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My wife runs her own interior design company. I was trying to think of a way for me to help increase her business. I came up with this idea, please let me know what you think, and if you think this could work.
Basically, I know realtors (especially in a slower market) will use any tools they can to sell a house... giving a car with the house, maybe a cruise to whoever buys the house. I thought, why not offer interior design service as an incentive for someone to buy a house?
This would especially be for homes where they already will include allowances for carpet or repainting... Also, if a realtor is showing a house, and the people are like "oh, it's a nice house, but we hate the paint on the walls, and the carpet needs to be replaced"... well, at that point the realtor could offer to include interior design service once the house is sold.
Now, to the pricing. When the realtor decides to use the service, a contract would be signed that said that when the house is sold, the interior design company will provide design services. Up front we would ask $200. Once the house sells, I thought 0.5% of the sale price would be fair.
Anyways, of course I left out some of the details, but I think you guys get the idea. I personally think this would go over well... but I'm not a realtor. Which is why I'm asking you. Please help.
If your wife needs business, she might want to look into providing staging services. Good stagers have more work than they can handle at the moment. And she could always leave her business card or a brochure at the house advertising her interior design services, which would likely come in handy for the potential buyers who were looking (as well as the other agents previewing the property who need staging services).
As to your plan, this is not an incentive that the AGENT should offer, but that a SELLER might consider, particularly if their home is "idiosyncratically" decorated. But even then, it's best to get the house staged up front so it appeals to more potential buyers.
My wife runs her own interior design company. I was trying to think of a way for me to help increase her business. I came up with this idea, please let me know what you think, and if you think this could work.
<SNIP>
Now, to the pricing. When the realtor decides to use the service, a contract would be signed that said that when the house is sold, the interior design company will provide design services. Up front we would ask $200. Once the house sells, I thought 0.5% of the sale price would be fair.
Thank you.
Can you explain why you would expect payment as a percentage of the sale price of the house, which has nothing to do with you or the work you will be doing, and not as a function of the work to be done?
My wife runs her own interior design company. I was trying to think of a way for me to help increase her business. I came up with this idea, please let me know what you think, and if you think this could work.
Basically, I know realtors (especially in a slower market) will use any tools they can to sell a house... giving a car with the house, maybe a cruise to whoever buys the house. I thought, why not offer interior design service as an incentive for someone to buy a house?
This would especially be for homes where they already will include allowances for carpet or repainting... Also, if a realtor is showing a house, and the people are like "oh, it's a nice house, but we hate the paint on the walls, and the carpet needs to be replaced"... well, at that point the realtor could offer to include interior design service once the house is sold.
Now, to the pricing. When the realtor decides to use the service, a contract would be signed that said that when the house is sold, the interior design company will provide design services. Up front we would ask $200. Once the house sells, I thought 0.5% of the sale price would be fair.
I apologize, but I am very confused. It's not the realtors that are giving a car away with a house, etc. Occasionally a seller will offer to include some sort of an incentive.
A listing realtor's job is to offer a home seller expert advice on pricing the home to get an optimal price in the shortest amount of time. The agent may also offer advice as to things the seller might do to help his home show better, etc (and sometimes this may include repairs, redecorating and/or staging). These things are paid for by the seller. Then the listing agent markets the home, negotiates the best possible price for the home, and handles the details of the sale through the escrow process to closing.
When showing a home a buyer's agent will not offer to "throw in" some perk. Sometimes during the negotiation process between the seller and the buyer, the seller may offer to "throw in" something in lieu of accepting a lower price.
The agents represent their clients and are not a party to the contract. It's really the homeowners that you would need to contact about the service you're describing. And maybe that's what you're asking - "Would sellers be interested in this design service?" But I took your post to be asking if agents would be interested.
My wife runs her own interior design company. I was trying to think of a way for me to help increase her business. I came up with this idea, please let me know what you think, and if you think this could work.
Basically, I know realtors (especially in a slower market) will use any tools they can to sell a house... giving a car with the house, maybe a cruise to whoever buys the house. I thought, why not offer interior design service as an incentive for someone to buy a house?
This would especially be for homes where they already will include allowances for carpet or repainting... Also, if a realtor is showing a house, and the people are like "oh, it's a nice house, but we hate the paint on the walls, and the carpet needs to be replaced"... well, at that point the realtor could offer to include interior design service once the house is sold.
Now, to the pricing. When the realtor decides to use the service, a contract would be signed that said that when the house is sold, the interior design company will provide design services. Up front we would ask $200. Once the house sells, I thought 0.5% of the sale price would be fair.
Anyways, of course I left out some of the details, but I think you guys get the idea. I personally think this would go over well... but I'm not a realtor. Which is why I'm asking you. Please help.
Thank you.
Not sure about other states but in texas it is illegal to pay a referral feel to anyone who is not licensed. The service fee would work... Staging a house runs about 300-500 here.
1. I thought a small fee up front would be fair, since then the seller could use the Interior Design company's name in any fliers or advertising. Also it does protect my wife in the case that we spend the time to write up a contract, and the house never sells. Maybe $100 is more appropriate. Also, I was considering that if the house does sell, the initial fee could be subtracted from the final payment.
2. You're right, this would be something that the seller would offer, not the agent. I was too hasty in writing this up.
3. I'm looking for more business for her, since she is just starting out. She has an interior design degree (4 years), and has been working for a few years, but finally is going out on her own. Anything I can do to help, I'm trying to get done. I'm sure she'll be fine, but if this was some kind of un-tapped market, I figured why not give it a shot?
4. I was thinking of a % of the sales price, because it reflects the needs of the house. If a house sells for $100k, you know that people won't be expecting a mansion... so it wouldn't be decorated that way. People who are buying a $400k house would most likely be expecting more from their interior designer. Plus by charging this way, the fee moves with the price of the home... which in this market usually means it'll go down. I believe that if a home owner has to drop the price of their home $50k, then the fee we charge should drop too... otherwise the seller will be less likely to keep the service as a selling point. (They'd be more likely to drop it, to make up for the lose they will have because they dropped the price)
5. Home staging is nice, but I doubt anyone would need an interior designer for that. Usually it's just... clean your house (not just pick up things, but actually clean it), take out all your extra stuff, so that all that's left is the bare bones of the room, remove anything personal (like family photo's), and make sure all the rooms are defined clearly (no office desk in the dining room)... Anyways, maybe staging is the way to go, but I doubt there's as much money in it. Also (at least around here) a lot of staging companies own their own furniture, which we don't have the capital for.
6. If we did not charge by % of the house, then it would probably be at a discounted rate. ($1.00 per finished square foot) This would mean that a 3,000 square foot home would cost $3,000. This is a lot higher than if we charged 0.5% of the sale price, since a $3,000 home would sell for around $300,000, giving a payment of $1500. The reason for $1.00 per square foot is that the normal rate is $1.50 per square foot. The difference is that generally people only pick a couple rooms for an interior designer to do. In the case of real estate, the whole house would be fair game in the measurement. We could charge less per square foot, but then it would be such a discount from the normal rate, that if the word gets around... people will be demanding a 50% discount all the time.
Well, thank you all for your comments so far. I'm not as excited as I was yesterday... but that's probably for the best. At this point I think I will still make up fliers, and go around to realtor's offices in the next week or two, to see what they think. If they end up using us, then great... if not, then I'm only out the cost of the fliers and my time.
Again, thank you, and any more comments would be great!
1. I thought a small fee up front would be fair, since then the seller could use the Interior Design company's name in any fliers or advertising. Also it does protect my wife in the case that we spend the time to write up a contract, and the house never sells. Maybe $100 is more appropriate. Also, I was considering that if the house does sell, the initial fee could be subtracted from the final payment.
Eric, you're saying that the seller should pay you $100 and then you would allow them to use your company name in the advertising flyers.
It doesn't work that way. The agent designs, pays for and distributes the flyers. That is a part of the agent's expense of marketing the home. No agent is going to allow his/her client to pay you $100 for the priveledge of putting your company name on her flyers.
It works the other way around. If you wanted your name on the flyer, you would have to pay the agent for that advertising. And the would have to disclose that to the homeowner, who could disapprove.
No homeowner is going to pay you up front (in case the home doesn't sell) for writing up a contract. That is not realistic. The realtor invests a lot of money out of her pocket to market the home and a lot of time trying to get the home sold, and doesn't get a dime if the home doesn't sell. So no one will support the plan that you have. Neither the agent, nor the homeowner.
Remember, any advertising of your product is done at your expense. If you want to co-sponser flyers with an agent you must expect to pay for half, or possibly all of the flyer cost, depending on what you negotiate with the agent.
"A listing realtor's job is to offer a home seller expert advice on pricing the home to get an optimal price in the shortest amount of time. The agent may also offer advice as to things the seller might do to help his home show better, etc (and sometimes this may include repairs, redecorating and/or staging). These things are paid for by the seller. Then the listing agent markets the home, negotiates the best possible price for the home, and handles the details of the sale through the escrow process to closing. "
I think it is a great idea although I am not a RE agent. Kind of falls into line with my discussion last week with Bill about the changing markets and possible new business models in RE. Then I read the responses and see the above............which brings me back to the point of alot of the RE "bashing" someone is complaining about. If the person who posted the above quote thinks that the average consumer is going to pay 6% for that level of service they better have a plan B for a career move, that level of service is not worth 24,000 on a 400.000 home. There are people that work half a year for 24,000 and some that work all year for that...........
Last edited by casper324; 01-16-2008 at 06:42 AM..
Reason: I wanted to switch the order of the quote but couldn't
Eric. Since your wife is new in the business, she would do well to go into staging. They go from room to room and determine where changes need to be made in order to show the home in its best light. To show its best features, depersonalize and give it curb appeal. She does not need to be a stager that rents out furniture. Not that many sellers need that or want that. That is typically done in new construction by large business, often furniture stores who then get the advertising.
There are many classes that don't take much time to take (nor money) and since she would already have the interior design trainer the two feilds would work well together.
She would then leave her information for the buyers and could have the potential of getting an interior design assignment from the new owners. She would then have her name out there and the new owners might tell their neighbors, and so on.
I for one, typically pay between $150-$200 for the initial consultation where the stager provides a report to the seller. It is then the sellers option as to what they will and will not do. Many sellers will hire the stager to then make the changes needed. Others will do nothing.
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