Times, they are a-changin’ in the way you buy and sell homes
By Mickey Satterwhite, Special to the Pinnacle
Innovation. As Californians, we take it for granted that change
is an everyday part of our lives. We tend to be a bit different.
More so than any other part of the country. We think differently,
we act differently and we do things differently. In many places,
they look at us and often think,
”
they’re crazy.
”
Then in a couple of years, we see them doing the exact same
thing.
Times, they are a-changin’ in the way you buy and sell homes
By Mickey Satterwhite, Special to the Pinnacle
Innovation. As Californians, we take it for granted that change is an everyday part of our lives. We tend to be a bit different. More so than any other part of the country. We think differently, we act differently and we do things differently. In many places, they look at us and often think, “they’re crazy.”
Then in a couple of years, we see them doing the exact same thing.
We were the first to embrace strict environmental laws. We were the first to incorporate computers and 21st Century technology into the workplace and schools. There are obviously numerous examples of our pioneering ways. We, in essence, are the nation’s test tube. What works here will eventually be accepted and work elsewhere. We are the trendsetters. We are risk-takers. We are the innovators.
Because we live and work in the most dynamic area of the world, we readily embrace new ideas of merit. New concepts and trends that would often be given up for dead in some areas of the country are not only accepted here, if the concept or idea has merit, we embrace it. We aren’t afraid of change. We are a society of consumers and here the consumer is the final arbiter.
This is true in practically every aspect of our society. The concept of change and innovation has finally reached into the real estate community and we are starting to see innovation and change having a very real impact on the traditional way that people sell their homes. If you’re not aware of it, a very real change is occurring on the real estate landscape. I’m of course talking about the growing variety of real estate businesses and the varying commission structures each offers. New, innovative companies are emerging with new ways to sell property. As these concept companies take hold, consumers finally have some real alternatives to consider that may save them thousands of dollars.
Consumers now have choices to make beyond which brokerage to use when selling their property. For the first time, a homeowner can look at the varying real estate brokerages and their service offerings and have some important decisions to make. They can (and should) investigate the various value propositions and the services associated with these different type companies as well as investigate the varying pricing structures.
These decisions can potentially earn you significant, real dollar savings depending on which model and company you decide to hire. To the best of my knowledge, there are basically three different real-estate models out there. Each is somewhat different. Each works well. There is the standard, percentage based brokerage, which has been around for many years. They are generally well known, provide good service and usually charge the seller somewhere between 5 and 6 percent of the sale price of the property for their services.
Then there is the menu-based real estate model, where you pay a set price for the listing and select and pay for the services you feel you need. The overall price paid will be based on how much work the seller is willing to do and if he or she wants to put the property on the Multiple Listing Service (MLS).
The MLS is a proprietary database available to real estate agents where properties are displayed. Participation requires that the seller pay a commission to the agent responsible for procuring an accepted offer. With the menu-based model, the more items selected from the menu of services, the greater the cost. If you want to do some of the heavy lifting, these companies offer a viable alternative and can save you money.
Finally, there is the new kid on the block, the real estate hybrid. Arriving on the scene in the last couple of years, these companies offer the same brokerage services (often referred to as full-service) as the percentage-based brokerages but charge you a much-reduced fixed-fee for your listing. You will of course, pay a selling side commission to any agent who brings in the offer but this model accomplishes two things. First, the brokerage does all the work for you and second you can potentially save thousands of dollars based on the selling price of your property when compared to a traditional 5 or 6 percent brokerage commission.
The best analogy I can find that describes these various real estate models is by taking a look at what has happened in the airline industry over the past 10 years. The percentage-based brokerages are similar to the larger, more established airlines. They are well known. They fly you to your destination in a safe, clean aircraft. You will of course pay a premium for their services.
The menu-based brokerages are like the private charter companies. They are also very reputable, clean and safe. They will get you there. For a small fee, they provide the plane. You can choose to be a co-pilot or have them fly the plane. Some things will come with the flight; you’ll pay extra for others. Depending on the services selected or not selected, you will save money with them.
The other alternative, the hybrid, is similar to the reduced-fare airlines. You fly the same type plane, you get to the same destination, you land at the same airport but you pay a significantly lower fare. They strive to provide high-end service for a low fixed-fee. With them, you get the higher-level service and save money.
Each of these brokerage models has something to offer and what is right for one consumer isn’t necessarily right for the other. The point is, there is finally real competition and several viable alternatives for you to consider when selling your home.
You owe it to yourself and your family’s financial well being to investigate the various brokerage models before deciding what is right for you. Don’t be afraid to investigate these options for yourself and don’t take anyone’s word on it. Make some phone calls and explore your options. Look at all the brokerage models yourself and decide what is best for you.
When talking to potential clients, one real-estate agent I know, who works for a more established, percentage-based brokerage, likes to tell folks that you can’t buy a Cadillac for the price of a Hyundai. I agree whole-heartedly. The last time I looked, the customer satisfaction rating for Hyundai ran higher than Cadillac’s. Yes, the times, they are a changing …
Mickey Satterwhite is the broker/owner of Sell-N-$ave Real Estate Services serving Morgan Hill, San Martin, Gilroy, SJB and Hollister. He can be reached at [email protected].
