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Discount brokers... one thing, but now this???

By: Janet Carpenter
Monday, April 09, 2007 8:18 PM

I just read an article by Clark Howard, our local consumer advocate that really got my blood boiling!  He advocates selling your house yourself and save that commission.  This would mean, in his mind, that Realtors offer no real benefit, because they really only list the home in the MLS.  Now, FSBO's can list on the MLS and Realtor.com themselves.  I don't know the cost, but all they have to pay is 2-3% to the selling agent.  This is referring to www.iggyshouse.com.  They are also connected to BuySide Realty, who are discounters.  THEN, they tell the buyers that they will get 75% of their commission back on the buying side.  Why is this not considered an illegal referral fee system?  I feel I would be in trouble if I tried that (not that I would).

They are operating in: California, Texas, Florida, New York, Oregon, Washington, Indiana, Kentucky, Tennessee, Virginia, Georgia, Michigan, Illinois, South Carolina, North Carolina, Maryland, Massachusetts, Connecticut and Colorado.

Have any of you run into this outfit or know what they are really charging?  

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Comments

Dan  Grammatica, e-PRO
Member Since '05

Dan Grammatica, e-PRO said:

I don't see any listings in CT.

Some of my best clients come from services like this.

I can compete with them - apples for apples. (if I want)

The clients generally want full service for a discounted price which they don't offer.....Oh well!

April 9, 2007 6:41 PM
John Rainville
Member Since '06

John Rainville said:

Janet:

They are not in Pennsylvania yet. however we have Help-U-Sell who puts the proprty in the MLS and offers a $100 Buyer Agent fee. Our MLS accepts it as OK.  That in my opnion is worse.  

Let's be real, the golbalization of the economy here in the US and the downward pressure on all business and industries EXCEPT the Gov't, and Hospitals and such has made things "lean" to say the least for Brokers.  The last survey I saw from NAR reported that the average "Broker" was only making $35 to $125 per transaction side after overhead.  

My point is the "discounters" or "new" business models have to be extremely efficient to produce a vaiable profit or build any amount of equity in thier business to survive.

How long to Coldwell Bankers 2% operation last?

Can Assist to Sell survive a "normal" market---I think not.

This Weeks PARADE Magazine most of you get in your Sunday Newspaper stated the same thing...no need to use a real estate agent.  It is all about value added propositons and realizing that what we sell is SERVICE---do yourself a favor and make yours stellar and people will pay more for it!

April 9, 2007 6:52 PM
Gloria Losie
Member Since '06

Gloria Losie said:

I too am in the Atlanta area.  I feel your pain.  I wonder why the Atlanta Board of Realtors or NAR doesn't do something about this.  We certainly pay our dues and try to abide by the rules.  We need some strong legislation that fights for us.  We do provide an excellent service and keep up on all the changes that are thrown our way.  I know that most sellers do not know half of the changes they made this January to the contracts.  It is disappointing.

April 9, 2007 7:20 PM
Ronda Kaufman
Member Since '06

Ronda Kaufman said:

I in Cartersville, GA and in my subdivision I have 2- Assist 2 Sells and 1- Help U Sell.  Two are right next door to me. The owners both refuse to even talk to a Full Service Brokerage. I've tried and so have alot of other agent. I agree Our Board of Realtors/NAR should do something because most of the agents that work for discounts aren't doing anything for the sellers.. I used to like Clark Howard but now I think my view has just changed..

April 9, 2007 8:21 PM
Mipeco Realty, Inc -  Michaela Krestenic, Broker-Owner
Member Since '03

Mipeco Realty, Inc - Michaela Krestenic, Broker-Owner said:

It shouldn't matter what model of doing busines you adopt ... what matters is whether you do your job well or not. It's about clients and what is in their best interests ... sometimes that might just as well be discounted service.

April 9, 2007 9:15 PM
JOWELL PEDEN
Member Since '07

JOWELL PEDEN said:

I saw the same thing in the airline industry.  American and Delta, etc. offered full service.  Southwest offered flying without the frills.  Southwest took lots of business away from the full service airlines.  If we want to stay ahead of the low fare alternative each and every one of us needs to be sure that we do more than just put a sign in a yard.  We need to be creative.  We need to sell the property as soon as possible.  We need to make the client happy that they went with a professional.  Its not only a money thing - its an obligation as an agent to our client and the industry.  

April 10, 2007 4:36 AM
Tim and Susan Fennell
Member Since '06

Tim and Susan Fennell said:

I really do believe that Clark means well but I also firmly believe he is doing many of his listeners a disservice by bashing our profession.  To say that everyone needs an agent would be a lie, but to insinuate that nobody needs one is a damn lie - and potentially a very costly mistake for many home sellers!

Certainly if a person has the time to educate themselves on the laws and the ability to market their property, etc. etc., selling FSBO may save them a few dollars.  But I can't begin to tell you how much money we have saved people in the course of practicing our profession.  I dare say that we often save our customers as much or more than our commission and we do all the work for them!

But that isn't necessarily the point, anyway.  The fact is that almost everyone pays other people for services that they 'could' do themselves if they so desired.  Do I really "need" to pay someone $20 per hour to weed my gardens?  No... but I do.  Do I know how to paint my own house?  Sure... but I'll gladly pay someone else to do it for me.  Can I change the oil in my car for the small price of a few quarts and a filter?  yep, but......

When someone tells me they don't need my services because they can sell their home by themselves I DO NOT try to convince them otherwise.  I simply smile and say, "That's great... I wish you all the best.  By the way, if you find yourself in a bind and you decide to hire a professional you know where to find us... we are happy to help."

April 10, 2007 5:40 AM
Becky Troutt
Member Since '05

Becky Troutt said:

"Now, FSBO's can list on the MLS and Realtor.com themselves.  I don't know the cost, but all they have to pay is 2-3% to the selling agent."

What do you mean by that Janet?

If it's listed on Realtor.com then it came from the MLS, which means they had to have a realtor put it in for them.

......or are they changing things?

April 10, 2007 6:32 AM
Mipeco Realty, Inc -  Michaela Krestenic, Broker-Owner
Member Since '03

Mipeco Realty, Inc - Michaela Krestenic, Broker-Owner said:

Not sure how it is in other states but Illinois has a minimum services law ... I have it posted on my website

http://www.mipeco.com/Illinois_Law_Compliance/page_1133114.html

I read on Iggy's site that they will list the home for free and the seller is expected to do the work themselves ... doesn't quite play along with Minimum Service Requirements law ... or does it!

April 10, 2007 7:45 AM
Ronda Kaufman
Member Since '06

Ronda Kaufman said:

Becky-In GA for a fee anyone can list on MLS. FSBO's pay the fee and now they are on MLS competing with everyone else. I haven't seen alot but it is going to start increasing with the media letting them know about it now..

April 10, 2007 8:06 AM
Janet Carpenter
Member Since '06

Janet Carpenter said:

Thanks, everyone! Several reactions to you all's comments!

Becky, I had the same questions.  How can they do this?  I somehow believe this site is either misleading, or they are getting BuySide Realty to do this.  You have to sign-up to see what they REALLY charge, but then their advertising is a "bait N' switch."  There are only 1Million members on realtor.com, yet there are over 3Million agents nationwide.

Clark Howard has not been pro-agents for at least 6 years.  He used to have (and still have) Lending Tree to write his articles which were always negative on agents.

I don't think they will be in FMLS, as they would be losing money.  However, there is a internet agency, MLSMART, who only charges $500 and does list in FMLS and realtor.com.  I just don't see how they make money at all.  I have a suspicion that they charge other fees somewhere.  They also collect the funds upfront, so if the house does not sell, they at least have the $500.  They may even charge extra for FMLS... I can't find out without signing up.  All charge for the sign, brochure boxes, etc.  None give any personal service that I can really tell.  Many say they help with the contract negotiations, but the quality of that service has to be very poor based on the type of agents who work at these places.  Anyone ever work on a deal with ZipRealty?  That is an experience I which I had not had.  The agent did not know basic contract rules, earnest money collection, timeframes, and it did not ever close.

Those FSBO's that go this route will get what they pay for.  Many will become expireds, which is when they are willing to listen.  Some will sell, of course... just the law of averages.  We, as realtors, need to define our real services better.  I do not talk to FSBO's in terms of just getting on the MLS... not in this market where we have high inventory.

April 10, 2007 8:27 AM
Klaus Nicholson
Member Since '07

Klaus Nicholson said:

Competition is everywhere and that is not necessarily a bad thing.  Are we going to lose some business probably.  Are the good agents that provide a real service going to lose business probably not.  If my memory serves me didn't the NAR go to court with Assist to Sell? Maybe it was board office somewhere and they lost.

I also offer to help my ex clients sell FSBO.  Several have taken me up on it and then listed with me a little later.  I like Tim and Susans' post.

Imagine, if you had to go through a painting mls or an agent to hire a painter.  Real Estate is not rocket science anybody can do it.  Remember the 2 page contracts?  They worked and we turned them into 7 pages.  A Realtor provides due dilligence a sense of security, familiarity and education.  How many times do I have to educate my clients before they get the hang of it?  On the other hand some people will always pay for security.

NAR and state leaders operated from behind closed doors for years.  Realtor.com knocked on the door got a foot in and the rest followed.

We don't need to go back to the old business model, we need to adapt, many many of us are doing just that.

Bloggers write to get attention and reponses from people.  Entertainers try to shock you for attention.  I think Clark is somewhere in the middle.

Good Luck to all.

Realtor, Columbus Ga

April 10, 2007 8:30 AM
Becky Troutt
Member Since '05

Becky Troutt said:

Janet use an email address that doesn't tie to your info or name....AOL or yahoo or any others that are free.....

This is what I do when I want the info but don't want them spamming my regular email address.  Get a free email account that doesn't tie to your name and request the info!  Well....as long as you don't have to pay for it!

Then the crap emails they send me go to an account I don't care if it gets filled up with junk mail.  I just go in every now and then and delete the emails!

;)

April 10, 2007 8:45 AM
Becky Troutt
Member Since '05

Becky Troutt said:

Here is part of their disclaimer:

Our MLS listing service is provided by Iggys House Realty, Inc., a licensed real estate broker. This service is available only in certain states (check here) and only for single family homes, condominiums and townhouses. Iggys House Realty, Inc. is a member of, and lists properties on, many multiple listing services (MLSs). However, it lists any specific property on only one. MLS rules require us to inform you that we are not an MLS ourselves, and do not enable any consumer to be a member of, or to otherwise directly access, any MLS. Only owners may request us to list their home on an MLS.

PLUS, they say they share 75% of the selling commission and keep 25% of it.  So they are pretty much earing referral fees on the sold properties.

April 10, 2007 9:01 AM
Ronda Kaufman
Member Since '06

Ronda Kaufman said:

I agree with Janet about Zip Realty. I had one about 6 months ago and it took 3 months to close. I thought I was going to go crazy..I read their website and they give back a % of the commission to the buyer.. Another one here in the Atlanta area, I won't mention names but her's is the same as mine but spelled RHONDA, charges $500 to list your house and everything is extra. She doesn't even show it, you have to call the homeowner to negotiate the contract. Her business must be making money she is always on TV..  

April 10, 2007 12:30 PM

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