Tag: Flat Fee

It’s About the Buyer, Klem!

I met Don Taylor for the first time last month.  I had a meeting with his daughter, Marci, and when I showed up at the Orange County Starbucks we’d chosen as our meeting place, there stood Don, as well.  Needless to say, it was a thrill and an honor to meet them both.  They deservedly occupy a very hallowed perch at the top of the Help-U-Sell family tree.

We talked about all kinds of things but Marci said something that was quickly echoed by Don:

‘People forget, but Help-U-Sell was always about the buyer.’

(Stop.  Think about it for a minute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ok)

I immediately pictured a slide I used in the first round of Help-U-Sell rallies done last year.  It is a simple diagram of how Help-U-Sell generates leads:

Put succinctly, we go into the marketplace, set a fee for our home marketing services that is reasonable and logical, that saves sellers money and still generates a nice profit for the office.  The Low Set Fee* creates interest and results in more sellers inquiring about our service than would if we were ordinary brokers charging a one-size-fits-all, percentage-based commission.

We all know what happens when a prospective seller asks about Help-U-Sell:  they almost always list with us.  So more interest, more inquiries, means more listings.

It almost makes me sick to think about it today, but during the high flying times of 2004, 5, and 6, many Help-U-Sell brokers stopped right there, where the dashed red line is.  They put blinders on and believed that if they just worked listings and didn’t worry about buyers, they’d make plenty of money with fewer staff.  They thought, ‘It’s a sellers’ market.  I have a model that enables me to get more sellers than anyone else.  Why should I scramble around chasing after buyers?’  All you have to do today to comprehend the completeness of that folly is to look around . . . and see that those brokers are no longer with us.  Like the Dinosaur, they became extinct.

You can’t ignore the buyer, no matter how overheated the market becomes.

While listings are not a loss-leader at Help-U-Sell (we expect to make a reasonable profit on them), one of the benefits of having them is the buyer leads they generate.  These are buyers who might buy one of our listings, perhaps generating a selling fee, or buy an MLS listing, thus generating a co-broke commission.  In either case, the buyer side usually generates more revenue to the Help-U-Sell office than the listing side.

That’s why the most popular way to implement the Help-U-Sell model is with the Broker and/or a licensed assistant taking the listings (after all, with our system, it’s not Rocket Science), and licensed agents working with the buyer leads the listings generate.  There’s usually a few more dollars on the buyer side, making splitting commissions with an agent possible.  In most cases we don’t have that kind of latitude on the listing side.

So, here we are in 2010.  The market is still weird, but it’s not nearly as weird as it was last year at this time.  And you know what?  It doesn’t matter how weird the market is anyway;  the great truth is still true:

He who controls the inventory, controls the market

So get out into the marketplace.  Tell your story.  Take more listings.  And then . . . capture, incubate and close the buyer leads those listings generate.  That’s the Help-U-Sell way.

*By the way, Don has no problem with ‘Flat’ fee.  He thought the whole campaign about tires going ‘flat,’ and ‘Set’ fee being preferable was splitting hairs.  I have a feeling the consumer would agree.

Full Service Broker vs Limited Service Broker vs Discount Broker

I’m stewing over what people say about us.  You know:  ‘They’ always seem to get around to saying we’re Discounters or, worse, Limited Service Brokers.  Of course, we’ve never been a group that pays much attention to what ‘They’ say, but still:  it makes me wonder where we exactly fit.

As usual, I Googled a bit and came up with a lot of promotional material, mostly from ‘Them’, describing what they do for sellers and buyers and defining that as ‘Full Service.’    By extension anybody who does anything different or charges differently for their service is deemed to be  less-than full service.  I disagreed with everything I saw, but after all, this was promotional material, designed to influence; hardly unbiased.

Finally, I found an attempt to distinguish at Answers.com.  They have delegated most of the content for their real estate section to ‘The Dictionary of Real Estate Terms’, by Jack P. Friedman, Jack C. Harris and J. Bruce Lindeman, published by Barron’s Educational Series, Inc.

First, their definition of ‘Discount Real Estate Broker:’

A licensed broker who provides brokerage services for a lower commission than that typical in the market. Generally, the services provided are less extensive than those of a full service broker or may be unbundled, so that a client may contract for specific services. Many discount brokers charge a flat fee rather than a percentage of the selling price. See Flat Fee Broker.
Example: Henson, a discount broker, offers to list a property for a 3% commission. Henson will refer prospective buyers to the seller and prepare a sales contract. The seller is expected to show the property and negotiate directly with the buyer.

Well, I thought, We usually charge less than an ordinary broker, offer some services as an option,  and we do encourage Seller involvement (because it helps the marketing) . . . does that mean we are ‘discount brokers’? I decided to follow the link for ‘Flat Fee Broker.’   Here’s what they said:

A licensed broker who charges a fixed fee for the provision of brokerage services instead of a commission based on a percentage of the sales price of the property. See Discount Broker.
Example:Kramden, a flat fee broker, charges $5,000 to arrange the sale of a home, no matter what price is agreed upon by the buyer and seller. If a sale is not consummated within the term of the listing contract, no fee is paid.

Ok, I thought, that feels different. . . but it still sounds like us. I decided to check out what they had to say about ‘Limited Service Brokers’

Plan offered by some real estate Brokers that allows the buyer (that’s what they said, ‘buyer.’  My guess is they meant ‘seller,’ but I’m not sure.)  to contract for less than the full array of brokerage services at reduced Commission rates.
Example: The Travises thought they could save money selling their home if they did some of the work themselves. They wanted professional assistance, so they contacted a broker who offered a limited-service option.The broker agreed to place the property in the Multiple Listing Service (MLS), screen prospective buyers before sending them to see the property, and provide the paperwork needed to prepare a Contract. The Travises advertised the property and showed it to those who were interested in buying. They paid the broker a commission fee of 3% of the Sales Price.

Now I was really confused.  That also sounded a bit like us . . . all except that part about charging a percentage based commission.  Then it dawned on me:  before I could understand if we were Discounters or Limited Service, I had to understand what Full Service was!   I went back to Answers.com and looked in the Real Estate Dictionary under ‘F.’ . . . and guess what?  They don’t define ‘Full Service!’

That’s the crux of the matter:  Everyone defines what they do as ‘Full Service.’  They define what we do as ‘Less-Than Full Service’ because we usually end up charging the seller less and we offer them options to eliminate services they may not need while giving them the opportunity to participate in the sale.

Here’s what I know:  we are a completely different business model than the one employed by ordinary brokers.  We analyze our markets in ways ordinary brokers have never even considered.  We design, track and adjust our marketing in a completely different way.  We control the leads our marketing generates in a way most ordinary brokers only dream about.  We achieve the same result they do — and usually do it quicker and for more walk-away dollars to the seller (just compare your KPI against the MLS) — all the while saving the sellers money.  Since nobody seems willing to define ‘Full Service’ (and since we’d probably disagree with the definition if they did!), I’d suggest we stay away from the term entirely.  Instead, let’s describe the business this way:

With ordinary brokers, you get Ordinary Service.  With Help-U-Sell you get Extraordinary Service.

Read more on the subject HERE

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