Yes I am going to tell you about a cool offering, but first let me give you the questions and thoughts that lead to its development.
When the market is strong for sellers, and equity is strong, most buyers and sellers spend little time concerned about saving a percentage point or two in commission. As the market has begun to tighten, many sellers are having second thoughts.
- With the changing marketplace, are the smart choices in real estate brokerage are changing?
- Does it make sense to save on listing commissions in a tough sellers market?
- How about buyer commissions – should buyer be looking for a commission deal?
To figure this out, we need to start with the question, “What are the options?” – Here are the most commonly seen 4 options:
- Traditional Commission Brokerage
- Discount Commission Brokerage
- Flat Fee Brokerage
- A-la-Carte/hourly brokerage
In general, traditional real estate brokerage is represented by decades old monolithic branded brokerages like Long and Foster, Weichert, and Realogy brands like Century 21, Better Homes, and GMAC. The reality is that most people who use these companies, chose them because they have a blue chip feel to them, as if they are like a law firm or medical practice. The unfortunate truth is that the vast majority of good agents quickly leave these companies once they become savvy industry experts. Because these companies adhere to the old school truths of business; massive office space, layer upon layer of middle management, and big company advertising, their overhead forces them to cut into agent commission splits to support their spending. As agents become good enough to generate their own repeat and referral business, they make the wise decision to go where they are not supporting so many non-producing employees. So, the majority of these companies tend to be made up of agents with less than three years experience. For information on beating the traditional brokerage refusal to offer consumers discounts and rebates check this page on InsiderHomes.com
Discount brokerage has filled an interesting niche for the last 10 to 20 years. However, it has many different faces today. The variations span traditional models with reduced services for reduced fees, to on-line offerings, and even full service models with reduced fees. While there are many top realty professionals offering discount brokerage services today, all too often it is difficult to be sure you have found one until you have already committed to work with someone. Some offer outstanding service, others offer almost none at all. Trick is to be sure before you chose your agent.
Flat fee listing and buyer brokerage is a interesting variant of discount brokerage. It is, in fact, as limited service as could possibly be imagined. Generally, it consists of some automated information, a mailed package including a sign board, and some documents, and an MLS listing modeled after owner supplied information. The fees are generally paid in advance and are not contingent a sale actually taking place. Essentially, the seller is on their own with this situation. These companies usually don’t offer any buyer services.
A-la-carte or hourly real estate brokerage really hasn’t found its place in brokerage yet. Most likely because it is misunderstood and creates the need for some thought on the part of buyers and sellers. I personally think it is an excellent model for real estate brokerage but, unless someone creates an easily understood explanation, it probably will not find traction for many years to come.
While all of these models have some positives, they all have one flaw in common – Regardless of the company’s reputation and how well know the agent is, you really don’t know what kind of service you will get until after you have signed the buyer or listing agreements.
For quite some time now, companies and individuals have been looking for ways to increase the accountability of agents to the consumer for their professionalism, while not increasing the cost to buyers and sellers. In fact, in a perfect world, a cost reduction would take place while accountability and consumer protection are increased.
Don’t believe it can be done? Well, I wasn’t sure myself a little while ago, but what we have done with InsiderHomes.com might make a believer out of you.
