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unbundling real estate services seems like a good deal for both the licensee and the consumer.
My biggest issue, is that often the consumer doesn't know what they will need.
As a superior service broker, I am willing to give all that I have and then some. If a consumer only wants this and that, how do I tell her that for another $500 you could also get this which should net you $1500 more? Or "I am sorry you didn't get the offer accepted. What do you want to do now? That will be another $500."
Consumers don't know what they don't know. This could be the easiest transaction on the planet, or it could be the deal from hell. How can you tell from a "I am thinking about buying a house" phone call/email message?
…I provide every service that a "traditional" realtor provides, do the same or more marketing, and give the consumer an opportunity to be involved. Of course, if they don't want to, sure I charge more, but they'll never pay 6% for the services they receive.
MKellam –
I’m trying to compare the cost to a seller using a “traditional” 6% full-service broker versus what a Help-U-Sell franchise might charge when it provides full-service.
Let’s say I’ve got a $215,000 home that I list with help-U-Sell that requires 14 months to sell and I require the following services:
Co-op offering of 3%
MLS listing for 14 months
Electronic Lockbox for 14 months
Yard Sign with Brochure Box for 14 months
Full compliment of professional photos provided by Help-U-Sell
Virtual Tour provided by Help-U-Sell
Realtor.com Enhanced Listing with Virtual Tour for 14 months
Print and Deliver 350 Color Brochures
Print and Mail 500 Postcards to Neighborhood
7 Comparative Market Analyses (every two months)
7 Newspaper line ads (every two months)
Newspaper Open House ad run 4 times
Help-U-Sell holds my Open House 4 times
50 Prospect Calls handled by Help-U-Sell
18 Showings handled and shown by Help-U-Sell
Reduce my asking price $5000 twice (to final selling price of $205,000)
Handle all Transaction Paperwork
Help-U-Sell to Attend the Inspection
Help-U-Sell to Attend my Signing at Title Company Office
My understanding is that many Help-U-Sell franchises charge $2950 for the listing, another $2950 for showing the house, a non-refundable $495 for every six months of the MLS listing (renewed twice for a 14-month listing totals $1485) and the $6150 co-op that will be paid to the buyer’s agent.
There may be additional charges for some or many of the other items listed that are considered part of “traditional” full-service.
In the scenario I’ve outlined, the Help-U-Sell client pays:
--at least $13,535 if the home sells…and at least $1485 to $4435 if it doesn’t.
The “traditional 6%” full-service brokerage client pays:
--exactly $12,300 if the home sells…and exactly $0 if it doesn’t.
Am I wrong here or is this a possibility if a Help-U-Sell franchise is providing the full-service of a "traditional" brokerage?
Last edited by Eric Young; 12-21-2007 at 12:17 PM..
Eric:
Since each of the offices is independently owned and operated, we have the flexibility to operate our fee structure as we want. Most of the offices offer the $2,950 set fee model but that depends on the average price of the home in that market. Some might start at $3,950.
Why don't we post our fees on our website? Most consumers know that we are different but don't exactly know how. So, until I meet them face to face and describe our services to them why would I want to post the fee structure on the internet and let them make assumptions? Like any other sales, building rapport and trust is important. I can say that I list 90% of the homes where I sit down face to face and explain what I do.
I do not charge sellers any fees upfront or otherwise unless their home sells. Again, that's just how I operate.
No, I don't write hardship letters for the sellers; I ask them to do that. Short sales should have a thread of their own. We could all use as much info and ammunition to deal with them as possible.
I'm happy to try to help everyone understand that what we do is just another flavor of real estate. We have 1,215 active listings in our MLS. I have 26. Am I that huge a threat to every company in my market? Probably not. But I do offer the consumer an alternative to traditional real estate.
Eric:
Since each of the offices is independently owned and operated, we have the flexibility to operate our fee structure as we want. Most of the offices offer the $2,950 set fee model but that depends on the average price of the home in that market. Some might start at $3,950.
Why don't we post our fees on our website? Most consumers know that we are different but don't exactly know how. So, until I meet them face to face and describe our services to them why would I want to post the fee structure on the internet and let them make assumptions? Like any other sales, building rapport and trust is important. I can say that I list 90% of the homes where I sit down face to face and explain what I do.
I do not charge sellers any fees upfront or otherwise unless their home sells. Again, that's just how I operate.
No, I don't write hardship letters for the sellers; I ask them to do that. Short sales should have a thread of their own. We could all use as much info and ammunition to deal with them as possible.
I'm happy to try to help everyone understand that what we do is just another flavor of real estate. We have 1,215 active listings in our MLS. I have 26. Am I that huge a threat to every company in my market? Probably not. But I do offer the consumer an alternative to traditional real estate.
Matt, I recently read that the national average market share for fee for service companies is 9%. Your office has a 2% share in your area, and perhaps there are other fee for service companies in your area that make up the other 7%. Anyway, 2% is pretty good.
The fee for service companies a few years ago had 18% of the market, so it has dropped significantly. If I can find the article I'll quote the exact figures. It's a Realtor.com article somewhere. It's fairly current.
Just for clarification, you have a team, and the 26 listings of yours is shown as office listings, so I assume that is the number of listings for the team, and for the office as a whole.
I would like to hear your answer to the hypothetical question that Eric proposed.
And why would you worry about prospects making assumptions, if a price list is printed stating exactly what they are getting? What is there to assume?
…I provide every service that a "traditional" realtor provides, do the same or more marketing, and give the consumer an opportunity to be involved. Of course, if they don't want to, sure I charge more, but they'll never pay 6% for the services they receive.
MKellam –
I take it that, if you were to provide the full-service that I provide, your statement “they'll never pay 6% for the services they receive” could be untrue in certain circumstances – Help-U-Sell clients can end up paying more than they would to a “traditional” realtor.
I appreciate that you acknowledge that you do not include (or even offer) services that I do…hardship letters for short sellers being one example.
________
Okay, that’s fair enough – the name is Help-U-Sell, after all, not MattKellam Full-Service Realty. You and I are serving completely different sellers with completely different needs, abilities and goals, right?
Well…it doesn’t seem as if your own website is all that clear on this one, Matt:
“Help-U-Sell is a full-service set-fee organization and the company’s licensed professionals manage the entire home sale process from start to finish, including handling all negotiations, providing referrals, showing the seller’s home, and providing expert advice and representation. Help-U-Sell’s model breaks down the services that a traditional broker provides, such as advertising costs, staging a house for sale and holding open houses, in turn allowing consumers to save an average 3-4% compared to what they would have spent on the traditional 6% broker fee.”
The first half is highly misleading by strongly implying that your “professionals manage the entire home sale process from start to finish” including “showing the seller’s home.”
In truth, your agency may manage the entire process – but you deliberately leave out that there may be no savings or perhaps a higher cost relative to “traditional” brokers – when your agency actually does do all of the things you’ve itemized. Instead, you jump right to “consumers save an average 3-4%” (which, by the way, is mathematically impossible if a Help-U-Sell client offers a competitive co-op percentage through the MLS).
Frankly, I find this to be a completely disingenuous approach that relies on obfuscation and is completely against the spirit of the high obligation all of us have to fair and honest dealing with our clients – and with all parties.
________
And then there’s more on your site for me to read…
“providing an alternative to the dated 6% commission structure, something that had virtually gone uncontested for years in a market overrun by a monopoly of traditional brokerage firms.”
You and I – and the selling public – all know who your target market is. But you and I know that for your clients to succeed at selling their homes our industry relies on at least a degree of cooperation among participants. Is it any surprise that you don’t feel embraced by we old-fogies when you refer to us in such a disparaging light?
Isn’t it at all conceivable that your marketing statements disparaging over 80% of the industry could be damaging to your sellers’ goal of selling their home at the highest price in the shortest time?
Go look at my web page. I don’t have a word about you or any other competitor. Even if I thought a competitor was outright dishonest, I wouldn’t put it in my marketing materials because the competitor just might have the buyer willing to pay top dollar for my client’s house. Slamming a competitor might help me but it might hurt my current and future clients.
At the end of the day, I have to do everything in my power to further the interests of my client…before I give any consideration to what will benefit me.
Publicly slamming competitors is, by its very nature, placing one’s own interest ahead of the interest of your client.
________
The most damning thing I found, though, wasn’t on your website – it’s on a post you made here:
Quote:
Originally Posted by mkellam
…I closed 44 listings…I sold 38% of my listings, so 62% of the time there was another agent involved.
Matt, in the past four years, just once have I handled both sides of a transaction – and that was between two mortgage loan officers who were best friends and co-workers.
At most, I’ll have ten listings at any given time…out of 28,000 in my area. That’s a 1 in 2800 chance that my buyer-client is going to fall in love with the property of my selling-client.
The odds of one of my buyers is going to find one of my listings to be the perfect home are astronomically small – yet somehow more than 1/3 of all your buyers fall in love with your listings? This is beyond stupendous – if you have an agency relationship with those buyer's, it could be actively steering them towards your own listings and away from the listings of other members of the MLS that may be better suited to your buyer’s needs.
________
Personally, it’s not the way I operate, or most “traditional” agents operate. Maybe a 6% commission frees me to really put the clients interest ahead of my own and not worry about the money.
I know you’ll read this as a major slam and in some ways it is (don't worry, if you've even read this far, I'll be shocked).
But I am not against the concept of pay-for-service – I think it holds great merit. Your business model is not a threat to anybody and even if it were, then so be it.
However, all aspects of following that model must be done completely above-board, without obfuscation in marketing, and in such a way that assures that the client’s interests are always placed ahead of all other considerations - and that is not what is going on with many pay-for-service operators.
Being mealy-mouthed about what your real services and real fees are, unnecessarily and falsely knocking competitors whose cooperation your clients rely upon and having your own buyers or a significant portion of them buying up to 38% of your own listings doesn’t come close to the standard I and other full-service agents set for ourselves. It's these practices that make life unneccesarily more difficult for many alternative brokerages - not me and the "traditional" brokerages and agents.
Last edited by Eric Young; 12-21-2007 at 07:17 PM..
Bill:
Actually I am the only "Fee for Service" real estate company in my county. My office is just my wife and myself. That was just a decision we made when we opened.
Since our owners take an active role in showing their homes to prospective buyers, I can operate this way efficiently.
It's funny, I just stumbled across this forum yesterday when searching for something else and I feel like I opened a big can of worms. But, I enjoy defending what I do. And I will be happy to answer Eric's hypothetical question.
Eric:
Since each of the offices is independently owned and operated, we have the flexibility to operate our fee structure as we want. Most of the offices offer the $2,950 set fee model but that depends on the average price of the home in that market. Some might start at $3,950.
Why don't we post our fees on our website? Most consumers know that we are different but don't exactly know how. So, until I meet them face to face and describe our services to them why would I want to post the fee structure on the internet and let them make assumptions? Like any other sales, building rapport and trust is important. I can say that I list 90% of the homes where I sit down face to face and explain what I do.
I do not charge sellers any fees upfront or otherwise unless their home sells. Again, that's just how I operate.
No, I don't write hardship letters for the sellers; I ask them to do that. Short sales should have a thread of their own. We could all use as much info and ammunition to deal with them as possible.
I'm happy to try to help everyone understand that what we do is just another flavor of real estate. We have 1,215 active listings in our MLS. I have 26. Am I that huge a threat to every company in my market? Probably not. But I do offer the consumer an alternative to traditional real estate.
So if I understand you correctly your clients are never charged more than $2950+3% and they all get the same services from you for that fee paid up front?
Also, if you get paid up front, how motivated are you to really sell that home? It seems to me the only motivation for some would be to get the listing and if it sells great, if not, you still got paid.
Wow...38%...I sell my own listing 2.5% of the time. Quite frankly, I don't like dual agency. How can I truly represent the best interest of 2 separate parties with opposite goals?
Just want to state that I am a full service only guy, but I just have to play devil's advocate because I find it fun, and it keeps my brain sharp. See my comments in BOLD
Quote:
Originally Posted by Eric Young
MKellam –
I take it that, if you were to provide the full-service that I provide, your statement “they'll never pay 6% for the services they receive” could be untrue in certain circumstances – Help-U-Sell clients can end up paying more than they would to a “traditional” realtor.
So far MKellam hasn't shown how much his particular office charges for what, he has stated every office has free reign on how they charge and offer services. So we cannot simply assume that in certain circumstances a client will pay more for services. He has also stated that his clients do not pay upfront
I appreciate that you acknowledge that you do not include (or even offer) services that I do…hardship letters for short sellers being one example.
People may say what your service of writting hardship letters for your clients is overstepping your bounds. Providing an outline and examples of other letters to the client is one thing, writting a letter in the first person of your client is another.
________
Okay, that’s fair enough – the name is Help-U-Sell, after all, not MattKellam Full-Service Realty. You and I are serving completely different sellers with completely different needs, abilities and goals, right?
Well…it doesn’t seem as if your own website is all that clear on this one, Matt:
“Help-U-Sell is a full-service set-fee organization and the company’s licensed professionals manage the entire home sale process from start to finish, including handling all negotiations, providing referrals, showing the seller’s home, and providing expert advice and representation. Help-U-Sell’s model breaks down the services that a traditional broker provides, such as advertising costs, staging a house for sale and holding open houses, in turn allowing consumers to save an average 3-4% compared to what they would have spent on the traditional 6% broker fee.”
The first half is highly misleading by strongly implying that your “professionals manage the entire home sale process from start to finish” including “showing the seller’s home.”
Again he has not stated what his ala carte services are or if he even has ala carte services, he may just have one straight program, take it all.
In truth, your agency may manage the entire process – but you deliberately leave out that there may be no savings or perhaps a higher cost relative to “traditional” brokers – when your agency actually does do all of the things you’ve itemized. Instead, you jump right to “consumers save an average 3-4%” (which, by the way, is mathematically impossible if a Help-U-Sell client offers a competitive co-op percentage through the MLS).
WHY would he have to put that there may be no savings over a traditional broker. If a client is too dumb to figure out "hey 6% of my 50K listing is only 3k!, Why am I paying a 4K flat fee?" then they may need help figuring out they should hold their breath when they put their head under water.
As far as the consumers save an average of 3-4%....I can't say anything, the math doesn't work out unless they aren't on the MLS or are offering nothing in the co-op
Frankly, I find this to be a completely disingenuous approach that relies on obfuscation and is completely against the spirit of the high obligation all of us have to fair and honest dealing with our clients – and with all parties.
Again no way to know if he's dealing completely honestly and fairly until we see what he offers and how he presents everything to his clients.
________
And then there’s more on your site for me to read…
“providing an alternative to the dated 6% commission structure, something that had virtually gone uncontested for years in a market overrun by a monopoly of traditional brokerage firms.”
You and I – and the selling public – all know who your target market is. But you and I know that for your clients to succeed at selling their homes our industry relies on at least a degree of cooperation among participants. Is it any surprise that you don’t feel embraced by we old-fogies when you refer to us in such a disparaging light?
What disparaging light has he put us in? He said our model is dated, sure is, we've been working with this model for almost a hundred years now. Seems to keep working well though I'm certainly not insulted by anything there.
Isn’t it at all conceivable that your marketing statements disparaging over 80% of the industry could be damaging to your sellers’ goal of selling their home at the highest price in the shortest time?
NO not conceivable, if you as an agent truely only thought of the best interest of your client, and the agency representing a home that met all your clients needs, and was priced below all others, and just so happen to be offered by his firm, would you hesitate to show the listing????? I still don't see what's so disparaging about the remarks.
Go look at my web page. I don’t have a word about you or any other competitor. Even if I thought a competitor was outright dishonest, I wouldn’t put it in my marketing materials because the competitor just might have the buyer willing to pay top dollar for my client’s house. Slamming a competitor might help me but it might hurt my current and future clients.
Ok Ok, this is possible, brokering is alot about knowing people, and if you peeve off alot of people then they will be dis-enclined to show your listings. But again, if the world was perfect, and all agents were truely as objective as they say they are (all business, they separate emotions from the process right?) then this shouldn't hinder their clients.
At the end of the day, I have to do everything in my power to further the interests of my client…before I give any consideration to what will benefit me.
So true, but go back to my previous comments.
Publicly slamming competitors is, by its very nature, placing one’s own interest ahead of the interest of your client.
Not true in all circumstances, before you said if you knew of a realtor that was outright dishonest you wouldn't advetise it. If you know about a dishonest realtor you better be publically making sure they aren't doing business anymore. Report them to the authorities and have their license taken away. I still wouldn't advertise this on my website or brochures of course, but that kind of thing is not something that goes on a personal website. in any event, you better darn sure make sure you have evidence of the dishonesty.
________
The most damning thing I found, though, wasn’t on your website – it’s on a post you made here:
Matt, in the past four years, just once have I handled both sides of a transaction – and that was between two mortgage loan officers who were best friends and co-workers.
At most, I’ll have ten listings at any given time…out of 28,000 in my area. That’s a 1 in 2800 chance that my buyer-client is going to fall in love with the property of my selling-client.
Do you NOT get leads from people calling on your signs and all the advertising you posted that you do?????? If not, then why do you do open houses or advertise so much? Being in the MLS should be all that's needed. Your chances are much greater than 1 in 2800. The average in my area is 1 in 10 listings are sold by the listing agent alone. This I think is attributable to the fact that all the advertising you are doing is going to attract calls from people that have at least some interest in THAT specific house. How many times in all the years you've practiced did someone call you about the listing and say hey, This is perfect for me, let's deal! Did you just refer them to another broker all the time? That's the only explaination I can see for you almost never selling one of your own listings, that or your marketing is worthless.
The odds of one of my buyers is going to find one of my listings to be the perfect home are astronomically small – yet somehow more than 1/3 of all your buyers fall in love with your listings? This is beyond stupendous – if you have an agency relationship with those buyer's, it could be actively steering them towards your own listings and away from the listings of other members of the MLS that may be better suited to your buyer’s needs.
Not astronomical, in my area 1 in 10 chance. I think one of the reasons he might be higher, is what I call the FSBO effect. Some buyers are so convinced they will get a better deal buying from a FSBO, or without a buyer's agent, they will ONLY consider homes that are FSBO....or the next best thing in their eyes....Limited service listings like HelpUSell where they assume the seller is paying less in commission so they as buyers can get a better deal.
MK never said if he has any agency relationship with the buyers that bought his listings.
________
Personally, it’s not the way I operate, or most “traditional” agents operate. Maybe a 6% commission frees me to really put the clients interest ahead of my own and not worry about the money.
Seems like the public for the most part doesn't agree with that, they think if your commissioned your only motivated for yourself. Catch 22 really, You either hear from the buyers "he has no incentive to get me the best price because the higher I pay the more he get's!" And from the seller side "Since he only gets paid if my home sells, his only goal is to get me to sell at any price, after all it's 50K to me if I sell for that price, but ONLY 1500 out of his commission!" Vicious circle isn't it!
I know you’ll read this as a major slam and in some ways it is (don't worry, if you've even read this far, I'll be shocked).
I wonder if he made it this far too.
But I am not against the concept of pay-for-service – I think it holds great merit. Your business model is not a threat to anybody and even if it were, then so be it.
Ditto
However, all aspects of following that model must be done completely above-board, without obfuscation in marketing, and in such a way that assures that the client’s interests are always placed ahead of all other considerations - and that is not what is going on with many pay-for-service operators.
I have to believe he does do everything above board, since I don't even know what services he offers what not, or what he does or doesn't charge for them, NOR how he presents them to his clients, I can't pass judgement
Being mealy-mouthed about what your real services and real fees are, unnecessarily and falsely knocking competitors whose cooperation your clients rely upon and having your own buyers or a significant portion of them buying up to 38% of your own listings doesn’t come close to the standard I and other full-service agents set for ourselves. It's these practices that make life unneccesarily more difficult for many alternative brokerages - not me and the "traditional" brokerages and agents.
And your rebuttal kind sir's
p.s. AGAIN, just being the devil's advocate, I'm a beleiver in free market and think there will always be a place for limited servicers. I for one, think my time and efforts are better spend in the "full service" realm.
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I'm certainly not insulted by anything there. 
