Also, if people know you are listed with a discount broker the expect you to shave $$ off the price. Buyers are more savvy than ever -- and if you aren't having to pay a full fee they expect to benefit from it! Just the mentality we've see in our personal experience!
Although I have not read the Stanford or Northwestern University studies, I can say, from my own personal experience, that when my clients were the "drivers" of the real estate transaction, and I was there only as the "map reader" to ensure that we did not fall off a cliff, I could really see that my clients were far more satisfied and prepared at the conclusion of the transaction than in a "traditional" real estate relationship where my clients are "informed" but not as "involved."
I certainly understand Joe's point of view that a Realtor is there as negotiator, but, perhaps, the assumption that the seller or buyer is ill-prepared to negotiate a deal of this size needs to be rethought. I've found that most of my sellers and most of my buyers are informed, have definite goals and buying or selling parameters, and need only the help of the real estate as "navigator" to get them to their destination of owning a home. The only thing that most buyers and sellers lack is the familiarity with the "arena" of real estate, and that's where a facilitator gets involved to fill the knowledge and experiential gaps.
The field of real estate is morphing due to access on the internet, and, more and more, in my opinion, sellers and buyers will want to be in control of the buying and selling experience. As such, Realtors and their job duties will have to morph. I just see this as a "coming of age" progression in this field.
Just my two cents...
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA
I blogged here on Trulia last evening about using a Real Estate Facilitator and my experience working as one for my clients. In using a facilitator, the seller or the buyer undertakes a lot of the "leg work" involved in selling the home--showing it, paying for advertising, etc--and the buyer undertakes the job of finding the home through the MLS or at open houses. Once a buyer has been found, the facilitator creates the paper work, helps coordinate the reports needed and, basically, handles the portions of the transaction for which a regular home buyer or seller is not equipped to manage.
The cost is moderate, but both buyers and sellers will need to sign agreements limiting the liability of the agent to that of a facilitator. Frankly, I see this as the most productive way for sellers to sell and buyers to buy, while reaping the benefits of a lower overall cost from a professional committed to helping providing the important services that cannot be done without a license in most states.
Check out my blog here at Trulia, or if you have difficulty finding it, go to my website below and read the information about Real Estate Facilitators.
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA
Tel (408) 426-1616
I can't see the downside to positive transactions coupled with low cost service.
Why? Because my brokerage charges me WAY less than my previous mainstream brokerage. Big name companies can and do take 50% or MORE of the common real estate agent's commission. Imagine if you were used to paying out 50% - 60% to your boss and then you switched to a company that charged you pennies on the dollar.
Why not charge less AND make the same amount of money AND provide the same quality of service?
It seemed the best choice for me and my satisfied clients.
disappearing. That is because most of them are not modelled for long term listing times and expensive marketing. With the difficulty of this market, the new government regulations, bank requirements fluctuating regularly, and negotiating with other agents, the homeowner needs updated information, accurate pricing & market trending, and constant communication to get the job done. If a seller is interviewing an agent then be sure to hire a full time agent. So many times I run into agents whom I can not contact because their new job won't allow them to converse or negotiate. The agent does not attend enough educational sessions to be up on the latest HUD, Her, HVCC, and foreclosure information to provide adequate consul to their client and I get
to either educate them or do their work. If the skill level of the agent you are hiring is to type and photograph...it is not enough. Yes you can reduce your fees by hiring an agent that can put you into the RMLS but if you are you paying a fee for that service alone, you are basically paying them to go away!! If the difference in the fees paid is 2-3% , ask yourself if an expert negotiator can make that same difference in your negotiations? Or if the length of time on the market and the cost to hold the home will equal or exceed the dollar amount? Or if the lost sale will put you back to square one? We are losing 1% of our home's value in Portlland each month. Next year will be a 10-15% decrease again. That being said...it doesn't take over 2-3 months of lost equity to pay for good knowledgeable service & a smoother sale.
The other difficult part about discount brokers are the industry respond to them. Full time full servcie agents
understand what they will have to work with when they show and sell one of those listings. They may not choose to show the home unless the client requests to see it or it is one of the last in the list. It may be that
this will increase the market time which effectively will affect the sales price of the home. If it takes longer to sell , customers will more than likely write lower offers and sellers may believe the price of their home could be a factor in the market time. The traffic for showings could be diminished. All this needs to be concerned
in deciding whom a seller should list with. Different models work with different people. But our market today
is so complex and so stressful it is nice to have an advocate from start to finish who will be there every step of the way. It pays big dividends!
There are a variety of low-cost models used in the Portland metro area (including West Linn). The vast majority rely on cutting some amount of services, in exchange for a reduced fee.
The cheapest model is often referred to by other brokers as the "minimum service model." With it, brokers usually charge a very low fee in exchange for putting a property in the local MLS, but provide no other services, aside from ordering a sign and taking pictures for the MLS listing. These brokers don't help the seller negotiate, or assist with escrow. They don't assist with completing the home purchase contract, or represent the seller for the appraisal or professional inspections. The seller is left to carry out all duties on his own or through the buyer's agent.
The risks with the previous model are borne mostly by the seller and the buyer's agent. The seller essentially has no one to represent his interests with the buyer; no firewall to prevent compromising information from reaching the buyer. The seller has no one to help ensure that he (the seller) provides all the proper disclosures required by Oregon law.
Similarly, the buyer's agent, having no counterpart on the other side of the transaction, is basically required to do more work than he would on any other transaction, but for no higher compensation. The buyer's agent runs other legal risks related to possible dual agency and, thus, greater errors and omissions liability. For this reason, some buyer's agents try as much as possible to avoid minimum service listings.
Another low-cost model, which is often advertised on radio or in print, is basically little more than a classic "bait-and-switch." The broker or company advertises a very specific commission, which is always remarkably low. When the seller finally meets with an agent from the company, he finds out that the low fee is only for assisting sellers who are willing to do all the work on their own. If the seller wants access to the MLS, he has to pay another higher fee. If he wants help with marketing, negotiations, etc., still another--higher--fee.
Another low-cost model that is probably not as common in other states involves a relatively small but growing number of independent brokers. After considerable lobbying from the Oregon Association of REALTORSÂ®, the Oregon legislature passed a bill that took effect in 2003 that made it possible for real estate agents to strike out on their own. Unlike most other states, where agents are required to take additional courses and pass a test to go into business for themselves, the new Oregon law allowed any agent to become a broker and open his own office with almost no additional training or instruction and without having to pass any test.
The new law resulted in a substantial number of successful brokers deciding to extricate themselves from under the wings of their brokers, who often take a large chunk of the commission from a sale. These new sole proprietors usually operate from small office spaces, often located in their homes. Their overhead is very low, so they can afford to charge lower fees. Their services run the gamut from minimal to extravagant, depending on the business philosophy and the skill of the individual agent.
There are different benefits and risks associated with each of these models. I would be happy to discuss them further if you have additional questions. Just call me at your convenience.