Why not save money when buying and selling real estate?
There are several options out there for buyers and sellers of real estate can feel like they have saved thousands of dollars. Buying and selling a home is a complicated process and the consumer needs an experienced agent to walk them through it. Everyone wants to save a buck when the buy or sell real estate. But, at what cost?
Companies like Redfin and several others offer discounts and rebates to buyers and sellers for their business. These offers have been around for years.
It all seemed to start with a company called “For Sale By Owner”. This company had a menu of services that seemed to make sense. The seller could take the low cost option to just be on the local MLS or agree to pay more for more services up to that of a full service company. Full service real estate companies and agents survived because over a short time clients saw through the intentions of the company. Offer cheap and sell high!
Then the NWMLS opened the access to the listing inventory to the public through websites like Realtor.com and the local real estate companies. Consumers no longer needed an agent to locate the properties for sale. Some agents thought that this would make agent less valuable. Full service real estate agents survived because the sellers needed experienced listing agents and buyers still need physical access to the properties. Both needed guidance through negotiations and closing of transactions.
So lets look at Redfin. Their system for buyers is based on several people having a part in taking care of your property search. The field agent to show you homes unless you just go to open houses and giving access for inspections. The agent in the office writing your offer. The transaction coordinator which keeps the contract on track after mutual acceptance. The rebate may look attractive! As for that, they have come from giving a rebate of 66% of the commission back to the Buyer in 2012 to today’s small 15% rebate of $2,225 for a $500,000 home purchase. The reason for the decrease in buyer rebate is simple. They needed to pay the agents more money, it costs a bundle to pay for their website maintenance, and some say it’s because they went public. I found an interesting article that explained the growth, change and business model of Redfin.
I never like to say “You get what you pay for” when it comes to real estate companies and agents. But for some of these discount platforms that is certainly can be true. It’s not necessarily the agents. But, it just doesn’t make sense that a top agent would ever join a company that reduces their commission income by so much. These programs may sound good to the “DIY” buyer who believes that they can do it themselves. But in many cases, it really does turn out bad. Most buyers do need the face to face guidance and direction from a full time agent with a hands on program.
Now, lets look at full service real estate agents. The greatest number of buyers work with full time, full service agents and gladly pay a full commission. An experienced agent that understands the process, the purchase agreements. Through their experience, knowledge and negotiating strategies, they actually earn their commission. Buyers and sellers find that it is so worth the peace of mind and after closing they realize the value!
We should acknowledge that there are some really bad agents out there asking for a full commission that don’t deserve any commission at all. Discount or full commission, don’t just work with the first agent that comes along. Interview a couple agents, select the best one and commit to them and the process. You must be able to trust that the agent will get you the opportunity to purchase the best home and watch out for your best interests.
For information on the process of buying or selling real estate: Contact Tom Perry. His proactive systems are based on what works best in today’s market. Both buyers and sellers will see during the short private meeting how Tom will represent you with effective systems that meet your needs and totally outperform your expectations.