agent) know they aren't effective.

When I get a new listing, I really want to sell the damn thing and I spend a lot of time and energy figuring out what we need to do to make that happen. By "we," I mean me and my seller. I don't market every house exactly the same, nor do I advise every seller to do the same things. It's part of my service to analyze each situation individually and proceed accordingly. Some listings will benefit from Open Houses, some won't. Some (most) homes need staging, some don't. Some listings will benefit from newspaper ads, most won't. It's my job to know these things.

Besides, you want to provide exceptional service to all your clients, don't you? Don't you want their future business and referrals? By purposely limiting your service (especially if it affects the marketability of the home), you may be blowing your reputation and credibility with this client and potential source of future business. And of course, you may also be blowing your chances of getting a paycheck if your seller doesn't pick the right package and the house doesn't sell.

I do offer two commission options, but they aren't priced according to the service provided; they're based on whether or not the seller pays an upfront marketing fee. You can learn more about this strategy on my website...  and yes, I tell the world what my commission is - which is a topic for a different blog, but it works amazingly well!

Be a professional real estate agent and do what it takes to sell your listings. That's your job.

 

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Rainmaker
3,329,973
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

You are exactly correct...sellers don't know what they don't know so how could they know what they should know to use or not use...no use to us !

Jun 24, 2008 03:39 PM #52
Ambassador
891,480
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

I have to say that I both agree and disagree.  The service menu option is a good idea, and offering the seller options is a good idea.  But, doing things that you know won't sell it, and leading the sellers to think it might isn't good at all. 

Jun 24, 2008 03:54 PM #53
Rainer
13,328
James Simmons
RE/MAX Greater Princeton - West Windsor, NJ

Excellent, well thought-out post. After contemplating a menu of services and trying to work it out many different ways, I came to the same conclusion you did.

Jun 24, 2008 03:57 PM #54
Rainmaker
575,653
Terry & Bonnie Westbrook
Westbrook Realty Broker-Owner - Grand Rapids, MI
Westbrook Realty - Grand Rapids Forest Hills MI Re

I have toyed with the idea of a menu of services and I guess after 35 years doing it one way I'm slow to change.

Jun 24, 2008 03:57 PM #55
Rainmaker
309,970
Mike Wong
Keller Williams Realty Southwest - Sugar Land, TX
Realtor: Commercial, Residential, Leasing, Invest

Great article that was well thought and written. I always considered offerrng a menu of services, but thanks so much for another perspective!

Jun 24, 2008 04:17 PM #56
Rainmaker
599,883
Cyndee Haydon
Charles Rutenberg Realty - Clearwater, FL
727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes

Jennifer - it's got to like birthing a baby - Congrats on finally getting your book out - I always learn so much for you and will take a look at your site to learn some more! Congrats on the feature - hope all is going well for you!! 

Jun 24, 2008 05:46 PM #57
Ambassador
2,712,768
Katerina Gasset
Get It Done For Me Virtual Services - Wellington, FL
Get It Done For Me Virtual Services

Jennifer- I believe that if you have your mind set on what your fee is going to be and you make that a part of your business principles that deviating from that only leads to ill feelings. We have our set commission, which is very customary in our area. We don't have discount brokerages here. We also work in mostly high end homes with very wealthy and professional people that respect us and often pay us over what our fee is. The other part of our market are short sales and we charge a premium fee for short sales, commissions are never an issue there because the seller is not paying, and the lenders have their own set fees that they will pay. We have had this issue of a seller trying to negotiate our fee, and my answer is, thank you for your time, would you like me to refer you to an agent that I know that will do your listing for X fee? And we start packing up our stuff to leave. I do not compromise on our service, our value or our fees. There are so many listings to get out in the marketplace. If you view this from an abundance perspective you will always find people who will pay your fee.

Jun 24, 2008 06:27 PM #58
Rainer
8,400
Bill Mitchell
Marc Joseph Realty & ForeclosureToursRUs.com - Fort Myers, FL

Great post! I personally do not let the seller adjust what level of service I give them. If they do not want a 100% of me I do not want any % of them. I would agree that there are many agents that would take advantage of just listing a home in their local MLS for $299 (it's happening here) and be done with it, myself on the other hand would want my name out on every listing possible in full marketing manner and not just half A$$ed. If someone from the outside was looking in and saw a listing that didnt have alot behind it due to the fact of the seller being cheap it only reflects the same to the listing agent.

Jun 24, 2008 10:19 PM #59
Rainer
336,320
Chip Jefferson
Gibbs Realty and Auction Company - Columbia, SC

I think the upfront marketing fee is a great way to do it. I spend so much on marketing that it would be a great off set. Thanks Girl!

Jun 24, 2008 11:53 PM #60
Ambassador
342,695
Paddy (Patricia) Pizappi
Better Homes and Gardens Rand Realty - Pine Bush, NY
Real Estate Associate Broker Hudson Valley NY

The comments here are confussing Jennifer.  I thought you were saying NO to the menu approach yet many of the comments appear to think you are advocating it.  It's weird how that happens.  Anyway I agree with you.  People should expect the best service from professionals and we should be compensated at our normal fees.  Would they want to work with a doctor who offered the menu of fees for less service?  Let's see ...I can treat your sore throat but avoid contact with you ear infection for $35 but if you want the whole illness treated it will cost you $50.  I don't think so.  Great post 

Jun 25, 2008 12:18 AM #61
Rainer
86,590
Ron Parise
LocateHomes.com - Cape Coral, FL

First of all I really like the idea of charging an upfront fee for some of your services and a commission for the rest.  It saves your client money and reduces your risk. At the end of the day I bet you make more money doing it this way, because more of your listings get sold. Ive had a similar idea as a buyers agent ie charge a non-refundable fee up front and in exchange offer a commission rebate at settlement.

Ive always thought of the menu of services like a partial FSBO, ie...here are all the things that need to be done to get homes sold in this market; I will do them all for a certain commission or you will do some of them yourself and pay me less. There is no less work done, no necessarry steps get skipped, no lack of professionalism,

Referring back to PaddyPizappi's comment. for an analegy. I know a guy that had a miserable recovery period after a hip replacement. He needed a series of shots for pain management, monitoring of an antibiotic drip, help to and from the bathroom, and with bathing, and help with food preperation.  The doctor gave him a menu choices...stay in the hospital, stay in a nursing home, stay at home and hire a visiting nurse service, or train his wife to give the shots, bath him prepare his meals, etc.  There would be a different fee for each level of service.   

I dont think the doctor showed any lack of professionalism, or that the patient suffered any more because his wife did the hard work.. 

By the way, as someone who prefers to work with buyers rather than sellers I think you would better serve your sellers by offering them the option of paying more to the buyers broker.

Jun 25, 2008 01:51 AM #62
Ambassador
342,695
Paddy (Patricia) Pizappi
Better Homes and Gardens Rand Realty - Pine Bush, NY
Real Estate Associate Broker Hudson Valley NY

Don't get me started Ron I would not want to hijack this blog from Jennifer.  Options for treatment as you described are not a lack of professionalism.  It is however a lack of professionalism to give less service than the buyer or seller deserves.  As for advocating for more pay for the hard work that a buyers agent does to sell the listing agent's listings I believe in equal distribution of the commission (minus any unusual advertisement expenses) but that is for a different blog

  

Jun 25, 2008 02:35 AM #63
Rainer
178,223
Birmingham Alabama Real Estate, Stephen Wolfe
LivingInBirmingham.com - Birmingham, AL

Jennifer, I do totally agree. My reason though is a bit different. I am a buyers agent. I am paid by the seller. We don't collect a dime more from our buyers and we are OK with that, but offering lower commissions as a way to "buy" a listing affects more than just the selling agent. It affects those of us who do not pick homes based on commission but on rather or not it meets our clients needs and are going to work just as hard no matter what we make.

Jun 25, 2008 02:56 AM #64
Rainer
137,481
Hope Goss
Ventura Property Shoppe - Ventura, CA
Ventura Real Estate

I have to agree that the menu of services isn't for me.  I'm intrigued by your upfront marketing fee.

Jun 25, 2008 03:19 AM #65
Rainmaker
485,057
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Regarding the upfront marketing fee, I work for RE/MAX and they don't get involved in my commission structure. However, I suspect that more traditional brokerage firms may not go for it, or may certainly want a piece of it. Just something to think about.

Jun 25, 2008 03:23 AM #66
Rainmaker
485,057
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Stephen - in Denver, the buyer agent always get the same commission, no matter what the listing fee is.

Jun 25, 2008 03:44 AM #67
Anonymous
Li Read, RE/MAX Salt Spring, B.C., Canada

Great post!     Thanks for saying it so well.

 

Li

 

Li Read, RE/MAX Salt Spring, B.C., Canada

liread33@gmail.com

Jun 25, 2008 07:21 AM #68
Rainer
26,172
Joshua & Kathy Schmidt
ERA Henley Real Estate - Cabot, AR

Jennifer,

     Completely agree here without a doubt.  I don't like the idea of cutting my clients short on possibilities to sell their home.  Therefore, I will not do it. 

Jun 25, 2008 07:54 AM #69
Rainer
52,415
Elizabeth Ward Small
REALTOR & CEO The 3B Method Seminars - Burlington, NC

I don't necessarily agree with putting it into practive, however, if a seller is asking you to lower your fee, I think it can be effective to explain all of the services you provide say, "Okay, well, which of these services do you feel is not valuable?" Say this of course with no intention of cutting your fee. The truth is, MOST sellers want it ALL, and when they see all that you will do for them, they're less likely to ask. I have also heard of agents taking out a dollar bill and explaining how it gets divided (if working for a broker) and how taxes and expenses have to come out. Low and behold out of the whole dollar, a fairly small sliver is left!

Jun 25, 2008 08:44 AM #70
Rainmaker
485,057
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Liz - I might have to argue with the dollar-bill strategy... I don't think sellers care much how their money is split up; they just want to feel good about where their money is going. To me, the whole bit about whining how little we end up with at the end of the day is unprofessional and immature. Yes, the seller needs to know that the buyer agent gets a piece of it, but beyond that, it's really none of his business. I'd much rather leave my seller with the impression that I believe I'm WORTH that whole dollar (or at least half of it) instead of making myself look a bit pathetic with my little sliver. I'll spend my time showing my seller prospect how I EARN my money and make him feel good about spending it on me...

I know you said you don't do this,but I wanted to toss in my pennies...

Jun 25, 2008 11:54 PM #71
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