Discounts. Rebates. Blue Light Specials. Sweepstakes. Lottery. Monopoly Money. All In!
There’s no such thing as a free lunch.
In the past few weeks I’ve had two buyers contact me out of nowhere saying they first found a local discount Broker, but when they tried to work with that company to find a home they became so frustrated with the lack of service they contacted me instead. And I’m just one agent! Imagine how many frustrated clients there must be!
Of course I won’t name the company. Those competitors can keep on ricocheting clients my way all day long. If a Broker is only passively sending you listings and calling that “service,” let’s talk. It’s not effective service unless you’re able to buy the home you want, or sell the one you have.
Flat Rate Service
One seller I met with recently heard an advertisement from a Broker on television touting a flat rate, say $5,000 for the purpose of this story, for selling his home. When he dug a little deeper he found out this $5,000 to the listing agent was in addition to the commission he’d have to offer to the agent who brings the buyer.
So, assuming this seller had an $800,000 house for sale, and assuming a 3% commission to the buyer’s agent, the actual commission he’d pay is $29,000. But that $5,000 sure sounded good in the ad! And, yes, he would save some money with this Broker, but is the tricky huckster on tv the person you want representing you and your home?
Also, the flat rate Broker gets paid the same $5,000 whether he sells a $200,000 condo or a $2,000,000 home. So, does he care which he sells? If it were me, I’d want to know my Broker was making a big effort to get the job done, not taking the easy sale!
A flat rate Broker has to increase the number of homes sold in order to make the same income as their full rate counterpart. This is the McDonalds model of real estate. If you only charge $1 for each burger, you have to sell a lot of burgers to make the same profit as a full service Ruby Tuesday. You’ll get service at McBroker, but it’ll be on a plastic tray and you’ll have to get your own ketchup.
Discounts for Military Buyers
Buyers often come to me with an already established banking relationship. Military buyers, in particular, favor USAA and Navy Fed. Those banks do many things well, but being a Realtor is not one of them. They often offer buyers a rebate of a few thousand dollars if the buyer uses a Realtor who has signed up with their in-house program, Members Advantage or the like. While the buyer is awed by the bank’s supposed generosity, they often don’t understand the agents who sign up for those programs give up nearly half of their commission in exchange for that referral from the bank.
So what? So, that agent has to take on almost twice the number of clients in order to make the same income. So, how much attention do you think you’re going to get? Or, if you are getting plenty of attention from that agent, you should probably be wondering why. Is the agent new to real estate and using this program to try to build up business?
You do not have to use one of these programs in order to take a loan from the bank of your choice. You’re welcome to choose any agent. You can even request that your choice agent match the rebate you were offered or include some other valuable perk. At least then you can get excellent service.
Want to Know More?
People love free stuff. I do! Black Friday and Cyber Monday only exist because our species wants more for less. But in terms of Realtors, if you’re not getting the services you need to successfully buy or sell a home, then what’s the point? If you’re unclear on how Realtors are paid and by whom, please contact me. I’d be happy to clear up the mystery and tell it like it is.
Rob
December 13, 2017
This is Funny to say the least! This Broker/Agent fails to mention in the article that Consumers will pay HIM $24,000 just to list the house and then another $24,000 if he brings the buyer to the deal ( assuming 6% total Commission on the Listing)! Compare that to the $29,000 Total he admits that the commission will be in working with the Discount Brokerage. That is $19,000 difference, very substantial. All Realtors are educated and licensed the same way. Yet, all Full Commission Brokerages always have the same Spiel: You get what you pay for, blah blah blah. At the end of the day, you save money and your home is advertised and brokered the exact same way on the MLS system. More than ever Buyers are turning to the internet to search for properties, and most of the time they actually choose the properties they wish to see and send them to their Realtor to book viewings on them. If a Realtor is honest and ethical, they have a legal obligation to show them any property they wish to see. So how does this person in this article justify listing commission of $24,000?? Did you do anything extra to attract buyers? Do you have exclusive rights to the internet that Discount Brokers don’t? Do not be fooled by garbage like this article. The Real Estate Industry has NEVER been more reliant on the internet and therefore the Buyer’s choices for homes to purchase. Times are changing and it’s funny to see people like this person clinging to the belief that if you are a discount brokerage, you aren’t worth dealing with. On the contrary, Discount Brokerages get paid less for Listing Homes and therefore have to work twice as hard on marketing and selling houses. Think about that before you believe something like this article! Hilarious though for sure!!
Lillian
October 15, 2021
> very educated comment, the writer also fails to show you where all that extra money goes ? It definitely doesn’t go into marketing your home . I used a discount broker to sell three of my homes and a so call full service broker and got worst service from the so called full service broker. People don’t be fooled by the cave man tactics of this article . You would be a fool to pay 5% or 6% to sell your home .