 Beware: There's a Difference Between Discount Brokerage, Unbundled Fees-For-Services, and a Full-Service Broker!
"I Can Sell That Home For That High Price" "Hire Me" "Hire Me" "I will do it cheaper" ...Really????
What sells your home in the least amount of time and for the best possible price is what?...A Sysytem of Quality EXPOSURE with Marketing! You're shopping for a brokerage to list your home when your eye catches a "list for less" ad. Then you see another brokerage advertising "choose the services you need and pay what they're worth". Are both companies fee discounters; and if so, how can you determine what each will provide?
It's the latest trend in the real estate homes industry --- fee discounting and unbundled services. And while both can potentially save you money, there can be a vast difference in what each provides. Differentiating is important because the last thing you want to do is (to quote Ben Franklin) be penny-wise and pound-foolish only to find that you have not reached your desired results---selling you home in the quickest time for the best possible selling price. You may end up with a NIGHTMARE!
By definition, a real estate discount brokerage charges a lower fee to take your listing and market the property. In comparison, a brokerage charging separately for each service or task is unbundling services to provide you with only the services you need while charging fair value for each.
Here's an example of the difference between discounted and unbundled services. We go to a bakery where whole pies and pieces of pie are sold. A freshly baked pie will cost us $7.95. One piece of pie (unbundled) will cost $2.50. We return tomorrow to find that one of the pies did not sell. It's now marked down to $5.00 (discounted) to compete with the fresh pies even though the discounted-price pie required the same amount of ingredients and cost the same to make as the fresh pie.
Confusing? Unbundled services can also be very confusing, and costly.
Discount Brokers: At first glance you may think that the discounted fee approach will provide you with the most benefits at least cost. Are you staring at his or her seller's Net Sheet? But all that glitters is not necessarily gold! The discount brokerage may charge you less to list your property, but fail to tell you what their package of services excludes. It could be a less-significant service like holding an open house or a more-major service like failing to assist in negotiations once a buyer is found. The discount brokerage's purpose is to lure you to list with them in the hope that your listing will sell quickly and their costs will be reduced. They depend on others to sell you home. It's called the multiple Listing service (MLS) but this only cover 60% of the possible Buyers. This usually means a much longer time on the market and a lower selling price. Thus, it's under the guise of costing you less. Unfortunately, many consumers gravitate to the lowest financial common denominator before discerning this critical difference.
What IS the harm in not having the services/tasks available to you when you need them? Potentially a lot. Since you're locked in (by a listing agreement) to the discount brokerage, you may not be able to seek the additional outside services you require. And even if you could locate the services you need, those providers may not be willing nor able to contribute the additional tasks since you have a brokerage agreement with the discount broker.
Just a few things about a FULL-SERVICE BROKER
Market Share - Local Exposure & Networking
Sure, some people can and do go it alone, hire a Discount Broker, Or Un-bundled-Fees-For-Services, but when buying or selling something as important as your home...it's certainly NOT ADVISED. Do you really know enough about Real Estate to understand all the complexities of the Industry? Realtors study for years and still have problems staying out of trouble. If you're savvy enough to navigate the very murky waters of the real estate transaction, then more power to you. Your are taking a serious risk in liability, and loss loss of money. But particularly for first-time buyers, the value of an experienced Realtor is immeasurable -- a lesson I learned from the school of hard knocks. A Realtor's role extends far beyond just finding a buyer, or a nice house in a good neighborhood. The hardest work is the Escrow period of the transaction. A lot can happen or not happen in the 30 to 60 days that it takes to close an escrow.
In many cases, your Realtor is there to provide a reality check -- as mine did -- and to handle the tough negotiations involved before closing. My Realtor® has assured me that regardless of what those developers tried to spoon-feed me, the real estate transaction is never, ever easy. He doesn't need to convince me.
Among a Realtor's areas of expertise are:
• Advertising properties both to other Realtors and prospective buyers on the MLS, as well as through other local and regional media;
• Creating marketing strategies to sell properties, based on accurate information and research about each property;
• Holding and supervising open houses in various properties on the market;
• Offering recommendations and information about various neighborhoods and properties that fit within a buyer's price range and individual preferences/lifestyle needs;
• Draw up an estimate of the market value of the seller's home;
• Drawing up the contract and negotiating its terms;
• Providing guidance to buyers seeking financing;
• Coordinating and handling all issues related to the inspection;
• Coordinating appraisals and contingency dates
• Negotiating offers and counteroffers;
• Screening prospective buyers and reviewing their offers before an acceptance by the seller;
• Assisting the seller when contract contingencies -- for example, furnace repair, new carpet installation, etc. -- are required; and
• Coordinating details of the closing day.
• The list goes on and on...
While some sellers choose to "go it alone" in order to avoid having to pay a real estate commission, if you don't know what you're getting into then you have no clue of all that can happen, the results could be far more costly than the commission. In fact, a commission is really the price you pay for peace of mind. And for buyers, a Realtor eliminates much of the legwork involved in finding your next home. The process is much like finding a needle in a haystack -- which is why it's so critical to find yourself an experienced Realtor who possesses an intimate knowledge of local-market conditions and properties which represent a good investment. Best of all, your Realtor can go to bat for you, steering you clear of all the 100s of pitfalls when Buying or selling in the Real Estate Market.
Am I trying to scare you? If this information begins to scare you then you definitely need a Full Service Real Estate Broker.
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