Discount Real Estate Brokerage
By Anthony Longo 29 10 2007
Does discount brokerage apply to all real estate companies offering services for less?
What if a firm offers full service real estate brokerage for less? Are they a discount broker?
Could discount brokerages be categorized in two different silo’s - Buy Side & Sell Side?
Are all discount brokerages created equally?
How about flat fee brokerages who are offering a full service for a set fee? Is that a discount brokerage/
Is anything “NON-TRADITIONAL” considered a discount brokerage?
Could a discount real estate brokerage be better than a traditional real estate brokerage if they specialize in a niche?
Could a tech savvy well run effcient discount brokerage actually be more profitable than a traditional real estate brokerage?
Has anyone figured out what buyers really want?
Has anyone figured out with sellers really want?
Can someone help me in answering these questions?
[...] Original post by Anthony Longo [...]
Does discount brokerage apply to all real estate companies offering services for less?
Anything Less than 6% is a discount, isn’t it?
What if a firm offers full service real estate brokerage for less? Are they a discount broker?
According to Big Brother, yes. You are a heathen who threatens every real estate professionals ability to make money. You must be put down…
Could discount brokerages be categorized in two different silo’s - Buy Side & Sell Side?
Sure…slice and dice it up!
Are all discount brokerages created equally?
NO! No brokerage, ‘discount’ or ‘full-swerve-ice’ are the same…
How about flat fee brokerages who are offering a full service for a set fee? Is that a discount brokerage/
Stereotyping runs deeep in this space. If you’re not a blonde with blue eyes, you’re ‘different’, and thus must go away…
Is anything “NON-TRADITIONAL” considered a discount brokerage?
See previous answer…
Could a discount real estate brokerage be better than a traditional real estate brokerage if they specialize in a niche?
Of course! That makes sense though
Could a tech savvy well run efficient discount brokerage actually be more profitable than a traditional real estate brokerage?
Wow, what progressive thinking here Tony! Be careful though, I think you’re on to something…something ‘the others’ don’t like very much…be afraid, be very afraid…
Has anyone figured out what buyers really want?
LISTINGS! and info, info, and more info…
Has anyone figured out with sellers really want?
EXPOSURE (and a reasonable, logical fee for services). Sell my stuff FAST!
Can someone help me in answering these questions?
I did my best in 5 mins or less….
Looking at your Discount Coupon there Tony, I think some real estate professionals snort Orajel…
Jeff - you made me smile and a made me a little bit smarter today. Thank you!!! Your answers were a great start…I hope to have more with similar traits to this post within the day.
Chat soon!!!! and Thank you!!!
Does discount brokerage apply to all real estate companies offering services for less?
Of course… but the word discount is only marketing semantics. It is a derogatory word for anyone that wants to charge less than what is standard in the industry. Why not Brokerage and Premium-Priced Brokerage?
What if a firm offers full service real estate brokerage for less? Are they a discount broker?
Still yes…
Could discount brokerages be categorized in two different silo’s - Buy Side & Sell Side?
I’ve seen that… but mainly I see the discount on the Sell side with the EBA to get the full commission on the Buy side… meaning if you give me both sides, I’ll cut my fees in 1/2
Are all discount brokerages created equally?
Only if all discount brokers are equal… most people I’ve seen try to overcompensate for their discounting… either by offering squat or by marketing themselves as able to do what the big boys do… the problem is that they usually just market listings on a shoestring and work harder on buyers since they’re not eating any marketing costs.
How about flat fee brokerages who are offering a full service for a set fee? Is that a discount brokerage/
Yes
Is anything “NON-TRADITIONAL” considered a discount brokerage?
Tradition… feh!
Could a discount real estate brokerage be better than a traditional real estate brokerage if they specialize in a niche?
Sure… for instance someone working super-jumbos doesn’t NEED to get 3% especially on both sides! Someone working affordable housing might need the money to make ends meet but maybe the discount would help them be more competitive for volume?
Could a tech savvy well run effcient discount brokerage actually be more profitable than a traditional real estate brokerage?
Probably… I think that an office of one selling agent, one buyer’s agent a great website and at least one assistant is superpowerful. The tech savvy is the key.
Has anyone figured out what buyers really want?
Red Carpets… they want to be treated like Paris Hilton
Has anyone figured out with sellers really want?
They want you to feed into their lies about the value…
Neither wants to feel they’re leaving money on the table…
Can someone help me in answering these questions?
Jeff did a good job… go figure a transparency cultist would answer you well!
JeffX puts orajel in his hair
David well put. You guys got me off to a real good start. Im actually a bit afraid for what the two of you may have stirred up!
Well, well, well … look who is still trying to see the light
The question I am most surprised you asked:
Could a discount real estate brokerage be better than a traditional real estate brokerage if they specialize in a niche?
My answer:
(besides the fact that “discount is not the proper word, see below …) DUH! Of course flat fee brokerage can be better. Do you really need to ask this question?
There is always room for a novel idea providing better service at the right price within any industry, especially one as obsolete as real estate. What determines its success is proper execution.
Flat fee is not a discount brokerage, it’s an alternative, it’s a choice, it’s efficient … Apples to oranges when compared to “traditional.” Now, while you can’t technically have a “discount brokerage,” you can certainly have a “reduced service” brokerage. This means less service for a lower price.
The notion of a discount demands a benchmark, therefore in real estate there can be no “discount brokerage.”
1) There is no “6%” standard. It is not mandated by any real estate law, it is negotiable. Therefore calling a brokerage using anything other than 6% “discount” is uneducated. I know guys at sothebys that will take the right listing at 4%, are they a “discount brokerage”? No, because there is no standard. Generally speaking to figure out if something is “discount” you would have to look at the ratio of what you are paying vs what you are getting to make sure that what your getting is the same but for a different price. In real estate, there is no standard so anyone offering the same service as a “traditional broker” and - for the sake of this argument - charging less than 6%, are not discount brokers they are just real estate brokers.
2) To call flat fee a discount means you are measuring it against a benchmark, but with a percentage (ex: 6%) the benchmark isn’t static. The percentage amount changes based on the home price. So, to jeff (response to Q1), 6% of what?
3) In regards to a niche: For a buyer broker the standard is different than a listing agent. Buyer brokers don’t negotiate a price and then “reduce” or “discount” it, the cooperating % is pre-determined. So, in the case of a flat fee buyer broker, X is what they charge for their full service, end of story - having nothing to do with the pre-determined %.
The term “Discount Brokerage” was started by fearful traditional agents using the word “discount” as a slur because it has negative connotations. It is a defensive response meant to hurt non-traditional agents’ feelings (tear, tear) or steel our clients. Quite frankly I think their attention is flattering
If their scared that means I am on to something big.
http://WWW.Territoryre.com
Coming to your town next!
Ahhh, Marla. So refreshing.
Thank you for your response. I agree personally on all fronts….however….in doing some market research I love hearing feedback from a national audience. I think everyone is starting to get their thoughts straight…it will be a while before it all makes sense to the consumer…but I like where your head is at!
My reference to 6% was a nod as to what most consumers would answer as to the cost of a listing agent…As in:
‘How much do Realtors typically charge to list your home?’
I’m not a % based commission advocate at all.
I am a smart ass, however
Does discount brokerage apply to all real estate companies offering services for less?
You’re questions are thought provoking. Our industry is broken because its broker driven and needs to be buyer focused. I think most brokers would see discount brokerage as companies offering services for less. I think buyers and sellers may see the discounts as more reasonable charge for the service provided.
What if a firm offers full service real estate brokerage for less? Are they a discount broker?
From a broker perspective they are perceived as a discount broker. From a buyer or seller perspective, they may be offering a better value.
Could discount brokerages be categorized in two different silo’s - Buy Side & Sell Side?
I think many brokers categorize buy and sell sides in silos. I don’t think this is a buyer focused model. Being able to work both sides at a discount is value to the broker and the customer. This can save time, money, and enhance service.
Are all discount brokerages created equally?
No, some just want market share or listings. Others create value by performing great services at a reasonable cost.
How about flat fee brokerages who are offering a full service for a set fee? Is that a discount brokerage?
Not always. Some flat fee brokers may not be discounting. They may just be providing service levels with corresponding fees for preferred or standard services.
Is anything “NON-TRADITIONAL” considered a discount brokerage?
Again, by the industry…yes. From the customer perspective …no. I think people are looking for intelligent fee structures and services that address their specific needs.
Could a discount real estate brokerage be better than a traditional real estate brokerage if they specialize in a niche?
Absolutely! If I sell new condominiums, and my buyers want to sell their homes I can take care of everything for them at a discount. Now I’m providing value because I’m handling both sides, providing a discount, offering a comparable level of service, and saving the customer time with less people involved.
Could a tech savvy well run effcient discount brokerage actually be more profitable than a traditional real estate brokerage?
In niche markets yes.
Has anyone figured out what buyers really want?
Has anyone figured out with sellers really want?
One stop shopping baby! Buyer and seller focused models, not broker focused traps. The buyer wants to be in the driver seat. They want services that work perfectly for them not standard off the shelf stuff. Combined technology, customer service, information rich web sites, responsiveness, and reasonable fees for great services provided. Healthcare and Real Estate are the last two frontiers that need to be restructured from a fee and customer service perspective. I’m convinced the answer is outside of the traditional real estate brokerage industry.
Can someone help me in answering these questions?
I feel much better getting that off of my back.
Orajel, The Anti-Rogaine…
Orajel, how Jeff X keeps that lovely X nice and smooth amongst his back hair
…
My first real estate company was a 7% company….everyone was clamoring for 6% and we had to learn to sell 7%! So everyone was “discounting”… then when I moved to Florida the discounters were all out in force… the thing was that most of them were little more than “Flat Fee for MLS placement” for the listing side but they did work on the buyer side. One company kept hounding me to come work for them with a free computer, car etc… but it was too hokey
if you can get past the stereotypes and get past the “I have to promote being cheaper” and get them to see that your real goal is to serve ALL their needs and that your real goal is volume discounting…. like the Costco of Real Estate then you’ll be alright… the problem is most of them turn into KMarts and they never have a blue light special… they are the insidious homes of the overpriced listing that never gets any attention but heavens forbid they reduce the price or pay a commission!!
“I saved $24,000 without paying a scumbag a commission…” oh really?
But isn’t it the same way in any business?
I personally think you can do it easier in Mortgages than real estate… just look at all the banks offering $0 closing costs or No Fee Mortgages… they get you on the other end - wrapping the fees into the loan so you pay more and can’t say no @ closing anyway
Tom - I think Im with you on all fronts.
David - you scare me a little bit….but otherwise I think we are all on the same page.
Question: So how do we communicate this to the rest of our industry? How do we communicate this to all of the consumers? Or do they already know and feel the same way we all do?
Boo
I think it is a matter of not only championing what you are trying to convey in this message but getting others to do so as well…
Start a Facebook group (another one!) and make a blog category about it… and get others to do the same
you should also be doing lead-in pieces to your main site with the same topic on other sites you contribute to
Start by losing the word discount …
EX (residential):
redfin: reduced service brokerage
TRE: Buyer brokerage
century 21:real estate brokerage
sothebys: “luxury” real estate brokerage
trulia: lead source
the word discount does not apply as there is no mandated (benchmark) commission … not to mention, good luck selling a new real estate concept using the word discount … ain’t happenin
Well, put your glasses on because it gets even better.
anyway, so, yes, discount has no relevance in real estate because there is no mandated commission (no benchmark) … so as long as the service is the same, if a brokerage charges something different than the “average” 6% it doesn’t make them discount … and again, it’s not really a word you want associated with your business due to the connotation - hence why traditional commission-based agents like to call us newbies discount
…. but while they whine we win !
Marla - we are going to become great friends!
Lets ride this ‘newbies’ modo as long as we can.
Hi Anthony,
Marla is correct start by losing the word discount. I knew back when most people were still learning how to use email ( 1999 ) that the biggest hurdle will be perception. We knew that the real world is driven by perception.
There are just as many people providing poor service charging 6% as those charging a discount.
This was what drove me to invent and trademark what I call nodiscount process. It was originally developed and tested by investors to circumvent brokers and agents and have since been enhanced to incorporate mls and agent service.
It’s important to note that today’s consumers want to research properties, make, view or compare offers BEFORE they start looking for a specific home; BEFORE they start looking for agents; and BEFORE they start contacting the seller or agent.
It is humanly impossible to provide service when consumers demand service before they speak to a human being. So we invented the automatic way to buy and sell real estate using nodiscount process as the basis of checks and balance.
It will be interesting in the months to come.
Hmm, Sol. You made me have to read that twice. Hmmmmmm.
[...] thinking this may stir up our discount real estate brokerage post again… Permalink by Anthony Longo November 19th, 2007 in Condo News, Real Estate &Technology. [...]