'Discount brokerages cost consumers money'
Letters to the Editor
By Inman News, Monday, November 17, 2008.Bookmarking Sites
Re: 'FSBO site channels listings to Realtor.com' (Nov. 14)
Dear Editor:
As a broker, I have sold homes when they have been for sale by owner. My experience has been that the broker who simply lists the property for a nominal fee is not there when the seller really needs them. The general public does not typically know about the selling process and they rely on our training and ethics to aid them in their sale and/or purchase. Discount brokerages cost consumers money.
Rick Fleming
Broker
Fonville Morisey Realty
Garner, N.C.
Dear Editor:
How sad this was allowed to happen. In other words, all of the Realtor's time in marketing, advertising, education, cost of doing business, and high gas prices to drive and show properties. Exclusive Right to Sell was defeated.
Vivian Draper
Broker/Owner
REMAX Complete
Knob Noster, Mo.
Dear Editor:
The Web site is called "Realtor.com" for a reason. It's not "forsalebyowner.com." If a FSBO (seller) wants to be affiliated with a Realtor then they should be paying those costs like the rest of our clients -- and most of all getting the benefits!
Cindy Kohut
Realtor
John L. Scott Real Estate
Bellevue, Wash.
***
What's your opinion? Leave your comments below or send a letter to the editor.
All rights reserved. This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this content without permission is a violation of federal copyright law.
You must login or register to post a comment.
Submitted by RealEstateCafe on November 17, 2008 - 11:14am.
Even though Inman News published these excerpts from letters to the editor as an "Opinion," those arguing that 'Discount brokerages cost consumers money' could have strengthen their case by substantiating them with research or credible third parties. Without denying the validity of individual experiences and perspectives, here's what the Antitrust Division of the US Department of Justice's says about the benefits of using discount real estate brokerages, both buyer and seller oriented business models, on the section of their web site dedicated to Competition in Real Estate:
Discount Brokers Can Make Selling a Home Less Costly
http://tinyurl.com/69wpjg
Consumers Can Save Thousands of Dollars in Commissions
http://tinyurl.com/64joh5
Rebates Make Buying a Home Less Expensive
http://tinyurl.com/66nver
Rebate calculator
http://tinyurl.com/6fxgeo
Here's an example of savings we've negotiated for our own buyer clients:
http://tinyurl.com/4wlxeu
Any fellow fee-for-service consults, rebate providers, discount listing services, and FSBO sites want to collaborate on a nationwide map of consumer savings? Mapping rebates alone could create a nationwide epidemic of "rebate envy."
Can't substantiate that with research -- yet. It's just my opinion.
Bill Wendel
The Real Estate Cafe
Serving a menu of money-saving services for "do-it-yourself" homebuyers & FSBOs since 1995
617-661-4046
realestatecafe@gmail.com
http://realestatecafe.com
Submitted by Richard Greenwood on November 17, 2008 - 1:53pm.
Here's lots more links to help sellers manage marketing expenses. http://BetterHomeSelling.com
Submitted by Larry Wright on November 17, 2008 - 2:04pm.
The content of these letters don't justify the claim that "Discount brokerages cost consumers money". Most Realtors cannot articulate why their services are worth "all that money" while the value of limited service brokerages is very easy for Sellers to comprehend.
For several years I've tried referring FSBO's to our full service Realtor customers, only to have the prospects reject the conversion attempt. Now, for just a few hundred dollars we deliver more listing exposure than almost every full service broker in Washington State.
Most of the full service agents providing comparable level of exposure are our customers ... we make sure of that! They also have a track record of delivering highly personalized service and I expect their success to continue.
Larry Wright
www.nwrealty.com
www.nrealty.net
Submitted by Bruce Hahn on November 17, 2008 - 2:45pm.
American Homeowners Grassroots Alliance
The most exhaustive independent comparative study on this subject was done a few years ago by two University of Chicago economists. Based on the review of many thousands of sales, the authors of the book "Freakonomics" concluded that there was no difference between FSBO and non-FSBO sale prices. Interestingly, they did find a small cohert of the sample that did consistently get higher prices for their homes. These were the homes, both primary residences and investment properties, sold by their owner-agents.
Submitted by Stephen Graham on November 17, 2008 - 2:48pm.
Discount brokerages can save on commissions; but, is that at the expense of far greater savings? This is the real question.
While I do discount commissions through rebates, I provide full service from contract negotiations all the way through to closing, unless a buyer does not want those services. Unbeknownst to some consumers, however, a dedicated real estate professional can maximize one's savings in ways that they would not even think about.
Associate Broker | Buyer's Agent
www.realtown.com/BuyersAgentGeorgia/blog
www.georgia-new-homes.net
Submitted by Doug Wolfe on November 17, 2008 - 8:32pm.
The great thing about the real estate industry is that different business models serve different needs. The market, if left alone, will determine who survives as they are and who must change. I believe in the maxim, "you get what you pay for," but I have zero answers that satisfy everyone. It's an exciting time.
As for so-called research, for me the book Freakonomics was more a random social commentary on interesting but inconsequential statistical relationships, than an exhaustive study of anything. It was entertaining,("Why do most drug dealers live with their mom") and provocative at the same time (Has the legalization of abortion reduced crime?)
One reviewer put it this way, "This book's subtitle is, "A Rogue Economist Explores the Hidden Side of Everything". A more appropriate one would have been, "An Ordinary Economist Ponders Too Long About the Widely Known Side of a Few Unimportant Subjects".
You don't have to read the entire study on real estate (Leavitt has written a couple), although I have posted the link below. The abstract clearly states the shocking news that real estate agents may know more about their business than people in other fields, and may actually benefit from that knowledge when they sell their own home.
Abstract
"Agents are often better informed than the clients who hire them and may exploit this informational advantage. Real-estate agents, who know much more about the housing market than the typical homeowner, are one example. Because real estate agents receive only a small share of the incremental profit when a house sells for a higher value, there is an incentive for them to convince their clients to sell their houses too cheaply and too quickly. We test these predictions by comparing home sales in which real estate agents are hired by others to sell a home to instances in which a real estate agent sells his or her own home. In the former case, the agent has distorted incentives; in the latter case, the agent wants to pursue the first-best. Consistent with the theory, we find homes owned by real estate agents sell for about 3.7 percent more than other houses and stay on the market about 9.5 days longer, even after controlling for a wide range of housing characteristics. Situations in which the agent’s informational advantage is larger lead to even greater distortions. Other possible explanations, such as a lower effort on the part of agent when serving clients, lower discount rates on the part of agents, or unobserved differences in housing quality, appear less likely to account for the observed differences."
http://home.uchicago.edu/~syverson/realestate.pdf
In 2006 Leavitt was looking for help for a paper about "flat fee" real estate, and suggested it would result in a great "marketing tool". I wonder if he writes his conclusions first, then collects data.Here is the link followed by an excerpt:
http://freakonomics.blogs.nytimes.com/2006/03/04/flat-fee-real-estate-ag...
"Now we’ve got a new paper idea on real estate, but we need some help from real-estate agents/brokers — especially ones that either themselves provide a flat-fee service for clients wanting to list a house on MLS, or know a lot about such services. Please spread the word."
"If you fit the bill and want to help us, I think you might have some fun and possibly get a great marketing tool for your business. Please email me at levittdubner@freakonomics.com."
Submitted by Ralph M on November 25, 2008 - 6:24am.
Please clarify a discount broker to me.
Is it the realtor who undercuts another by a percentage point or 2 to get the listing?
Is it a realtor who takes a listing for 4% and can not upload a photo on a website of realtor.com (too new for photo)
Is it a realtor who takes a listing and HOPES that another person in the office sells the overpriced property?
Is it a flat fee real estate brokerage that does more service and advertisements on a property than a newbie realtor who is fed to the franchising sharks?
Or is it a 0% full service real estate brokerage like www.nosellercost.com?
Value thyself!!!!
You created this mess, now fix it before it’s too late.
www.aarsteam.com