I wrote a piece a long time ago called Full Service Broker vs Limited Service Broker vs Discounter. It remains popular. I think it’s because the title uses terms people use when searching online. Trouble is, the piece was really just musing. I was trying to point out how mushy the definitions of these key concepts are in the world of real estate today. Nobody reading that post is going to come away with a firm understanding of the various kinds of brokerages out there and few will get a feel for how we at Help-U-Sell are different and better. So, let me take a stab at it this time being a little more pedantic.
Full Service Broker: A Broker who essential takes over the task of selling a home. Usually that means the seller does nothing but sit back and wait for a contract and then a closing. I could be more granular in the description – break it down a little further – but I don’t think that’s necessary. When you list with a Full Service Broker, you expect that you are turning the messy task of selling your home over to someone else. Your job, once you have the house in tip top shape, is to simply disappear anytime anybody wants to see the home and to be patient. Generally speaking Full Service Brokers charge a percentage based commission in the 5% – 8% range (although real estate sales commissions, whether percentage based or not, are fully negotiable between the broker and homeowner and no standard or even standard range exists). That can get pretty pricy. Think about it: the owner of a $300,000 home with $100,000 in equity who agrees to pay a, say, 6% commission is paying $18,000: almost 20% of their equity! And don’t get me started on the guy down the street in the smaller house worth $250,000 who will pay the same broker the same percentage but, in his case, it’s only $15,000! Why is the first guy paying $3,000 more for the exact same service?? It makes no sense (it really doesn’t)!
Discounter: These brokers focus on the commission and cut it to levels Full Service Brokers cannot meet. Using the above hypothetical examples, a Discounter might take the listing for say, 4%, a significant savings for the seller. But here’s the thing about Discounters: they use the same business model the Full Service Brokers have. They are on the same planet, in the same universe. If they’re going to operate on that planet for less revenue, something else is going to have to give. Think about it: If you find a hammer at Ace Hardware for $4 and then spend the rest of the day shopping until you find a Discount Hardware Store who sells the same item for $3, you may have a bargain! Or maybe you don’t. You gave up something to get that dollar off the hammer. You had to spend you time and money driving around to find the store and the hammer (their profit margins are so small they can’t afford to be visible or easy to find), you probably had nobody on the floor to help you, you may have had to dig through disorganized bins to find your hammer and you may have had to dig until you found one in good shape. There are trade-offs for this kind of savings, and there are with the Discounter’s view of real estate too. The quantity and quality of marketing the discounter does will probably be reduced, the amount of personal attention the seller receives will probably be less (after all this broker has to do big volume to compete and has less time), and let’s just hope there’s not much else going on when the offer comes in. You don’t want your Discount Broker watching the clock and counting the seconds and thinking about wrapping this negotiation up so he can get on to the next one!
Limited Service Broker: This is a term the Full Service and Discounter Brokers invented to diminish the value of Brokers who don’t represent anyone in a transaction. The model is different this time. Usually it involves a set fee, often paid up front and non-refundable. The Broker then takes the property information and does very limited marketing, usually just putting the property into MLS or on a FSBO website. There is no hand-holding, no showing, no open houses, no communication, no assistance with pricing and strategy. All they are providing is access to a few marketing tools you probably don’t have access to on your own. The kicker is, if you pay an MLS only Limited Service Broker to put your house in the MLS, you’re also going to have to be prepared to pay the other broker who sees the listing in MLS and then comes in with a buyer! Suddenly, that rock bottom front fee is not looking like quite the bargain you expected! Some Limited Service Brokers do provide representation – which means they look out for your best interest and get involved in negotiations and make sure the deal goes as planned to closing – but it’s often at an additional fee.
Help-U-Sell is something else all together. We operate on a different planet than the three guys above.
We recognize that technology has made marketing a properly priced home pretty easy, and pretty standard. The idea that your agent needs to create a completely customized, personal marketing campaign for your individual home is actually a little absurd today unless you are in some astronomical price range or in a completely unique boutique type situation. Marketing is: pricing the home properly, starting a buzz locally through signs, flyers, postcards, MLS, past clients and so on, making the property easy to find online via various websites (the more the better), social media outlets, video, QR codes and so on, and then being sharp as a tack when an inquiry comes in to make sure that, if the prospect is right for the home, the’ll get to see it. It’s not rocket science. It takes a professional working every day in the real estate business to do it well, to manage it and keep it on track, but it doesn’t take a super-human or even a star.
We also recognize that the best thing we can do for all of our sellers is to generate leads – potential buyers who contact our office and with whom we develop a working relationship. And that’s what our marketing is designed to do: generate leads, not just for your individual house but for all the houses we have in inventory. Truth is: the caller rarely buys or even wants to see the house that motivated the call. Once they have the information they often discover that there is something missing or not matching their needs. That’s where the developing relationship with the agent on the other end of the line comes in. If we really know our business, if we really know our inventory, if we are really good at listening, we probably have something else in inventory that would be perfect for this buyer . . . and that’s how we market your home. A great Help-U-Sell office is like a clearing house for buyers and sellers, or maybe more like a buyer/seller dating service!
We acknowledge that there are a number of activities ordinary brokers routinely take on that might be better handled by the seller, and if the seller is willing to take on these generally easy tasks, they can achieve significant savings. If the seller is up for it, we will coach them on how to hold their own open houses. We’ll show them how to walk through the home with a prospective buyer. We’ll provide them tools to use in spreading the word to friends, neighbors and co-workers. If they can find a buyer through this kind of easy participation, we can cut them an amazing deal on our fee. After all: they’ve produced the buyer! And, oh by the way, not all of our sellers opt in to participating in this way, and that’s ok. We can still save them big time over ordinary brokers. The good news about seller participation is that it is a lead generator for us – and since lead generation and capture is how we get our listings sold, all of our sellers benefit when one of them holds an open house. Let me be a little more clear. One of the tasks most sellers are not comfortable doing is following up with buyers who come through their home. That’s great: we don’t ask them to do that. We do it for them. Their job is to collect contact information on everyone who comes to their open house (essentially, nobody comes in without signing in – that just makes sense). They share that with us and we make the follow-up call. Sometimes the buyer just needs a little clarification or next-step help to move forward on the property, but more times, they’ve eliminated the property because it didn’t quite match their needs. And so we have yet another lead that might be perfect for one of our other listings.
Because we design our offices and our marketing to be big lead generators -and because leads, properly handled, drive the sale of our listings – our agents have a much more manageable job description. You see, the ordinary real estate Broker builds his business by adding agents, agent after agent. The only way the ordinary Broker can get the large number of agents required to make his business viable is by offering prospective agents HUGE commission splits. Because the ordinary Broker has fewer dollars to work with after paying those huge splits, he can’t afford to orchestrate and implement the kind of lead generating marketing program the Help-U-Sell broker can. Instead, the ordinary Broker delegates this responsibility to his agents who generally just do their own thing . . . which is not to market or generate leads, but to advertise in hopes that their latest ad will show the anxious seller that they are really working. In a Help-U-Sell office that is all handled by the Broker. Our Brokers are in charge of and responsible for marketing, for creating all of those leads that turn into buyers and sales. Our agents are there to take care of the buyer leads our marketing has created. Period. We don’t ask them to market or to build our business on the strength of their sphere of influence, to prospect for listings or call on FSBOS. We ask them to take the leads we’ve generated for them and to take incredibly good care of them as they find their dream home. Building and maintaining listing inventory is the broker’s job, converting buyer leads into sales is the agent’s job. And it’s a wonderful, manageable job! Compare that with the job description of an ordinary agent who is expected to do everything from soup to nuts, essentially running his or her own real estate company within the Broker’s company! No wonder they burn out so quickly!
We recognize that a buyer for a particular home might come from several sources and that the cost of acquiring a buyer varies from source to source . . . and we price our services based on which source produced the buyer. Ordinary real estate is a one-size-fits-all world. Usually, when you list with an ordinary broker, the high percentage based commission you are agreeing to pay is designed compensate four different entities: the Listing Agent and Listing Office, the Selling Agent and Selling Office. But in most cases you’re going to pay that same high percentage based commission even if there is no outside agent or company involved in securing the buyer. In fact, you’re probably going to pay full fare even if YOU find the buyer. With Help-U-Sell the fee is based on where we had to go to find the buyer. If you find the buyer through an open house or talking it up at work, you pay just our low set fee – usually thousands less than you’d pay an ordinary broker. If you want, we’ll ask the buyers agents in our Help-U-Sell office to go to work trying to drum up a good buyer for the house and if they are successful, we’ll have to pay them as well . . . but you’ll still save thousands over what you’d pay most ordinary brokers. Finally, if we have to go into MLS to find a buyer (and we don’t always have to!), you’ll pay your Help-U-Sell low set fee and you’ll have to take care of that outside agent and broker -which will be relatively expensive. You’ll still save, but just not quite as much. And, if you elect to go full-bore on marketing your home, if you do elect to participate, if you ask our Help-U-Sell buyers agents to get involved and you do opt to go into the MLS . . . and then you find the buyer yourself . . . all you’re going to pay is the low set fee, saving you maximum dollars.
There are a lot of other differences between what we do and what the other guys do, whether they are Full Service, Limited Service or Discounters. But most are technical twists on how we operate our offices. By the way: that is a key to how we’re able to charge less and still maker more: we operate our offices very differently from ordinary brokers. We’ll save those twists for another discussion and leave this one where it is. I think it’s clear that we are different. We don’t fit any of the definitions that the industry has put on itself. We are a different category because we approach the task of selling a home differently. And one of the big differences is that we make sense.