PPOT Realtors: question about flat-fee / "no-service" lsitings

notfarnow · 10-28-2010, 05:56 PM

I'm a Realtor in Canada, and this week a settlement was reached between the Realtor's Association and the competition bureau. The rules are being clarified to allow homeowners to post their properties on MLS for a flat-fee, without the need for a full-service listing agent.

I am see many, many advantages to this setup, but also see some potential hurdles.

I know there are other Realtors on PPOT, and some of you compete in regions that also have flat fee / no-service / tiered service brokerages and agents. I am wondering how your business changed (good and bad) with this type of competition.

And from the general PPOT populace, I'd be curious to hear of any experiences with these flat-fee / no service agents. (*cough*, legion)

legion · 10-28-2010, 06:09 PM

You know my experience. I went full service and am gearing up to sue the realtor who provided the flat-fee listing (took the money and ran).

That said, there are reputable no-service realtors around, I just didn't pick one of them.

I still think there is a place for full-service. No-service generally does not advise on listing prices (or advise on staging, or advise on anything), try to generate traffic, or work very hard on closing the deal.

notfarnow · 10-28-2010, 06:32 PM

Thanks Legion. When you tried the flat-fee route, what was agent's advice about the selling commission for buying agents?

Did that agent also offer full-service, and try to upsell over time?

look 171 · 10:02 PM

I am still working with a agent. I am committed to her each and every home we sold. I did buy the last one from someone else ( the house up the block). Not me, no flat fee, I need service. There are many questions I need answer. Plus, I need someone to do the leg work. Both buying and selling. I try buying one 2 months ago where the agent had it on their web site. One can only make offer through the computer. you can see what the latest offer and how much. You can change your offer anytime before they accept. That was a pain in the rear. I waited and waited for one and half month and finally gave up. Still my agent did all the work. NO reply from the selling agent. No return phone call, email, nothing. We offer cash with 30k over the asking with no contingency. fuch that, I need people who will work for me and be paid a fair amount for their work. don't fuch around if they are not interested in selling a house. You pay cheap, you get cheap. My agent sold my last place in 4 day with a biding frenzy. It was at 550k . She double ended the deal and I was more then happy to pay her commission. Her estimate and plan was dead on.

NOw, you know how I feel?

Jeff

asphaltgambler · 10-29-2010, 05:24 AM

Actually this is a great question. My siblings and I are readying my parents property for sale. We have already payed for an appraisal/market value. Next will be interviewing three RE agents for their take on what price point and expectations. My sister (who is the exectutor) thinks the better way once we have all info is to list /sell it ourselves. I'm not so sure. It is a upscale listing on prime 'Va horse country"

Paul_Heery · Paul_Heery's Garage

Quote:

Originally Posted by asphaltgambler

Actually this is a great question. My siblings and I are readying my parents property for sale. We have already payed for an appraisal/market value. Next will be interviewing three RE agents for their take on what price point and expectations. My sister (who is the exectutor) thinks the better way once we have all info is to list /sell it ourselves. I'm not so sure. It is a upscale listing on prime 'Va horse country"

Where is the property? I just spent the weekend at a relative's horse farm in Fauquier County. As always, it is going to be about location, location and location.

I think if you are going to sell this property "from a distance", you will need to consider the advantages of having a full-service agent. In horse country, it could take a local agent a considerable amount of time just to get to a property, let alone show it. You want to make sure that it will be worth their while.

Tobra · Tobra's Garage

Realtors black ball properties that are not listed by another agent. This is common practice. Last time I was looking for a house, the agent showed me all her listings first, about half did not satisfy my minimum requirements and I did not even get out of the car to look at them. I do not personally know anyone who had a good experience with a realtor.

Christien · Christien's Garage

I like the idea of an a-la-carte system, where you'd be able to pick and choose what services you want from a realtor. If I were trying to sell our house, I'd start with as much DIY as possible, see how it goes, then pay for more and more services as required, based on viewings, offers, etc. I would definitely pay for an MLS listing, but probably little else beyond that, to start. You can learn anything you want about staging and presentation from HGTV or the countless magazines in line at the grocery store. Then, if traffic isn't coming or offers aren't rolling in, I'd look at the next step the realtor could do for us.

This process wouldn't work if you needed to sell fast, but if you need to move fast, then I guess you have to pay up for full service.

TheMentat · TheMentat's Garage

I'm involved in Real Estate in Canada as well... That qualifies me as an expert!

I think it is really all a matter of incentives. The problem in Legion's case is that his Realtor had already been paid, and therefore had no incentive to put any effort into closing the deal. For the same reason, I would expect that his Realtor could give a rat's a$$ about the commission for the cooperating broker.

Tobra's experience is also a perfect example of how incentives can mess up the process.

asphaltgambler · 10-29-2010, 11:42 AM

Hey guys excuse my spelling (above) Paul - The property is located between Marshall and Warrenton off of rt 17- The area is known locally as "old Tavern" - it is with-in eye shot of the Great Meadows complex

Eric Coffey · 10-29-2010, 01:32 PM

Quote:

Originally Posted by TheMentat

I'm involved in Real Estate in Canada as well... That qualifies me as an expert!

I think it is really all a matter of incentives. The problem in Legion's case is that his Realtor had already been paid, and therefore had no incentive to put any effort into closing the deal. For the same reason, I would expect that his Realtor could give a rat's a$$ about the commission for the cooperating broker.

Tobra's experience is also a perfect example of how incentives can mess up the process.

As a listing agent: I would never consider a limited-service "flat fee". My Company wouldn't let me if I wanted to anyway. There is far too much liability to have your name attached to a transaction that you have limited/little/no oversight of. Doing so also promotes the (further) deterioration/marginalization of the industry and dilution of service. I would never give discounts on full-service commission either, and actually stipulate more than the industry standard (say 7% or 8% vs. 6%). By doing so I can offer a buyer's agent a greater incentive, cover extended (out-of-pocket) marketing efforts on the back-end, and still give myself enough incentive to take on the listing. I have happily turned down (or referred-out) countless listings from clueless/irrational sellers.

As a buyer's agent (my primary focus): While not a fix-all, an up-front buyer-broker compensation agreement solves many of these "issues". The problem is that most agents are too afraid to ask for them, or they lack the skills required to tactfully articulate their function. If an agent knows that their efforts are not going to be in vein, they will be more likely to give you their full attention.

The way that works: You agree to pay X amount/percentage for services rendered ONLY if a commission is not offered by a seller (or you agree to pay the difference if the amount offered is less than specified in your buyer-broker agreement). That way if you buy a FSBO, you know going in that you will be on the hook for the commission if the seller won't negotiate one. On the same token, you may be able to make it up by negotiating the purchase price down by that amount (or more) on such a transaction.

notfarnow · 07:04 PM

Quote:

Originally Posted by Tobra

Realtors black ball properties that are not listed by another agent. This is common practice.

"Blackball" vs "not waste our time with". It's a fine line, and showing for sale by owner properties can be a HUGE huge PITA with little (sometimes no) payoffs. I wrote about that here: Offer from Realtor

Quote:

Originally Posted by Tobra

Last time I was looking for a house, the agent showed me all her listings first, about half did not satisfy my minimum requirements and I did not even get out of the car to look at them.

that is poor form, I hope you ditched here ASAP

Quote:

Originally Posted by Tobra

I do not personally know anyone who had a good experience with a realtor.

No one? Really? How are these people chosing Realtors?!

Quote:

Originally Posted by Christien

I like the idea of an a-la-carte system, where you'd be able to pick and choose what services you want from a realtor. If I were trying to sell our house, I'd start with as much DIY as possible, see how it goes, then pay for more and more services as required, based on viewings, offers, etc. I would definitely pay for an MLS listing, but probably little else beyond that, to start. You can learn anything you want about staging and presentation from HGTV or the countless magazines in line at the grocery store. Then, if traffic isn't coming or offers aren't rolling in, I'd look at the next step the realtor could do for us.

This process wouldn't work if you needed to sell fast, but if you need to move fast, then I guess you have to pay up for full service.

Yep, I think this will work REALLY well for consumer looking for tiered service like this. Not my kind of business, but someone will fill that gap for sure.

Quote:

Originally Posted by Eric Coffey

As a listing agent: I would never consider a limited-service "flat fee". My Company wouldn't let me if I wanted to anyway. There is far too much liability to have your name attached to a transaction that you have limited/little/no oversight of. Doing so also promotes the (further) deterioration/marginalization of the industry and dilution of service. I would never give discounts on full-service commission either, and actually stipulate more than the industry standard (say 7% or 8% vs. 6%). By doing so I can offer a buyer's agent a greater incentive, cover extended (out-of-pocket) marketing efforts on the back-end, and still give myself enough incentive to take on the listing. I have happily turned down (or referred-out) countless listings from clueless/irrational sellers.

Sounds like we are on the same page. I am moving towards MORE service, and higher commission, rather than getting involved in the race to the bottom. I am currently focusing on listings more than buyers, and see FAR more satisfied clients (and subsequent referals) from the group who are willing to pay a higher commission for more service. It gets easier as I get more of a portflio.

Quote:

Originally Posted by Eric Coffey

As a buyer's agent (my primary focus): While not a fix-all, an up-front buyer-broker compensation agreement solves many of these "issues". The problem is that most agents are too afraid to ask for them, or they lack the skills required to tactfully articulate their function. If an agent knows that their efforts are not going to be in vein, they will be more likely to give you their full attention.

The way that works: You agree to pay X amount/percentage for services rendered ONLY if a commission is not offered by a seller (or you agree to pay the difference if the amount offered is less than specified in your buyer-broker agreement). That way if you buy a FSBO, you know going in that you will be on the hook for the commission if the seller won't negotiate one. On the same token, you may be able to make it up by negotiating the purchase price down by that amount (or more) on such a transaction.

I would be VERY interested in hearing more about this, and how your buyers react to it. Buyers agency contracts are not the nowrm up here, but we will see a LOT more of them as the no-service and flat-rate listings pop up.

911Rob · 911Rob's Garage

Let them do what they want with the free competition mumbo jumbo; In RE it comes down to one basic thing and that is "SALES"! It's a sales job and that's what most people don't get. The 90/10 rule that states that 90% of the money is earned by 10% of the realtors AND those are the ones that know how to SELL.

I know lots of good realtors and lots of mediocre ones too; many are good at 9/10th of the job, but it takes 10/10 to make money in commission sales; no ticky no washy. Putting a listing on MLS® is about 0.5/10 of the job; Good luck to them.

Just banged out another record year, no complaints here in my humble little town of 16,000 people

I love what I do, but if I wasn't making money at it, I'd find something else and in a hurry.

As for Legion? C'mon that's the "Law of Attraction" in its most basic format.

PS: Jake, just had a great visit with my daughter and her family, although we didn't go out to NB and cram into her little house, we all went South to Florida and did Disney for 10 days. It was a great visit. Cheers, sounds like RE is going good for you?

legion · 10-31-2010, 12:17 PM

Quote:

Originally Posted by notfarnow

Thanks Legion. When you tried the flat-fee route, what was agent's advice about the selling commission for buying agents?

Did that agent also offer full-service, and try to upsell over time?

No, he took the money and ran. He never gave any advice. He barely communicated after he had the cash in hand, and all communication ceased after about a month. Advice? He never gave any. I was willing to pay a buyer's agent the full 3%, and told each that showed the house this. Some had me sign a document stating this, some didn't.

The other (better) no service (and full service) firm in town will refund the MLS listing fee in return for a full service listing. I think the best way to go with the upsell is to draw a clear line between no service and full service, and use a desire for some full service services as your upsell opportunity. I know an immediate hard sell would turn me off.

Tobra · Tobra's Garage

That woman was referred to me by my mother, who had used her a few years previously. In the interim, she apparently became a booze jockey. Quit returning her calls and found a house on my own. Took the 3% commission agent would have taken as a discount. I will never, ever, use an agent to find a house as long as I live.

When I sold my place in Texas, did a bit of research and found an "expert" in our area. He did not do much and it took an overly long period of time to sell. I don't know how others came to find their agents. I would imagine that people don't talk so much about good experiences in this sort of thing.

I can see using an agent to sell a house, maybe, depending on the market. My best friend got his realtor license a few years ago. I know him to be an honorable man of good character and would use him, or recommend him to anyone in this area without reservation.

john70t · 10-31-2010, 09:21 PM

Let's review what a Realtor(tm) does, or is supposed to do:
(btw a Realtor is a member of the NAR club, all others are real estate sales agents.)

1. Examine the property.
Sometimes this can make a huge difference in how it's presented. The agents selling one of my relatives homes spent literally two full days cleaning and re-arrainging it, and it sold for near-asking price just before the crash.
Even the best house can have thousands mentally knocked off its potential price if it has stained curtains from the 70's. Sometimes furniture is rented for temporary measure. Candy and flowers are a must.

2. Research comparable sales history in the area.
This can be done through Zillow, Realtor, Trulia, city assessors, etc., but agents usually have access to the latest data instantly.
FISBO's are usually considered to be overpriced by buyers(right or wrong), and Realtors often pressure sellers to drop the price for a quicker sale.
*even if you have a "buyers" or a "sellers" agent, never ever give a hint of your financial status or needed sales date when they ask. Just a whisper to the other side will skew a deal.

3. Meet potential buyers and show property.
Buyers want to browse on their own schedule and not be pressured in the slightest. They want to be placated and feel "in control". Nervous, impatient and/or weary sellers don't let that happen. The most important thing is the house should be "new" to them. They don't want stories of someone elses children growing up there, they are only thinking of their own.
A neutral third party is usually best for this.

4. Handle the paperwork.
Offer, counter-offer, plenty of lowballs, headaches.
Meanwhile the bills continue on an empty property.
A real estate lawyer can also handle these(at a per-hour rate!) and deal with the Title Company, etc. to make sure all the "I"'s are crossed and the "T"'s dotted. Screw-ups can mean extended court fees, buyers backing out, and post-sale complications.

That's all I can think of at 1:20am

Eric Coffey · 10-31-2010, 10:28 PM

Quote:

Originally Posted by notfarnow

I would be VERY interested in hearing more about this, and how your buyers react to it. Buyers agency contracts are not the norm up here, but we will see a LOT more of them as the no-service and flat-rate listings pop up.

We actually have an agency agreement and a buyer-broker agreement. The agency agreement is mandatory on all transactions, and is more for defining the relationships/duties of all parties involved. The buyer-broker agreement is more of an exclusive employment/compensation agreement, and is usually used on a case-by-case basis.

If I am dealing with a past client, friend, or family member, I won't bother with one. However, if I am representing a buyer that is completely new to me, I will bring it up. It can be a challenge to explain/articulate to some, but if you just level with them, very few (serious buyers) will have an issue with it.

The bottom line is that I have no problem doing copious amounts of leg-work (sometimes for several months) for someone, as long as they are going to remain loyal, and I am going to be paid for my efforts. The buyer-broker agreement ensures that "loyalty". I usually don't bring it up immediately, but after spending a day or so together building a rapport and seeing if we are going to "click" beforehand.