This is me, guest-posting at Blown Mortgage while Morgan Brown is on vacation:
So why is a limited-service listing unlikely to succeed? If you’re in a high-demand market like Seattle, it just might. But in most of America, right now, a home must be marketed perfectly from the first day or it will sell slowly and at a deep discount — if at all.
The one difference between a true FSBO and a limited-service listing is the searchable record in the MLS database. The home will be offered by-owner in all other respects: Priced wrong, prepared wrong and inaccessible to buyers and their agents. This is not a necessary consequence, but it is very, very common. In the case of our newly-listed competition, the home is offered at $200,000 over its market value. Presumably because of the recent re-financing craze, it is encumbered at about $75,000 over market. This home will not be a threat to our listing.
But it wouldn’t be a threat even if it were priced right. There are too many weapons that a professional home marketer will bring into battle for an amateur, no matter how dedicated, to compete. A limited-service listing comes with none of the professionals’ arsenal. So much the worse, it shouts out a warning to skilled buyer’s agents to stay away.
Why would that be so? Because even if it’s competitively priced, even if the buyers love that particular home, it is being marketed by an amateur who will, in all innocence, make egregious errors again and again. Worse, the seller will have no one to turn to for advice, exposing the buyer’s agent to double the legal liability in the transaction, potentially even creating what a judge might regard as an undisclosed dual agency.
The same situation obtains in reverse with discount buyer’s agents like Redfin.com or Buyside.com. Their vaunted cost savings come not from their technology, nor even from picking the low-hanging fruit of well-prepared buyers. The savings they pass on to the buyer come from pushing the costs of buyer representation onto the listing agent.
I wrote this essay a couple of months ago, when Redfin.com got its latest round of financing. This is my favorite part:
It will be a knee-slapper for traditional Realtors when a Redfin agent writes a contract on an IggysHouse listing, but that’s what pays the bills at law firms.
I think that would make for a raucously funny film, as each posturing sleazoid tries to push the work off onto the other. If there’s a god, this will happen to Lesley Stahl.
Of course, you can’t ride my roller coaster without a discussion of divorcing the real estate sales commissions:
You will note that in all the talk about reforming traditional real estate emanating from the new discount real estate start-ups, there is no discussion whatever of divorcing the commissions. This is because it is a true reform, not the sly exploitation of an inane contradiction. When buyers finally knowingly pay for their own representation, they will demand full value for their money.
There’s more, and Morgan will have great guest posts all through his vacation.
Technorati Tags: disintermediation, real estate, real estate marketing, Redfin.com
BR says:
Worth repeating:
“You will note that in all the talk about reforming traditional real estate emanating from the new discount real estate start-ups, there is no discussion whatever of divorcing the commissions. This is because it is a true reform, not the sly exploitation of an inane contradiction. When buyers finally knowingly pay for their own representation, they will demand full value for their money.”
September 5, 2007 — 7:58 pm
J. Ferris says:
Greg,
What do you make of http://www.homezill.com ?
September 5, 2007 — 8:26 pm
Greg Swann says:
> What do you make of http://www.homezill.com ?
A complete rip-off of Redfin.com. None so deserving. As Glenn Kelman himself said, “What if the parasites had to eat the parasites?”
September 5, 2007 — 9:32 pm
Ryan H says:
Very well-written substance that should be required reading for all commission-stressed consumers.
September 5, 2007 — 10:08 pm
todd says:
“The lady doth protest too much, methinks” –From Hamlet (III, ii, 239)
To the author: Your use of the word “amateur” no less than three times betrays you.
Before you make an assumption about my intentions, I am a current prospective buyer who is using a traditional full-service Coldwell Banker agent, whom I am happy with. So I am not approaching your viewpoint antagonistically, since I have no problem with the commission she will be paid upon finding a house for me.
That said, your article is has a decidedly strained quality to it. Your frustration is transmitted quite clearly. You arrogate to yourself the right to label all of these discount agents as amateurs – how all-seeing and all-knowing of you.
Your points might be valid, and you may be correct in stating that full-service agents are a better deal.
But it sure works against you to write an article that sounds like a high-school baseball player boasting that they ‘know’ they will win the big game because they ‘know’ that the other team is a a bunch of ‘amateurs’. That kind of cocksure thinking is likely to get one into trouble. Frankly, I avoid hiring professionals that exhibit overconfidence.
You win more clients with professionalism than with diatribes.
September 6, 2007 — 8:15 am