Dirty Little Secrets Behind White Picket Fences:

The Good, the Bad, & the Ugly about all things Real Estate

Are Traditional Real Estate Companies the “Dinosaurs” of the Real Estate Industry? The Dawning of a New Type of Ice Age April 16, 2007

DON’T LET HIGH COMMISSIONS TAKE A BITE OUT OF YOUR HOME’S EQUITY

With the Internet finally invading and ultimately controlling the real estate market, how will traditional real estate agents continue to justify their 6%* commissions to Sellers?

As a real estate agent, I can honestly say that buyers do not need me to find out detailed information about a property for sale. Even if I am the listing agent, they can log onto their favorite website and find the property they are interested in, learn the details about the home, view 10+ photos of the interior and exterior, see virtual tours, examine the location by using Google Maps, and evidently, decide whether to see the home or not without ever picking up the phone to ask me a single question.

They do have to call me (or another agent) to actually see the home’s interior, but my importance to them is more like a gate-keeper or key-holder than a facilitator of information.

And yes, I do the administrative work of listing the home and providing the pictures and information on various web sites and in the local multiple listing service, but does that justify a 6%* commission fee? Absolutely not.

Enter the discount real estate company: all the benefits for often less than half the traditional cost.

I am biased, though. I work for a discount real estate company that charges sellers reduced commission and flat fee commissions. Other than the charge for my service, I do not perform any less for them than another “traditional” agent would. There is essentially no difference between me and “them” except for what I charge. Our motto is “Full Service with Savings”. There are other discount real estate business models that charge even less than we do, but in general, do not provide the traditional full service Sellers are accustomed to receiving from big-name dinosaur real estate companies. They are valid and do work, especially for experienced sellers, and provide yet another successful, alternative business model to the traditional game-plan.

Some agents may argue that I am selling my value as an agent short. After all, good real estate agents hold their Sellers’ hands throughout the transactions, making sure their home is priced properly, advertised profusely, and most importantly, help them to avoid legal pitfalls. When working with Buyers, I am helping them navigate through the often confusing escrow period that follows a signed agreement to buy a property: home inspections, appraisals, financing, title issues…the list goes on and on. I am also supposed to be working to make sure sellers get the most money for their home and that buyers pay the least amount of money possible for their home, depending where my fiduciary duty lies. And although I personally do this, many unethical agents care only about their commission and will guide buyers and sellers in the wrong direction all in the effort to make a buck. In truth, every agent sells a home to make money—they may enjoy helping others purchase and sell homes and may truly uphold the Code of Ethics Realtors “MUST” adhere to, but in the end, they and I wouldn’t work for free

I have always wondered who set the magical “6%*” commission rate? Who actually came up with a price for the services we as agents perform and then made it stick for so many years? After all, commissions are negotiable by law, and it is illegal for a group of real estate companies to come together and say they will all charge a certain price for their services, so where did the 6% mentality originally derive? Ten years ago, when homes were priced hundreds of thousands of dollars less than they are now, a 6% commission was significantly less than it is today. For example, in 1997, a home that today would sell for $275,000 was listed for $75,000. The commission in 1997 would be only $4500. Today, the commission to sell the same home would be $16,500. Add to that the fact that it is now in many ways EASIER to sell homes than before, and you have to wonder why the 6%* mentality still exists.

Agents may claim to “hate” discount agents, threaten not to show their homes listed (thereby violating their fiduciary duty to their buyer-clients and breaking the code of ethics and a variety of other licensing laws), and insist they are worth their weight in gold, but chances are, they’ve discounted in the past too. Ever listed your house with an agent who said his fee was 6% only to mention that another agent was willing to do it for less? What happens? Usually, the set-in-stone six-percenter* agrees to lower his fee in order to obtain the listing. All agents discount—they just do it under the table, so to speak. If the discount model of doing business didn’t work, why would other traditional agents reduce their fees to compete instead of just waiting for the listing to not sell and the seller to “see the light”? And, why does my company have a 99% listed to sold ratio?

I truly feel I do more for my clients than many traditional agents do. I know this because the majority of my business comes from referrals. I also feel I would have a very successful career in a “6%” real estate office, but I would be delivering the exact same services I already do now. I honestly could not justify the extra cost to myself, never mind a potential client. It is kind of like a moral dilemma for me.

Luckily, I jumped aboard the discount ship many years ago. Sooner, rather than later, traditional agents will have to recognize that with virtual freedom of information, 78% of Buyers using the Internet to find homes, and the gate-keeper ideology becoming a thing of the past, it is just a matter of time before we all must adopt more of a consultative approach to real estate and the services we provide. Or prepare for extinction.

Disclaimer: All commissions are negotiable by law. 6% commission used for comparison purposes only. Savings are compared to paying 4, 5, or 6% commissions.

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Greetings from the Land of Discounters March 24, 2007

Hello Everyone!

First and foremost, thank you for taking the time to view this site. With so many blogs and opinions flying around in cyberspace today, I hope you will find this particular one to be informative, cutting-edge, controversial, and most importantly, fun.

I decided to write this blog after spending some time at others professionals’ real estate blogs such as bluecollaragents.com and blueroof.com. Each person has their own interpretation and opinions as to where the real estate industry and market is heading over the next few months, years, and decades. I am one of those people, but with a minor catch: I am a discount real estate agent with very different ideas and opinions than the majority of “traditional” real estate agents, or, as I like to call them, the dinosaurs of our industry. Yep, folks, that’s right, I sell property for a flat fee and discounted MLS fee while still providing full service.

Many people have asked how I do it? How can I provide the same service that other agents charge up to tens of thousands of dollars MORE for? I hope to answer these and many more questions and have conversations over the coming months utilizing this blog.

Now, the disclaimer that all commissions are negotiable by law needs to be placed here, but most people are aware that traditional agents are also known as the six-percenters. Companies like Assist2Sell (where I work) are providing consumers with the full service of a real estate professional working to sell your home at a significantly discounted commission than the industry norm.

The term discount used to be considered a “dirty” word. Now, with the coming of Wal-Mart, Costco, Sam’s Club, BJs, Hyundai, eBay, SmartBargains.com, and others, it is looked upon in a new light by consumers and industry vets. Suddenly, it’s hip to be price-savvy.  Today more than ever before the real estate market is experiencing a definite uprooting from its traditional past. Why? The answer is simple: home prices have skyrocketed and we are no longer gatekeepers of information. With the advent of the Internet, and sites such as www.realtor.com, www.nneren.com, www.zillow.com, and many, many others, buyers can find almost any kind of imaginable information about a property for sale. Real estate agents supply that information, but they no longer keep it under lock and key as they did in the past.

My goal with this blog is to expose the secrets of the real estate industry, show consumers that there IS a better way to buy and sell property, and engage in conversations with buyers, sellers, and other real estate professionals so that we can all come to a better understanding of today’s changing market and industry.

I look forward to you continued support and guidance on this project, and hope you will be receptive to new ideas, even if you do not necessarily agree. Together, with your participation, we can take the real estate industry out of its stagnant black hole and into a new better and brighter light.