Andrew Wetzel's Musings

May 27, 2017

Planning to SELL? “Discount” Commissions May NOT Be Such a Bargain!!!

Filed under: Uncategorized — awetzel @ 5:07 PM

You have decided to sell your house and are considering your options.  There are so many choices!  One that you should be wary of is the “discount” commission.  I have ALWAYS been told that “you get what you pay for” and it is so true in Real Estate.

Let me submit that Real Estate offers numerous “business models” ranging from “full service” (like me) to “limited service” (marketed as “you pay for the services you actually use.  Be very careful what you leave out!!!) to “discount Brokers” (they say they do what I do for less.  Perhaps.  But, perhaps NOT!).  Some agencies will only charge you a small fee to get your listing online and then they let YOU handle EVERYTHING else (this means calls for appointments, letting people in, receiving their inquiries, receiving and responding to any offers and handling all the details that are so vital to getting you to the settlement table).

I respect that we have many different business models and am only suggesting that consumers make sure they really understand what they are getting for what they pay.

Unfortunately, we have a two-part problem.  One is that too many consumers do NOT fully realize what we do after the listing contract is signed, the “For Sale” sign is installed, the multiple listing service and Internet sites are “uploaded” and the highlight sheets are delivered.  Frankly, those are the “tip of the iceberg” but extremely important to a successful sale.  Technology has made this part easier and most buyers can readily find listings to look at.  That, however, should not make a seller feel that we are worth less because we really earn our money after the buyer finds the house (assuming they present an offer and we “settle”).  Keeping up with technology costs us yet I have not increased my fee.

Assuming that I market a house effectively, meaning that buyers and their agents can find it in their searches, how quickly a house sells really depends on how realistically a seller prices their house.  Unless a buyer is paying cash, which is rare (I would also mention that cash buyers generally expect to pay less as they are not tied to a loan approval or lender’s appraisal), a sale has to appraise.  Emotions aside, buyers will coldly evaluate a house based on location, features and condition.  A seller picks their competition when they price their house and buyers want a value.  I wonder if I could raise my fee if a house stays on the market longer than expected?

Rather than looking to cut our fees because it is easier for buyers to find their houses, sellers should be grateful that technology helps bring buyers and sellers together.  Sellers need to understand how much work it takes to make an agreement produce a sale.  The “average” “for sale by owner”, referred to as an “unrepresented seller”, will accept the challenge and rise to the occasion as far as making flyers, advertising and setting up appointments.  Where they lose steam rapidly is when someone calls and expresses interest in making an offer.  Look at my Real Estate designations and education and know that I have been in this business full time since September 1996.  No disrespect intended but can the “average” seller really expect to do what I do after watching television, reading a book or attending a seminar?  Probably not.  Having sold or bought a house before does not make anyone “experienced”.  The overwhelming majority of “unrepresented sellers” will soon give up and contact a professional.  That should tell you all you need to know about trying to save the fee/ commission.

The second part of the problem is US:  many of US simply do NOT tell YOU everything we do so you may assume that we do little.  Frankly, some of US should be working elsewhere.

I do understand that it is “normal” to try to save money and that many sellers simply need to “cut corners” to be able to take the next step in their lives.  I am simply suggesting that this should lead to an open and honest discussion with a Real Estate professional so that you do not undermine your plans.  There are some sellers who simply cannot make a move at any given time.

Let me conclude with two thoughts.  First, selling Real Estate is more complicated than it looks and the process offers no time for inexperience, empty promises or false expectations!  A house is a big investment so choose your options wisely.  Second, it is easy to appeal to the “average” seller with two “gimmicks”.  Agents can suggest a higher listing price than I would.  This is both stupid and deadly:  the house may not get shown, it probably won’t receive much interest if shown and, if you manage to sell it, it probably will NOT “appraise” anyway.  The added time on the market may result in a lower eventual selling price than you might achieve if you started at a realistic asking price.  Alternatively, they may offer to work for less.  Do you really want to have an agent who so quickly gives up their own money representing your best interests???  If they are working for less they need to have more volume and they need to sell your house as quickly AS possible to minimize their own costs.  How concerned might they be about getting you a few extra thousand dollars?  If an agent agrees to work for less, please make sure that what you offer the buyer agent is competitive so that you do not discourage showings.

Again consider your options wisely.  They are not all as attractive as they may appear.  I would be happy to answer your questions and go into further detail if you wish.
HIRE WISELY!

Thank you for reading.

 

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