Discount Real Estate
Getting what you pay for - Some Thoughts on Discount Real Estate
When I have to speak to a homeowner about commission discounting (and these days who among us doesn't have to do that?) my conversation tends to go like this:
Selling a house is like any other service you might wish to contract out. There are those who are good and those who are not. There are those who are expensive and those who are cheap. What's important is to establish priorities at the outset. Do you want to sell quickly? Do you need to sell for a particular dollar value? Do you want to buy something else prior to selling what you have? The most important question is: "Why do you want to sell the house?" Everything to do with the sale and any subsequent transaction is derived from this fundamental understanding. Remember also that Real Estate is just like anything else in terms of its relationship to the TANSTAAFL Concept. What's TANSTAAFL? Read on.
Some years ago, prior to getting into Real Estate, my sales manager took me out on a call with him. That morning I learned more about sales fundamentals than any course has taught me since. One of his most important points was that sales people fall quickly into two categories: sellers and discounters. The former rarely discount and the latter rarely sell.
A good sales person develops an understanding of the product and an understanding of the consumer's needs and applies those understandings to successfully complete a transaction. The discounter, on the other hand, simply lowers the price and keeps lowering it until the buyer agrees to pay. Brian's point was that if you're giving up your commission in order to make a sale you come perilously close to providing a public service. Time to rethink the method!
Consider for a moment the listing Realtor. This individual is in the unique position of having to sell the house twice. It must be sold initially to the other Realtors, who in turn must sell it again to their buyers. The listing Realtor should consider this when the listing is being prepared. Dwelling on negative aspects of the property or failing to note positive aspects may fail to create a desire to sell on the part of the other Realtor. A reduced selling commission may have a similar effect. It is the listing Realtor's responsibility to make this clear to the Vendor, but all to often the Vendor is allowed to offer the property for sale without a clear picture of the implications of a less-that-total listing commitment. Only later, when the property has not generated the attention it deserves is this sort of thing considered.
One of the most important facts for a Vendor to know is that when a new home comes on the market there is a window of about two weeks when the property will be at the peak of it's popularity. It is a NEW LISTING! If the listing has been properly priced and presented, there is a good chance that the property will sell within that time. If the listing is lacking in any way, the property may not end up selling and adjustments may be required to correct the situation. The problem is that by the time these adjustments are made that window of opportunity has gone; the Vendor's home is just another of the many listings on the market.
Extreme care and total understanding should be the watchwords for Vendors considering a discount Realtor. Discounters have been known to use phrases like "We Sell Real Estate For Less" in their ads. Any Vendor considering an ad like this should replace the words "Real Estate" with "Your Home" and reconsider the choice.
How can a Realtor who is trying to sell himself on the basis of discount not turn around and negotiate the sale of a home on exactly the same basis? Often these ads are simply an attempt to get in the door - figuratively and literally.
Homeowners should be cautious of phases like "some conditions apply". Be very clear on all of these conditions prior to even sitting down to interview a Realtor. Any reluctance to give all of the conditions over the phone should be dealt with prior to the interview. It is, after all, the Vendor's home and it is always the Vendor not the Realtor who should be in charge at all times.
What does the law say? The fact is, a Realtor can charge whatever a Vendor is willing to pay and whatever the Realtor is willing to accept. No limit up or down. So homeowners must remember the first priority. Why are you selling the house? Answer that and then test all future considerations against how they affect that first priority. Stick to that simple formula any you lessen your chances of disappointment to near zero.
What is TANSTAAFL? TANSTAAFL is an acronym that is popular with accountants, lawyers, computer types and readers of good science fiction. It stands for the old adage: "There ain't no such thing as a free lunch".