Friday, June 8, 2007

Flat Fee Vs Full Service Realty

I've got both of my houses listed for sale on the MLS through flat-fee listing services. The first (the fixer-upper) is listed through some outfit in NJ at a cost of $299. They do not do much, but their web site is easy to use and I can update information any time I please. I had about half a dozen calls from Realtors early on, but have not had a call on the place for over a month despite a price drop of $5k. I thought I had an offer through one agent from some women in NYC. But she proved to be a flake and never delivered the contract though we had agreed on a price.

I've listed my second property through a local flat-fee listing service which cost me $695. Their claim is that they are an upgrade to the cheaprer flat fee listers since an actual agent came to the house and took pictures. There's a lot of nice pictures on line and good write-up as well. They will advertise in the local paper as well, which @ $100 per week is a big expense. So far though I have not received a single call from a Realtor for that house.

My margins are pretty slim on the two houses and a 6% commission is going to take a big chunk of any profits I make. I've read some comments about Flat Fee Vs full service here and here. I'm really struggling with this. It would not surprise me if Realtors avoided these homes as people tend to want to punish what they see as competition. I'm sure Realtors deserve a good commission when they are working with clueless people, but I have bought and sold over 20 houses now and know more than many average Realtors. (I don't want to come off as cocky, but I am being forced to run a Short Sale offer through an experienced Realtor now and am finding that they are clueless in special circumstances like this.) So why should I pay $13,000 in commissions? A study in Madison seems to indicate FSBO sellers keep more profit but have longer holding times.

I think that by the end of the month I will switch to full service Realtors if I don't start seeing some action, but this sickens me to say the least.

2 comments:

Chris said...

What comission are you offering to the buyers agent?

That may make a difference. I know a full service listing with 6% commission is tought to swallow sometimes. Instead just up the commision 1% or so to a buyers agent, or offer a bonus of a few thousand dollars. This way realtors will be more enticed to show your property if they know they can make earn a higher commision than a normal listing.

I would also network with brokers and realtors to let them know your property is available and you're offering a higher commision than normal.

From what I have been told by succesful brokers and realtors, the majority of leads come from the internet(local MLS, or sites like realtor.com), followed by newspaper, followed by for sale signs.
I think you are on the right track, now it's just a matter of time (as marketing professionals call it "the drip" campaign).

Good Luck!

Paul said...

3% commission right now. Newspaper advertising here is useless - I've probably gotten 5 calls from 20 ads placed over the past 2 years, none worthwhile. Signs are my #1 source of traffic every where I have tried to sell. The MLS is a distant second so far - close to news ads.

Maybe higher commissions will work or a bonus