Real estate brokers around the United States seem to be missing the point, at least from a client perspective. If you read the regular stream of articles published about how real estate brokers must change, and about the so-called “new brokerage models” that are supposed to give consumers better service or more choice, you’ll notice (if you have the discernment to see what is behind the curtains) that the emphasis is always on money, not the consumer’s best and ultimate interests. This subject may be a bit deep for most people just searching for a home online, but not for my readers. My readers are smart and sophisticated, and they like to know how things really work. If you read this blog, you know my personal passion is summed up in a little word called “truth”. Unfortunately in the real estate industry, many real estate brokers don’t understand how their own business model or corporate culture can play against consumers like you. As a result, they miss the entire point–serving your best interests, all the while claiming (and sincerely believing) they do put you first. It’s not necessarily the fault of real estate brokers you and I know–good people. They don’t always understand, because few of them have a background in business development, marketing and sales, real estate law, and customer service. They fall into the trap of believing the talking points of their brokerage. As a result, they miss the most important focus of all–how to best serve YOU as the client.
Real Estate Brokers and Discounts
Redfin is a example of good intentions gone awry. Redfin was created because real estate brokers thought by reducing real estate commissions to 1.5% on the listing side and 3% on the selling side (total 4.5%), and by offering buyers an additional refund of part of the commission, and by paying their agents salaries, they could give consumers like you something you really want.
Reducing fees always seems like a good idea to consumers, until you realize where the focus is NOT. The focus is NOT on attracting or hiring the most experienced professional real estate brokers in the business–it is about hiring real estate brokers who will work on small salaries. New and inexperienced real estate brokers may be attracted to a small salary with little room for career progression, but when you hire a listing agent to sell your home, do you really want that real estate broker? Of course not. You want the best who can most effectively market your property, who has the experience to negotiate the best price, and much more.
Real Estate Brokers and Seller Beware
There are many other discount real estate brokers out there, but many of the brokers who offer discounts do not have the highest level of experience to list at a realistic price, market effectively, negotiate the best price, and handle all the legal duties to protect clients. What does this mean? It can mean they charge a total of 4.5% to the seller, but it also means they may only get $345,000 for the seller instead of what they should have gotten, $375,000. The seller thinks he is saving money on the commission, but lack of professional experience on the part of real estate brokers can cost far more than the commission.
If you’re a buyer, you might be thinking, “well I like the idea of paying less for a home,” but this is a double edged sword. Real estate brokers who work for discount houses or corporations who focus on building their brokerage rather than placing you at the center of the Universe have less experience, and they often list a home way too high, demand too much in unreasonable negotiations, and buyers can end up paying too much for a home. I saw this happen when a buyer from outside the area paid about $150,000 more for a home than its fair market value.
None of these new real estate brokerages have taken off, because they do not attract the best in the profession, which means consumers are not best served. Traditional bricks-and-motor brokerages are in trouble, too, and many have closed their doors, merged, and consolidated during this recession.
They all have the wrong focus. They are focused on almost everything except YOU. A real estate brokerage built entirely around you would be dramatically different than any of the traditional or discount brokerages out there. It would be built from the ground up with your best interests at the center of the Universe. Every single aspect of the business. Now that would be a business that consumers like you could love, because there are no hidden agendas, no underlying profit motives that can play out against your best interests, no motive to get you to pay more for a home than it is worth, and all the technologies, software, and customer service would also be designed and used only if it helped with the goal of putting your best interests first in every way.
Why is this such a passionate interest for me? Because I have been immersed in the real estate industry going back 37 years, and I am intensely focused on what is true, and filtering through all the hype and agendas that are contrary to serving clients without compromise. Ten years ago, I decided to build a real estate brokerage that puts your interests as a client first without compromise, and to do so with the highest standards, experience, and professionalism. This business model has been a smashing success, although a mystery to my colleagues in the real estate business.
My brokerage is iRealty Virtual Brokers, also registered as Sequim and Port Angeles Real Estate. And I’m having the time of my life. So are my clients.
Last Updated on August 19, 2015 by Chuck Marunde