Discount Realtors - Part I

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A interesting article in Preston Hollow People focuses on a new discount real estate service in our area. These kinds of agencies are nothing new and some have found success in other areas. However, this new brokerage is locally owned, with a local focus. These look like nice people. But I hope they keep their second job.

One of the reasons these "1%" or "2%" commission companies don't do well in this neighborhood is because folks are smart enough to know that they will typically be paying an additional 3% for the buyer's agent commission. They also get wind of the 'additional fees' that they will be paying outside of the commission. Usually discount companies charge these fees regardless of if the house sells. These fees can run into the thousands of dollars for marketing, advertising, photography, color brochures, internet fees, etc.

In addition to the extra fees, you will probably be showing your home to prospective buyers (often with short notice) and handling your own negotiations. If you want to cut a few corners, don't skip the professional photos featuring the best aspects of your home (take a look at my section of bad real estate photos to get an idea of discount quality).

The marketing strategy for many discount brokerages is that they price the property well below its value to attract attention and hope for a quick sale. Then expenses are kept to a minimum. But if you don't sell in the first 2 weeks, you're looking at spending some money - and you've already priced the home at a discount. There goes the money you saved on a full commission. Double whammy.

If you're one of those people who changes their own car oil to save money, a discount brokerage could be for you. If you'd prefer to program your own computer, then a discount service may be your thing. But I've learned that my plumber is worth his fee and so is my yardman, computer geek, doctor and attorney. I don't have the time, interest or expertise to rotate my tires or balance the chemicals in my pool. A good, knowledgeable professional, who knows how to get the job done, is usually worth the expense.

I'm a full-time, full-service Realtor. I don't charge 3% commission, I earn a 3% commission for my side of a real estate transaction. My straight commission includes expenses with no surprise fees at closing.

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