A Question to Ponder this Weekend

Your house is worth $400,000.  You list it for sale with ABC Realty (a fictional company) for, say 6%.  That’s $24,000.

You neighbor, in a smaller house worth $300,000, also lists with ABC and agrees to pay 6%.  That’s $18,000.

Why did you pay $6,000 more for the exact same service?

Isn’t that like you paying $100 for an oil change at the corner service station and your neighbor paying $60 at the same station for the same oil change?

Time to wake up, America.  Real Estate Brokers who charge a percentage of the sale price as a commission are dinosaurs.

Real Estate should be a fee-for-service business – very much like your dentist’s business – and paying a Set Fee for service is the only thing that makes sense.

Don’t be stupid!  If you need to sell, call America’s premiere Set Fee real estate organization, Help-U-Sell Real Estate, and save Thousands.

You can find a local office here.


“What Am I Not Getting?” Commissions Demystified

We Help-U-Sell folk often get mis-tagged as ‘Discounters.’  We take umbrage at that notion because we don’t offer a stripped down version of ordinary real estate (which is what a discounter would do).  Instead, we offer a completely different model, a different approach, one that is more efficient and – surprise! – costs less.  Usually, the ‘discounter’ tag comes courtesy of our competitors who can be quite vocal in defending their turf.  But sometimes, on seeing how much they’ll save with Help-U-Sell, consumers also wonder how we do it.  They’ll say:

‘So, this looks like a great deal, but what am I giving up?  What am I not getting that I’d get with a ‘regular’ real estate company?’

The question is not what you’re not getting;  it’s why are they charging you so much for the same thing we do for a low set fee?

Of course there’s an explanation.  It makes no sense from a consumer or business point of view, but it is an explanation.  It starts with what you’re paying for when you engage a real estate professional.  You could make a list several dozen items long but it boils down to just four things:

  • Marketing
  • Securing the Buyer
  • Representation
  • Managing the transaction details
At Help-U-Sell our brokers take responsibility for three of those four items.  Marketing, Representation and Managing the Details are all the purview of our brokers and though they might delegate bits and pieces out to qualified assistants, they don’t generally assign those tasks to agents.  The Help-U-Sell low set fee pays for those three things, and if the seller locates the buyer for his or her property that’s all they pay and it’s usually a huge savings over a percentage based commission.

How often do sellers find their own buyers?  You’d be surprised.  It’s not unusual for a seller to go to work two weeks after listing, learn of a co-worker transferring in for whom their house would be perfect.  It’s also not unusual for one of the neighbors to drop by with friends and family in tow.  We help our sellers find their own buyers by coaching them on doing their own open houses and letting them help distribute property information.

The ordinary broker charges a steep percentage based commission because his business model involves  paying four different people to do the same thing we do with one.  He has to be prepared to pay his company, his listing agent, the selling company and the selling company’s agent.  So the seller ends up paying not one, but four commissions!

And here’s where it gets really interesting.  Where we allow for the possibility of a seller finding his or her own buyer, in ordinary real estate, the four commission commission is the commission:  you pay the full fare no matter how the house sells.

What’s fun in this is that our listing brokers usually make more on a sold listing charging a low set fee than their competitors who charge a bloated commission.  The Help-U-Sell broker doesn’t have to split the dollar four ways!

The four commission situation is at the heart of the ordinary real estate world.  It probably won’t change anytime soon because there are about 1 million licensed real estate brokers and agents who depend on that model for their livelihood.  The industry will change when enough consumers find out they don’t have to do it that way.

Here’s a nice footnote to this discussion.  We haven’t talked much about the fourth item, locating the Buyer.  Yes, we allow our sellers the option of finding their own buyer and if they do they will experience maximum savings.  If one of the agents in our office finds the buyer, the seller pays the set fee plus a showing fee – which still ends up being much less than the four commission guys will charge.  If the seller wants, we’ll even put the listing in the MLS and offer it for sale through outside brokers.  If one of them brings the buyer, the seller pays our set fee plus whatever commissions will be necessary to take care of the selling agent and broker – but that’s still just three commissions, not four and it almost always costs less than what an ordinary broker charges.

Best of all, regardless of whether the seller elects to offer the house for sale through our agents or even through the MLS, if in the end he finds the buyer himself, the low set fee is all he pays.  It’s a great system.

ADDENDUM (The next day)
I’ve been asked to ‘demystify’ this post.  At Help-U-Sell we all understand what I’m talking about – but sometimes those on the outside need a little more explanation.

When you hire an ordinary real estate agent (who will likely charge a percentage based commission), you’re agreeing to pay not one, but four commissions:
  • 1 for the listing company
  • 1 for the listing agent
  • 1 for the selling company
  • 1 for the selling agent
You’ll be charged the same percentage based commission regardless of whether it takes all four commissions to get the job done, with any un-allocated overage going to the listing company and agent.

When you list with Help-U-Sell you get flexible pricing based on how the property sells.  Your low set fee covers marketing, representation and managing the transaction details.  If you locate your own buyer – which happens more than you think – you pay just that:  one commission.

If one of the buyer agents in the Help-U-Sell office locates the buyer, you pay two commissions – the low set fee to the Help-U-Sell office plus a showing fee that will compensate the buyer agent.

If an outside MLS agent brings the buyer, you pay three commissions:  the low set fee for the Help-U-Sell office, plus a commission for the selling company and agent.

With Help-U-Sell you may pay one, two or three commissions depending on how your house sells, but never four.

With ordinary real estate you pay four no matter how your house sells.

Make sense?

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