Here's another example of why it doesn't usually pay to use a discount broker just to save their fee. I have some clients whom I sold a house to a few years ago. For the past couple of years, they've been wanting to sell and buy something with a pool. We finally accomplished that last month.
When it came time to list their home, I treated them like any other seller. I went over and presented the new comps since I would run them every few months since they couldn't decide to sell or not. I also showed them all my updated marketing information including the free trip I offer to the buyers and their agents upon a successful close.
Since they were repeat clients and I already sold them their new home, I offered them a small discount as my way of saying "Thank you".
I had staged the home and we had made the final appointment for me to come and take pictures and get it listed in the MLS. I called the day before to confirm our appointment.
Me: Are we good to go for tomorrow afternoon?
Seller: Ummm, yeah, about that... we have decided to list with someone else.
Me: **LONG SILENCE** Ok, Can I ask why?
Seller: You weren't giving enough of a discount and my friend said she would just list it in the MLS and I wouldn't have to worry about that. We need every penny for the updates in the new house.
Me: Ok, great. Best of luck with that. Let me know if you need anything. In the meantime, don't forget to bring your licenses with you to closing on Monday.
We closed on the new house that next week and we were cordial at closing, though I was pretty insulted as to what they did. They mentioned that they had several showings and were to expect an offer. Good for them.
I checked the MLS last night... This house should have sold for $145k easy! They probably could even have gotten $147-149k which is what I told them they could get. The house was updated as I helped them with opinions over the years. It was a nice house and I knew it would sell fast and for top dollar in the present condition. They were bickering over $1400 as they wanted me to reduce my fee an extra 1% from the discount I offered...
When I looked in the MLS last night and saw a sales price of $139,000, I dropped my jaw! They left a minimum of $6000 on the table though they were bickering over $1400??
Did going with a discount agent achieve their goals? I would say NO! The only goal they achieved was not paying the agent the extra $1400, but in the meantime, they missed out on putting the extra $4600 or even more, back into their pockets for the new house.
Sellers, when interviewing agents, please look at your bottom line. You know, the money that goes IN your pocket, instead of worrying where the fees are going. It might have been a principle for them not to pay me my fee, though I had already offered them a discount, but they chopped off their foot to spite the leg. Makes no sense. Look at the numbers, Sellers!
Donna, that's tough, makes no sense. Sometimes people get a number stuck in their head and it makes no sense, like when a seller has a vacant home and absolutely won't go below $xxx price but will keep making $yyy mortgage payment every month, for another 6 months just to get their asking price. In the long run they would have made more money by reducing their price from the get go.
Donna, I have no doubt you are good at what you do. You clearly have all your ducks in a row from your explanation of what you did to prepare the client. In almost every single case when a customer goes a different route it is because of perceived value or perhaps in this case lack of perceived value of services (whoa, hang on....don't take that the wrong way.) I have had this happen in my career more often than I care to admit and although I have never sold real estate, I have been in sales for over 25 years. There are no differences however, bringing value to the equation is always the same. It sounds like you pretty much did everything right and no sense in beating yourself up over it. The only thing I would add though is taking a good look back to see if you could have done something different. Perhaps even an exit interview with the client. I'll bet dollars to donuts, that they will tell you and more than likely you will be surprised. The best part though is that it can be a marvelous opportunity to get some referrals and more business from them.
BTW, I do have one question. You mentioned something about a trip. How is that possible? Title agents are so heavily regulated, that if there was even a hint of giveaways in a transaction, HUD would shut us down so fast that I wouldn't have time to turn off the coffee pot before they changed the locks on our doors.
Sad isn't it? I've seen this happen again and again where a seller will be 'happier' with the fact an agent didn't make as much from helping them. It has become more about what fee they paid versus how much money they made from the transaction.
Isn't it amazing...this happens ALL the time. People just don't get it. I'm talking with a buyer right now who went discount in another MLS area, and I think he'll regret it. Sir...if you want your house to actually SELL...you really need to list it with someone who ACTIVELY MARKETS HOMES.
Why go to K-Mart when you can use Nordstroms. I feel your pain. You should have sent them a bill for the staging.
I agree 100%! Great post I hope every seller that has ever done this reads this post. I will give a discount from time to time, but you get what you pay for in the end! Now more then ever, you need a good solid Realtor and there is a good chance you won't find them at a discount agency!
Shirley, You appt is with past (and current) clients?
Mike, I've had that also, but they tend to look at the payments as a tax write off and it's hard to change their perception.
Bo, The trip is not written in the contract. It's a separate agreement between ME and the buyers and buyers' agent. It has nothing to do with the seller offering anything to the buyer. If you click the palm tree on the right side of my blog, you'll get further information. The trip is just a "thank you" from me. It has nothing to do with the title company or the lender.
Teresa, Yes, very sad!
Suzanne, Exactly!
Ellie, There's a time for KMart/Walmart, and there's a time for Nordstroms. Listing your most expensive possession is a time for Nordstroms. Buying a shirt can be KMart.
Chad, And this wasn't even a discount agency... just an agent giving a huge discount with big broker name.
I agree. I just don't know how to get that point across to all the sellers who see 6% versus 4% and think that means the people who want 6% or forbid 7% actually spend part of the fee on advertising, marketing and otherwise helping their home sell, where many of the discount companies (at least in our area) do very little advertising to get your house out there other than having it displayed in the MLS. Especially in this market you need an experienced realtor who will be able to bring the best offer to you for your home and somehow some sellers still aren't getting that idea into their heads.
Jenn, I agree. It's not just discount companies though, it's just agents in general who will discount their fee enough to "buy" a listing. That person might still do all the necessary marketing for the home, but to get $6k less in order to save $1400 makes no sense, and I think it's because of their negotiating skills. Another example that if an agent can't negotiate their own fees well, they're not going to negotiate a contract and sales price well for the seller.
Some agents buy listings with a low commission and others buy listings with a high listing price. We try to show clients that's it's about value, not cost. And exactly as you point out, it's about the bottom line, not the amount of a single item.
Sharon, Thank you for your points. Very well said.