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Seeking opinions (Pro's and Con's) about 1% realtors (Redfin etc.) for Selling a owner occupied home

I am trying to summarize my friends argument that 1% realtors are equal to a traditional realtors (of 2.5% OR more)

a. 1% realtors do the same thing what other realtors does - they market, they put out right signs where possible & do legal docs
b. Both listing agents don't do much after putting the home on sale other than holding open homes - even these open homes are outsourced to junior realtors
c. Gone are those days where 'realtors negotiate better' because, there is this thing called 'internet' and specifically Zillow, Trulia etc. can clearly point out comparisions including location, sq ft, amenities etc. There is also this forum (such as ask a question here) that can be used to inquire 'desirable or not' type questions
d. Realtors have the same network and encourage each other in all ways to close the sale - regardless of selling agents 1% or 2% or 2.5% or 3% or 3.5% or whatever.

However, I fail to agree with him and I am not sure why. I am not feeling confident. Opinions?

  • January 17 2010 - San Jose
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Answers (14)

"1% realtors do the same thing what other realtors does - they market, they put out right signs where possible & do legal docs"

While the ACTIVITIES may seem the same, the RESULTS are drastically different. 

Have anyone pull numbers from the MLS and compare you local discount or flat fee brokers vs. your full service companies:
- compare % of cancelled and expired listings
- compare price per square foot
- compare sales VOLUME
- compare sales UNITS
- compare avg price sold

The numbers don't lie. Profit margins are needed to sell a home for top dollar and 1% usually isn't close to break even unless volume is there. 

The most expensive resource an agent has it their time. How do you spend less time on a listing? You sell it for low or FMV. The buyer feeling like they got a "bargain" cures many issues in an escrow: negotiating repairs, appraisal, etc. The buyer is now a COMMODITY and they can be switched if they don't perform because you have others lined up to take their place. 

On the other hand, selling a home to the ONE buyer who was willing to pay substantially more than the pack requires lots of attention and requires an agent to pull ALL stops: correct negotiating (where saying one thing or accepting a counter too early or countering too high can cost you thousands), handling buyer's remorse, appraisal issues, contingency timetables, occupancy options (leaseback/contingent on purchase) etc. 

All those mentioned above can KILL the deal with one little mistake. That takes more attention than most think.
  • June 04 2013
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  • May 29 2013
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Your question is difficult to answer because it lumps agents together, good and bad, regardless of the commission.  There are 1% agents, as you put it, that do phenomenal jobs and there are "full" price agents that perform very poorly.

I am one of these "discount" brokers everyone seems to want to convince you does not or cannot provide the same level of service as a "full" price agent.  I worked for one of the major real estate companies and provide the same services now as I did then, if not more.  I am able to this by restructuring the real estate business model, reducing overhead, and embracing technology.  I am also a licensed California attorney and can negotiate a transaction.  The bottom line is that all agents are different and there are good ones and bad ones no matter the commission charged.  If you are looking for an agent, whether as a buyer or a seller, you should interview agents to find the one that you trust and will perform for you.  Do not dismiss an agency just because they are labeled as a "discount" broker.

What I do is apply an hourly rate for seller services with a cap on the accrual of fees to less than the industry standard 6%.  If the home sells fast and easy, the cost is less.  If longer and harder, the more the cost,  I also do not double my commission if I represent both sides.  The result is an income of a successful attorney while still saving my clients money. 

For buyers, I do not charge the hourly rate because it does not work as well as it does for sellers.  Instead, I provide a small rebate at the close of escrow and will generally provide a home warranty. 

  • February 05 2010
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You can do all the work and let some one to put on a MLS for $325. Guaranteed for a disaster.

When you negotiate for commission listen to what he offered other than MLS and internet advertisement. How much is he going to foot the marketing bill?

If you compare different commissions you will be surprised some offer a lot more than others. For example, no sell no stop open house or advertising.
  • January 25 2010
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keep in mind... sometimes the money you save on commission is lost in poor negotiating and pricing skills... if this business was easy ... everyone that got a license would still have instead 1/2 have gone the wayside and back to their JOBS... sales is not for everyone and not everyone can sell...
  • January 25 2010
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And, they do. In fact, I have a friend who told me, he's been hearing that some people are talking about someday . . .
  • January 25 2010
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"and, jkonstant, that's annoying as heck!"

It sure can be. On the other hand, anybody who has done this for a while has been the beneficiary of listing day one and collecting their paycheck in fewer than 30 days.

There are plenty of limited service/flat fee/referral agency models and agents out there with success stories and very happy sellers and buyers. Anybody can tell stories, real, exaggerated or fabricated, about horrible experiences.
  • January 24 2010
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A friend told me that in about 10 years there will not be any "brick and morter" RE offices any more. He says that everything will be internet driven like  the agency you mentioned.

No offense to Zillow, or any other RE website, but turning to Zillow for negotiating wouldn't work.

I had a listing a while back that was appointment only, and the owners want me present during every showing. (valuble art ect...) It was a tough gig. We did sell and clients were very happy, but could an internet service do that?

I have clients that tried to reach an internet agent whose name was on a sign in Millbrae Ca last year, it went to a home office answering service. When I tried to call same thing, they took a message, and we didn't hear back. When I complained, and wanted to speak to the Broker, the answering service person laughed at me and said "Get in line for that one sister!"
  • January 23 2010
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Its really hard to say. Its all about the Realtor and not about the company. That being said, if someone is working for 1%, they may not be giving you nor your property the attention it deserves to get it sold QUICKLY saving you money in the long run because you won't continue to pay more months of mortgage payments, taxes nor insurance.

Getting it sold and saving on commission is one thing, but getting it sold FAST is another.
  • January 22 2010
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SPAM
  • January 22 2010
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- Every day homes with near zero marketing effort or expense sell instantly while others with extensive marketing and expense languish without interest.

 and, jkonstant, that's annoying as heck!

The thing is, the people who get the best results, over time, are the people who do the best work. I am told that anybody can go to a card table and win a few hands, but if they stay long enough, the better players will eventually clean them out.

 

  • January 18 2010
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There is no right or wrong answer to your question. Every day homes with near zero marketing effort or expense sell instantly while others with extensive marketing and expense languish without interest.

All real estate models offer something. While your odds of selling do improve having a full service brokerage, it is still not a guarantee and going full blown FSBO might do the job too.

Examine all the options available to you and decide what will work best for your situation. Whatever you choose, I suggest a buyer's agent/broker commission at the local competetive rate.
  • January 18 2010
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In my experience, 1% Realtors are all about volume and it is hard to get in touch with them and worse yet to get them to do much more than put a sign in the yard. If I take 3 listings at 3%, the 1% agent would need 9. If the do everything I do to promote a listing, they would pull their hair out. If they are solo, I doubt they have the marketing budget or the time to treat all listings the same. There may be some very good 1% Realtors out there; I just haven't met any yet. This is just an opinion based upon my experience only.
  • January 17 2010
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Apparently, Trulia has more interested respondents than Zillow does!
  • January 17 2010
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