Too Good to Be True

freemoney2

I’m convinced that one of the hot new trends in residential real estate is toward discounting services and/or rebating commissions. Of course, this is nothing new. Help-U Sell and Redfin and ZipRealty have been around for awhile but it just seems to me that there’s more of this ilk than ever. Years ago we had a flight attendant friend of my wife’s who told me he had gotten his real estate license and had a plan. He really wanted to supplement his income and maybe sell a house or 2 a year. He created flyers that he distributed in his neighborhood in Sacramento that essentially said that he would sell a house for 1% (and was willing to do both sides of a transaction for that too…if need be) and he told me (and I assume would tell his prospects) that he realized he was inexperienced and incompetent but that his discount was a fair way to compensate for that. He said, “I don’t know what I’m doing…so why should I charge full price?”

I never forgot that poor guy. I don’t think he ever sold a house. Thank God! Imagine deciding to be a dentist and telling prospective patients “I really don’t know what I’m doing and I’ve never done it before…but I’ll fill your cavity for 10% of what your other dentist would charge”. Would you open your mouth for that person to experiment?

Well, there’s a bunch of realtors out there right now that are just like this. They have listings and clients because that “discount” sounds so appealing. There’s this firm running radio ads that I hear offering to fix up your place and sell it all for one low discounted price. I’ve been hearing these ads for a couple of months now and finally saw a listing by them last week. The “agent” is in San Diego…but the listing is around here. I had a client interested in the place. The “agent” doesn’t return calls and takes around 48 hours to reply to email. They had about a third of the necessary disclosures available and no inspections. It was impossible to tell how much interest there was on this place because of the incredibly bad communication. In a multiple offer environment it’s a big challenge to write an offer without a contingency when SO MANY unknowns are present. My clients decided not to write. I wonder how many others did the same. I wonder how much money the seller lost by choosing this “agent”.

There’s another place in Redwood Shores that was listed by a discounter. The original list price was aggressively high. Too high even for this market. The commission offered to the buyers agent in the MLS is 2%…a half percent less than all of the other active listings there. The seller not only isn’t supplying inspections they didn’t even include HOA docs with the minimal disclosures they have. It didn’t sell in 2 months. Last week they dropped their price $176,000. Umm…saving that 1/2 percent and the $300 to order the HOA package sure was a good plan…huh? OK, I know…it was overpriced to begin with. My point is, if this place would have been professionally represented the seller would have 1) paid just a little bit more and 2) made ALOT more by selling.

Sorry…it just drives me nuts. There’s guys (and gals) like my wife’s flight attendant friend all over the place right now…and it’s the blind leading the blind! You get what you pay for!

Comments

  1. Hello. I was wondering what your thoughts are on Stanley Lo’s listing at 648 Portofino. It has sat on the market for 2 months with an asking price of $999,999 for a wide water 2/2. Today, the asking price was increased an additional $250,000!! This seems crazy to me, even in this market!

  2. June Randolph says:

    I’m not surprised sellers would consider discount brokers. With the escalating price, a small house could easily fetch $1.5 million. However, these houses were selling for $800k 3 years ago. Does it take more efforts to sell today than 3 years ago? Probably not. To me, a more equitable commission would be based on the size of the home, not the sell price. As big houses take more work to stage they should demand higher commissions and vice versa.

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