What are you doing to keep discount listings from killing your market?

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December 03 2010 - Cincinnati
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Profile picture for the_country_hick
Since discount brokers risk making real estate sales people look almost affordable I can do only one thing to keep them in check.

I will look mostly for FSBO properties. That way the super high full commission brokers seem to expensive to use and the discount brokers will seem more expensive that FSBO does.

I see no way to convince a flat fee broker to charge even less. We have one here that advertises $4,000 to sell your house. Several years ago one charged $995 to sell your house. I wish they would come back.

Is the above facetious? Yes it is.

I think the question asked was facetious also.

Any business has 2 and only 2 options.
1 make enough money to stay in business.
2 not make enough money and go out of business.

If a flat fee service takes over they have a better business model.
If they fail their business model is flawed.

There is nothing legal anyone can do to stop a competitor except for out-competing them. If you offer more value for the $ you win. If your competitor offers more value for the $ they win. You should already know that the best agents in town take business away from the lesser agens in town. This is the same thing. Welcome to american business.
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December 03 2010
Profile picture for SoCal_Engr
"In most cases, the negotiation process may impact up to 5% of the homes value. The biggest mistake homeowners make is choosing representation based on a discounted commission but losing three fold the commission during the negotiation process."

Can this really be backed up by objective numbers?
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December 03 2010
Profile picture for Fxdlmatt
How has the proportion of discount listings changed in the last ten years? I assume they are increasing, but I was wondering if the bubble changed the dynamics? Matt
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December 03 2010
Simply put, you get what you pay for...especially in today's world.
Sellers who hire a discount broker may think they are saving on the realtor's commission, but what they don't know is that they could also be losing thousands on their own net profit. Many may not clearly distinguish the extent of the services they offer, especially when compared to a traditional agent. There may be discount brokers promising full service on listings while accepting lower commission rates, but past experiences show that not all promises are fulfilled as expected. After all, businesses need money to run and need to cut costs if cash inflow is reduced. Those cost cuts are on creative marketing and advertising that actual full service brokerages provide. Reduced services will often lengthen the time a home is on the market. Furthermore, the agent may not provide any advice throughout the buying and selling process, which is often very difficult. The negotiation of a sale is crucial...sellers need someone strong, knowledgeable, and experienced to fight for the best possible terms for them.
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December 03 2010
There is a certain segment of the population that shops by price (commission) and a certain segment that shops by value.  There is room for discount and full service agents.

The price (commission) sellers assume that discount agents sell homes for the same price as non discount agents and assume they save the difference.  Although this can happen, it is the exception rather than the rule.

Reduced commissions mean reduced marketing budget, which means reduced exposure, reduced showings and reduced sales.  The end result is reduced prices for sellers which does negatively affect the market.

It does not have to affect great agents sales, we list and sell them after the discount listings expire. 

This market is hardly a time to reduce marketing costs, it is a time to increase marketing costs.

Think about it.  Who discounts commissions to get business?  Those who can't compete on quality and effectiveness of service. 
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December 03 2010
In most cases, the negotiation process may impact up to 5% of the homes value. The biggest mistake homeowners make is choosing representation based on a discounted commission but losing three fold the commission during the negotiation process.
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December 03 2010
 
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