How Do You Frame Your Pricing Model?

Help-U-Sell is certainly NOT a For Sale By Owner company.  Yes, it’s true:  in the late 70’s Don Taylor pioneered the use of the phrase ‘For Sale By Owner’ on the Help-U-Sell For Sale sign.  In time, that phrase morphed to ‘For Sale With Owner,’ but the intent was never for Help-U-Sell to be a stripped down FSBO package vendor.  Our vision has never wavered from the notion that Help-U-Sell is a full service real estate company.

Having said that (and fully embraced it without reservation), I think it might make sense to examine our Consumer offer – the one to Sellers, specifically – and how we present it.

Pictured below is the graphic that is often used with sellers as we talk with them about putting their home on the market.  It acknowledges that there are really three ways a home might sell and prepares the seller for the good news that we charge them, not on some arbitrary percentage basis (no matter how the house sells), but on a logical pricing model that varies depending on how it sells.  This chart forms the real heart and soul of most Help-U-Sell listing consultations.

*Note:  the savings in this example are versus an ordinary broker charging, say, 6% commision on a $300,000 home.

We use the first option, the ‘You Show’ option to talk about seller involvement in the sale process through holding open houses, showing prospective buyers through and talking the listing up at work and in the neighborhood.  If they procure their own buyer in this way, then the Low Set Fee is all they pay; which means  maximum savings.

The second option, ‘We Show,’ is the place where we introduce the idea that one of the Buyer Agents in our own office may be working with a buyer for whom the home might be perfect.  If the seller opts we can include this option as well. (Notice, in this example, the broker charges a set fee on the showing side too and it’s equal to the listing set fee.  There are variations out there, but let’s remember: we are a set fee real estate company.  Shouldn’t the showing fee also be a set fee?)

Finally, option three has us putting the listing in MLS and having the seller be prepared to compensate an outside company and agent should they have a buyer and affect a sale.

Regardless of which options are selected at the time of listing, the seller will always pay based on how the house actually sells.  Even if we put it in MLS, if the seller ultimately finds his or her buyer, all they pay is the option one price: the Low Set Fee of $3,950 in the example.

There was a time when many sellers opted for  option one or one and two, choosing to stay out of MLS all together, thereby ensuring a large savings.  With the downturn in the market, however, this has become a rarity.  Most sellers, with the advice of their Help-U-Sell brokers, want to pull out all the stops when it comes to initial marketing and so go into MLS from day one.

All of this brings me back to option one.  I think it might be helpful to remember that a whole lot of marketing  happens in that option:

  1. A proper price is recommended.  Any truthful agent will admit that 75% of marketing is done the night the home is placed on the market, when the seller chooses a price.  Properly priced homes, marketed well, sell. Period.  Improperly priced homes don’t sell, regardless of how much marketing is done.   That simple Low Set Fee option comes with the credible advice of a knowledgable expert (you) on matters of pricing, terms,  fixing up, showing procedures and a multitude of others things.
  2. The brilliantly beautiful RED Help-U-Sell for sale sign is installed in the yard.
  3. Flyers on the property are created and made available inside the house and out.
  4. Directional Signs, Open House Signs, Sign-in Registers and other tools for holding an effective Open House are given to the seller along with expert coaching on how to hold a effective Open House event.
  5. The Buyer Agents in the office are briefed on the home so that they can talk intelligently about it when inquiries come into the office and do so in such a way that caller interest is maintained, even heightened.  And what do we do with these inquiries?  If the only option the seller has chosen is option one, we send them directly to the seller for showing.
  6. Dozens of photos and a virtual tour are created for the listing so that potential buyers can see it in its best light when deciding whether to proceed with a showing.
  7. The listing is input into and is available there for prospective buyers all over the world.  In addition, once on, the listing is syndicated out to dozens of other consumer oriented real estate websites for maximum web exposure.
  8. A QR Code for the listing is generated and made available for use on flyers and on the For Sale sign so SmartPhone enabled buyers can get the information they want, when they want it.
  9. A knowledgeable expert (again, you) is available to help with questions and concerns, to write any purchase agreement and to handle all the details of transactions processing and coordination all the way to and through a successful closing.
  10. And more . . . meaning that every office has other things they may do on an option one only listing.

Look at that list!  That’s a lot of stuff! And you know what?  That may be enough to affect a sale even in today’s tough market, a sale that could yield a very happy seller who saved thousands!

I’m not suggesting you abandon the MLS (although I am looking forward to the next generation MLS – the one that is not connected to your Board of Realtors and whose policies don’t restrict your business).  However, I’ll go back to what I said earlier:

A properly priced listing, marketed well, will sell.  Period.  And that applies no matter what the market realities.

Maybe it’s time to start offering this option more vigorously to our equity sellers who are willing to price right and are interested in saving maximum dollars.  It’s hardly ‘For Sale By Owner.’  It’s full of good marketing and advice.  And remember:  there is a direct coorelation between seller savings and seller delight; between seller delight and word-of-mouth advertising; between word-of-mouth advertising and the growth of your business.






2 thoughts on “How Do You Frame Your Pricing Model?”

  1. James- This is off topic in regards to your post but I’d love to see a post with an expanded view of your statement- (although I am looking forward to the next generation MLS – the one that is not connected to your Board of Realtors and whose policies don’t restrict your business)-
    Increasingly I feel that many of the policies put forth from NAR or CAR tie our hands and do not keep up with the realities of today’s technologies. CAR has actually been discussing a policy that would restrict people from taking photos inside of a home that is for sale. If it goes through, in the world of iphones & droids how in the world would we police that? How old fashioned and out of date and ridiculous would it make realtors look in the eyes of their clients? I believe we realtors have created the public’s desire for sites like zillow and trulia and other sites that don’t have to adhere to some of the craziness that we do. Anyway, would love to hear your thoughts on the subject.

    1. I don’t think it’s off topic at all. I think it is central to the Realtor dilemma. We real estate people have a rich history of hoarding information. When I was a practitioner, people only came to the information they needed through us, and that became a major justification for our commissions. That cat got out of that bag a long time ago and today we have to bring real value to the transaction in terms of industry knowledge, local expertise, negotiating skills and client advocacy (and I think the best among us do that in spades). The Information can no longer be the reason people hire and pay us.

      I think the future is an MLS that is not idiosyncratic, varying from Board to Board, but is systematic, easy and predictable. That will only happen when techno-outsiders who do not have a stake in how we earn our fees design a better, faster, cheaper, more efficient system. My guess is it will quickly become a national MLS and our role will quickly move to the real and tangible skills I mentioned above.

      I suggested to a Zillow exec not long ago that they were closer to being that next generation MLS than anyone else, but that the model was somewhat flawed because they get their data largely from the current MLS system. The response was that that’s not their business model. They see REALTORS and ancillary services as their revenue stream and they are not about to upset that. They also believe the local Boards and MLSs do an excellent job of ensuring the integrity of the data. In short: they keep the crap out.

      But someday, some Silicone Valley type with the backing of some deep investors is going to take a market or two, then three or four, and introduce an alternative MLS that costs less, has fewer restrictive policies, makes it easier for consumers to get and use data and for REALTORS to market their listings. Soon it will become national and that will be our future.

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