You Get What You Pay For — Or Do You?

There is more and more discussion in the real estate community of late about discount brokers damaging our reputation as an industry, while offering consumers what appears on the surface to be a real bargain.  In order to understand just exactly what you’re getting when you hire anyone to represent you in the sale or purchase of a home you have to ask questions.

I will start by saying there is no such thing as a free lunch.  Therefore, if someone tells you they’ll market your home as extensively for a bargain price as the full service broker, generally speaking it simply isn’t so.  We all face certain fixed costs and we allocate dollars from every sale to keep our businesses running.  To be successful for ourselves and for you, we’re constantly looking for new and more effective ways to attract buyers for our homeowners. 

Recognizing that most of us in the business have no trust funds and have families to feed, when commissions are discounted, something has to give.  Unfortunately when there is not enough money in the coffer, the clients suffer.  Nobody can run a business successfully without making a profit.  Given a choice of diluting those profits or reducing costly marketing, the loser is more often than not the seller.

There is nothing wrong with opting for a lesser service for a lower dollar amount . . . as long as you understand the rules of the game.  I just sold a home in which the owners knowingly chose a flat fee listing broker.  They paid simply to have their home in the MLS (multiple listing service).  They understood that all the showings, ads, open houses and negotiations were their responsibility.  After four weeks they were tiring of giving up their weekends to wait and hope someone would show up at their open houses.  They got to experience, as we do, the tire kickers, the pseudo buyers who express great interest only to disappear into the ether, and the nosy neighbors.

Fortunately for them, I had the perfect buyer for their home so their discomfort was short lived.  Had they continued with the process as most people do in the current buyers’ market, I’m not sure they would have been happy campers.  I must say though, unlike the experience most people have had in their circumstances here, their limited service broker stepped up to the plate more than once when they had concerns about the progress of the transaction.

Even though I’m tempted to say the obvious, “you get what you pay for,” I’m stymied by the occasional maverick like Greg Swann, a staunch proponent of a discount pricing model who refuses to lower his outstanding level of service and who manages to make it all work.   I’ve yet to meet his counterpart on Long Island however.