Real Estate Myth... Flat Fees are Cheaper?
Something that is popping up all over the country lately, in this dot-com world where we live, is flat-fee real estate. I thought this seemed like quite a scam when I first heard about it. But when I saw it in action, I found it to be one of the worst schemes I have seen in my career.
A couple of years ago, I had a client, a very nice lady that lived in a quad-level house and needed to move into something that would be more accessible for her disabled son, come to me with a home that she had seen at an open house that she thought would be just right. She asked me to write the offer for her, contingent upon her home selling (I had just listed it a couple of weeks prior). I tried to pull it up on the primary MLS service for the area it was located in, but I couldn’t find it. She gave me a copy of the Listing she had picked up at the open house, and I immediately knew why I was having so much trouble. It was listed in the wrong MLS service. I am a member of a couple of different listing services, so I was able to pull it up to find out the number of the listing agent. Imagine my surprise when I called them and they gave me the seller’s number! They gave me a direct line to their client and told me to have at it! I couldn’t believe that they didn’t want anything to do with negotiating the sale, until I met the lady that owned that home.
She had signed an “Exclusive Agency” listing with them. They had collected a $400 fee from her, two years prior, put the listing up on the MLS service (the wrong one for the area, mind you) and that was all they were going to do for her. I had to meet her, with no representation at all, explain to her that she would be paying me a commission as a buyer’s agent (she had no idea, even though it was in the agreement she signed, it was never explained to her) and I had to be the one to tell her that her home hadn’t sold in two years because it was listed in the wrong MLS for 30% over market value. An offer presentation usually takes a few minutes to maybe half an hour if all of the agents are experienced and have briefed their clients on what to expect. I was with this lady for over three hours!
The worst part about the whole ordeal, my client, the buyer, changed her mind about the house after she sold hers. Sure, she forfeited her tiny deposit and bought another house, but I don’t think the lady with the flat-fee listing ever sold her home. She kept it up for sale for another year or so, and I never saw that home change hands. But, she saved the commission. It only cost her $400 and three years of doing her own open houses.
That’s what flat-fee real estate will get you, headache and extra work. Think about it this way, when you go to a sit-down restaurant, when do you pay for your food? At the beginning of a meal or at the end… after you are satisfied with your service? Why should real estate services be less important than your steak dinner? It’s only your home…
A couple of years ago, I had a client, a very nice lady that lived in a quad-level house and needed to move into something that would be more accessible for her disabled son, come to me with a home that she had seen at an open house that she thought would be just right. She asked me to write the offer for her, contingent upon her home selling (I had just listed it a couple of weeks prior). I tried to pull it up on the primary MLS service for the area it was located in, but I couldn’t find it. She gave me a copy of the Listing she had picked up at the open house, and I immediately knew why I was having so much trouble. It was listed in the wrong MLS service. I am a member of a couple of different listing services, so I was able to pull it up to find out the number of the listing agent. Imagine my surprise when I called them and they gave me the seller’s number! They gave me a direct line to their client and told me to have at it! I couldn’t believe that they didn’t want anything to do with negotiating the sale, until I met the lady that owned that home.
She had signed an “Exclusive Agency” listing with them. They had collected a $400 fee from her, two years prior, put the listing up on the MLS service (the wrong one for the area, mind you) and that was all they were going to do for her. I had to meet her, with no representation at all, explain to her that she would be paying me a commission as a buyer’s agent (she had no idea, even though it was in the agreement she signed, it was never explained to her) and I had to be the one to tell her that her home hadn’t sold in two years because it was listed in the wrong MLS for 30% over market value. An offer presentation usually takes a few minutes to maybe half an hour if all of the agents are experienced and have briefed their clients on what to expect. I was with this lady for over three hours!
The worst part about the whole ordeal, my client, the buyer, changed her mind about the house after she sold hers. Sure, she forfeited her tiny deposit and bought another house, but I don’t think the lady with the flat-fee listing ever sold her home. She kept it up for sale for another year or so, and I never saw that home change hands. But, she saved the commission. It only cost her $400 and three years of doing her own open houses.
That’s what flat-fee real estate will get you, headache and extra work. Think about it this way, when you go to a sit-down restaurant, when do you pay for your food? At the beginning of a meal or at the end… after you are satisfied with your service? Why should real estate services be less important than your steak dinner? It’s only your home…
posted by Tim Hall | Monday, September 25, 2006
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