The sale is actually made at the listing, the Seller either lists for a sellable price, or they don't.
Look at bidding for services like Hotwire or Priceline the are buying unused Hotel rooms, just like hungryagents is buying Unused Agents time at a discount. You have 8-12 hours a day, if you aren't using all of them for something productive you may as well bid for services of people who are willing to identify themselves as Homesellers/Homebuyers. I'd much rather get part of something than all of nothing.
Old School Realtors are very scared about services like this. Their entire system is built around the 6% number, not only for themselves but for the agents they have under them. If they can no longer get 6% commissions it will drastically reduce the amount of "other peoples time" they can leverage.
Fun example time: 6% ABC Company
ABC Company Broker hires agents at a 70-30 (Agent/Broker) split. Agent Lists a $200,000 home and the listing side is generally 3% to 3.5% depending on the market. Agent X from XYZ Company sells the listing and this leaves 6-7K left for ABC Company to divvy up.
Using $6,500 as the total commission earned by ABC Company. $5,500 earned by XYZ Company
ABC Agent Makes $4,550
ABC Broker makes $1,950
This is the model that most companies use, it works because the Agent makes good money, the Broker makes a reasonable amount (in their mind, pretty good for just hosting an agent)
So lets move on and look at what happens to the Traditional Broker/Agent model when the â€œBid for Serviceâ€ comes into play.
ABC Company Allows their agents to use Hungryagents.com (this is the key, if the broker wonâ€™t allow it, itâ€™s dead) Agent bids 4.7% to secure business on a $200,000 home. Remember this is a full service bid, the key to full service is what is the Listing broker is Cooperating with the other companies at (2.5-3%). if it is any less than standard commission it is no longer full service.
Agent X from XYZ Company Sells ABC Companyâ€™s listing for 4.7% Leaving $9,400 total commission.
XYZ Company still gets $5,500 if ABC Company is legitimately offering â€œFull Serviceâ€
This leaves $3,900 for ABC Company of which Hungry Agents will take $800 of, so now they are at $3,100.
70% Agent $2,170
30% Broker $930
As a Realtor I look at those numbers and say. â€œHey, thatâ€™s not to bad for a customer that was pretty much handed to me, and I didnâ€™t really have to work to get.â€ Plus I didnâ€™t have a 100% workload anyway, so Hungry Agents pretty much bought my unused time at a discount. Thatâ€™s how I look at it. and when i no longer want to use hungry agents i will just have to work harder to make sure i occupy 100% of my time with my own prospecting activities.
If you want discount service, there are options for that. I would hire a discount company before some "full service" person who is willing to do it the cheapest...at least I know what I am getting.
Just food for thought...
As a seller you do not know what you are getting. Yeah you are paying a low price but you usually get what you pay for. Even though someone makes a bid, as a seller you still need to check them out as you would any agency you are looking to have represent you, find out what they offer for what you pay.
The agents who bid say 1% ruin the expereinece for other agents and the seller as it is impossible to be able to offer full service for that fee.
In most cases what you pay in a commission is regained many times over in a quicker sale and best obtainable price which more than covers the fee.
I hope this helps, feel free to email me with any other questions on this.
Maryland, D.C. and Virginia