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A REALTOR who has several listings above a million and is honored by being selected for the Platinum Top 50 is most likely providing EXCELLENT service, with a proven track record.
Actually yes. I provide the same service for my $3 million dollar listings as I do my $500,000 ones. Because I understand the value of happy clients. I've had people choose not to use me because I wouldn't discount, and that's fine with me, because I understand that there's a real value to my service, knowledge and ability that results in my production being much higher than most.
People are welcome to discount their services if they like, but that comes across as buying clients, which really doesn't say anything positive about what their value is. Value and cost are different.
I can guarantee you that you can call every one of my clients, both past and present and ask them if they were pleased with my service vs. the cost of my service at the end, and every one of them would say yes.
This is the problem with real estate and the stigma. We get too many people saying "oh, you make too much", when in reality, they don't see the thousands (yes, thousands) I spend on my listings every month. They don't see the late nights working on new marketing ideas. They don't see the networking I do for EACH property I list. There's a lot more to real estate than opening doors. It's coming down to day zero and knowing how to get an appraisal through. It's knowing how to get HOA's to pass off on survey issues.
You're right, there are a lot of bad Realtors out there that charge full price. But they don't normally last too long in the business, as it's a very expensive business to do and do successfully.
Again, people are welcome to whatever business model they like, in any field of work. But discounting price just to get business doesn't exactly portray people as the professional that they're looking to hire to help them through the biggest purchase of their life. Would you take the lowest bidder when looking for an attorney? This IS a legal contract, yes?
Different strokes for different folks. People can charge whatever they want. They have every right. But if you pull up the top Realtors in town based on production (nothing to do with income), you'll find that not one is a discount broker. Not one. Do you want to be the best of the cheapest?
They have to provide a high level of service if they want to stick around. Because the person who lists a house for $135K may know someone who is getting ready to list one for three times that amount soon and it's only human nature to ask around for someone good to list it with.
So if the service is the same excellent service and thousands are spent in advertising in both cases, why not charge approximately the same commission for the $500,000 listing as for the $3,000,000 one? Assuming, for argument's sake, a 3% commission to the listing agent, you're talking about $15,000 vs. $90,000 in commission. You might spend more time and more money on the $3,000,000 listing - but $75,000? Remember, we're talking about providing the same level and quality of service from the same agent - you, for example. I'm not talking about comparing your services with some other agent's but about your service on the $500,000 listing with your services on the $3,000,000 listing. Is the difference in your work $75,000's worth? Should it be $75,000's worth? Don't get me wrong, I'm glad those top producers are successful and I'm not trying to take anything away from them. But my conscience works on those questions. I'm happy we're having this conversation, and I thank you for sharing your thoughts with me.
As an aside - apparently there were a lot of people out there in various states who knew how to get those appraisals through; I'm sure sellers were happy. Fortunately the market didn't completely tank in San Antonio.
So if the service is the same excellent service and thousands are spent in advertising in both cases, why not charge approximately the same commission for the $500,000 listing as for the $3,000,000 one? Assuming, for argument's sake, a 3% commission to the listing agent, you're talking about $15,000 vs. $90,000 in commission. You might spend more time and more money on the $3,000,000 listing - but $75,000? Remember, we're talking about providing the same level and quality of service from the same agent - you, for example. I'm not talking about comparing your services with some other agent's but about your service on the $500,000 listing with your services on the $3,000,000 listing. Is the difference in your work $75,000's worth? Should it be $75,000's worth? Don't get me wrong, I'm glad those top producers are successful and I'm not trying to take anything away from them. But my conscience works on those questions. I'm happy we're having this conversation, and I thank you for sharing your thoughts with me.
As an aside - apparently there were a lot of people out there in various states who knew how to get those appraisals through; I'm sure sellers were happy. Fortunately the market didn't completely tank in San Antonio.
Duty calls.
Ever done it? Know what amount of work goes into it? If everyone could do it, everyone would. You're welcome to give it a shot.
The funny thing is, the folks in that price range are the ones that don't ever question cost. Not because they have a lot of money. In fact, they have a lot of money because they're very wise with their purchases and habits. But because they truly understand that they're paying for a service that not everyone can do. If it's so easy to make $90,000 for selling a home, go do it.
Real estate isn't just putting some listings online and waiting for a sale. There are over 7000 Realtors in San Antonio, but only about 5% of us do any business. Probably less than that.
For the appraisal comment, it's not about inflating appraisals. It's about being able to deal with the fact that appraisers are being SO finicky on them right now that they're actually harming the market. It's getting them to appraise at true value. Not over appraising, but not under-appraising either. It's just one of a thousand issues that can come up in a deal.
I'm not saying that it's easy to sell a $3,000,000 property in San Antonio or that any agent out there could do it; $90,000 to someone who lives in a $3,000,000 house is chump change and it does take special talent to get the job done. Remember, I said in my previous post that I wasn't comparing your talents with those of the other 6,999 agents.
What if a seller came to you with that $3,000,000 listing and asked for a 0.5% reduction in your commission - would you turn that listing down? What about a 1% reduction? Would you walk away from $50,000 to $70,000 in commission just because you're not a discount agent and you're worth every dime of that $90,000 or $100,000 commission? Make no mistake, I think that if you can make the deal happen, you deserve the full $100,000. But that seller is out there, you might meet him someday and I'm very curious to find out what you would do, if you'd be honest with me in answering. Would you reduce or walk away? And if you didn't walk away from that listing, would the quality of your service suffer because you're not getting that extra $20,000 or $30,000?
I would (and have) just explain that I don't discount because I feel I'm good enough at what I do and don't have to. And I'll get the listing at the full price. If you believe strongly enough in yourself, they'll believe in you. I put a "fire me" clause in all my contracts too. If the client doesn't feel I'm doing my job, they can terminate the agreement at any time. That $20,000 may be the difference in advertising budget. I don't get paid until the listing sells, and I put out a lot of money up front, so I explain that I'm doing that on good faith that they won't pull the listing.
Most sellers completely understand. They also understand that they can go to any one of my competitors and they'll end up paying the same price. That level of home is a different monster and it takes a lot of networking and direct marketing to contacts that a lot of agents just don't have.
Ever done it? Know what amount of work goes into it? If everyone could do it, everyone would. You're welcome to give it a shot.
The funny thing is, the folks in that price range are the ones that don't ever question cost. Not because they have a lot of money. In fact, they have a lot of money because they're very wise with their purchases and habits. But because they truly understand that they're paying for a service that not everyone can do. If it's so easy to make $90,000 for selling a home, go do it.
Real estate isn't just putting some listings online and waiting for a sale. There are over 7000 Realtors in San Antonio, but only about 5% of us do any business. Probably less than that.
For the appraisal comment, it's not about inflating appraisals. It's about being able to deal with the fact that appraisers are being SO finicky on them right now that they're actually harming the market. It's getting them to appraise at true value. Not over appraising, but not under-appraising either. It's just one of a thousand issues that can come up in a deal.
I think that if you sat down and talked with an appraiser, you'd realize what has changed in the last year. Substantially more data being required, more appraisals being reviewed, Underwriters who think there have got to be better comps, time pressures, lack of cooperation with agents/builders, etc. Not to mention that more likely than not, the appraiser is being hired by an appraisal management company who shares in the fee. That "needed wall" so to speak between the appraiser and the loan officer. That's why you may see an appraiser from out of town performing an appraisal in San Antonio.
I think that if you sat down and talked with an appraiser, you'd realize what has changed in the last year. Substantially more data being required, more appraisals being reviewed, Underwriters who think there have got to be better comps, time pressures, lack of cooperation with agents/builders, etc. Not to mention that more likely than not, the appraiser is being hired by an appraisal management company who shares in the fee. That "needed wall" so to speak between the appraiser and the loan officer. That's why you may see an appraiser from out of town performing an appraisal in San Antonio.
I know quite a few appraisers personally and you're right. The system is incredibly screwed up right now. Banks from across the country are complaining about comps because they think that things here should be the same as they are there. They send us appraisers from Austin, who don't know this market. They have put these appraisers in a box and they're really making it almost impossible to do their job correctly. The pendulum was too far one way, but now it's too far the other way. We need our middle ground back.
Real estate agents have gotten to know appraisers (as loan officers did), and that's less likely to be the case if your appraiser isn't from around here. The next step is a wall between the appraiser and the real estate agent.
Sending an appraiser from out of town and putting him in a box is an attempt at looking at pure numbers and reaching complete objectivity; that attempt is a result of the mortgage mess we're in. Keep in mind that most homes aren't $3,000,000 homes so for the most part (knock off a zero, divide by two, and you'll have the approximate median selling price for San Antonio in the summer of 2009) the appraisal can be done more scientifically. Think of the actuary who calculates your insurance premiums; he might be sitting in a cubicle on USAA Blvd or he might be in another country crunching through those multiple integrals. The guy from the cubicle in San Antonio may have no idea what it's like to drive a car on ice in Michigan, but he's been calculating the likelihood of a slip and slide in that far-away state for years. From a mathematician's perspective, in theory, the cold calculating objectivity in appraisals can be reached. In practice, of course, we should all be in favor of getting back (as Kevin says) our middle ground. I'm sure Kevin will have a lot to say about that (and everything he says is perfectly valid), but let's also keep in mind that we live in a cookie-cutter world and Kevin's properties aren't cookie-cutter. A KB home is a KB home; MLS will tell you what they go for no matter where your cubicle is.
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