The Other Side of Discount Brokerage: Discount Brokerage Is A-La-Carte

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Commentary by Mike Parker
Commentary by Mike Parker

RISMEDIA, October 18, 2006?Just a few weeks ago, an article appeared here; ?Is New York Times article, ?Last Stand of the Six-Percenters Hype??? The article reminded us of why a full service agent is imperative to maximize a clients sale price and selling experience.

The article compared discount brokerages to rug merchants and pointed out that, ?How can a house be marketed to its maximum if no one is making a profit doing it??

Well, the other shoe is starting to drop. Consider this: Redfin, a discount brokerage offering rebates of commissions to it sellers, has apparently realized that ?full service? is one thing, but ?discount service? is a-la-carte. They have announced that they?ll arrange an agent to accompany someone searching for a home on their ?Red Carpet Services? option: three hours of looking at houses. To be fair, they offer one free tour with a Redfin agent. Subsequent tours are $125 per house and $250 for a three hour tour.

What?s even worse than this, however, is that once again, this is a corporate attempt to demean the value of full service agents (to view previous article, visit this link: www.rismedia.com/index.php/article/articleview/15926/1/1/) to justify why the consumer should consider the discount firm. Yet, if a full service agent ever needed forms of justification of their full commissions, this is but one simple example: charging to view their listings in person (like most people would buy a house without actually physically looking at it).

But the main reason to use a full service professional real estate agent is the most simple one of all: local knowledge. The free market enforces a discipline and balance between the greed or ignorance of the uninformed seller and the savvy of the local agent who knows what will fly as to price in that local market and who wants to sell the house as quickly as possible in a reasoned and disciplined way.

The real issue is not the allegedly cheaper way of selling with a discount brokerage, the real issue is if these folks charge buyers to view listings, what?s to prevent them from listing too low or turning off a buyer with endless ?additional Red Carpet Services?? The real issue, one that you must emphasize on every listing presentation, is that to properly market properties, to properly equip yourselves and your customers to be found on the Internet, to have good selling packaged materials, to have quality signage and all the little things every agent needs, to prospect for buyers and to take buyers to all the homes they wish to view at no cost, a reasonable commission is necessary.

I have always believed in using a good question to try to close a presentation. Maybe the one to ask here is: ?Is giving yourself a full chance to realize the right price in the right time frame worth paying for? Or, do you want to waste a few months listing with a discount broker??

Mike Parker is a principal at the Blackwater Consulting Group, Inc., and specializes in online marketing for business professionals. You can reach him by e-mail at
mparker@theblackwatercg.com. For a free copy of the booklet ?Especially for Real Estate Professionals: 15 tips to help your website make you money? send an e-mail to:
realestate@theblackwatercg.com.

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