Bye, Bye Discount Brokers
We may be seeing the demise of many discount real estate brokerages as a result of market changes. A search of the Manatee Multiple Listing Service shows less and less listings being taken by so-called "discount brokers".
What's going on? Why are more sellers choosing full service Brokers? I've got a few ideas.
1. In our current market we have almost 600% more homes on the market than we did in 2005. It was so easy to sell a home then. All you had to do was stick a sign in the yard and put the listing in the MLS. It was sold in a matter of days or hours. Now, it's taking months for houses to sell. Brokers must have a detailed marketing plan, spend a lot of money on marketing, and have the staff to service and sell the listings. Discount brokers generally do little marketing, spend very little on marketing listings, and run a lean staff with little "service" provided. Most sellers today recognize the difference.
2. If you were a real estate agent and saw that the cooperating listing office was offering 1% or 2% commission compared with others offering 3-5% commission, which listing would you show? Sellers choosing an agent offering minimal compensation may discover their home isn't shown.
3. Desperate real estate agents are taking overpriced listings and discounting their commission just to get the listing. Consider this, last month there were 255 single family homes sold among approximately 3000 agents in our local MLS. There's a lot of hungry agents out there. I've heard of some Sellers who are shocked to find out their agent has now left the business. Discounting commission is a downward spiral to a failed business. Most sellers recognize this and are choosing full service brokers today.
What's going on? Why are more sellers choosing full service Brokers? I've got a few ideas.
1. In our current market we have almost 600% more homes on the market than we did in 2005. It was so easy to sell a home then. All you had to do was stick a sign in the yard and put the listing in the MLS. It was sold in a matter of days or hours. Now, it's taking months for houses to sell. Brokers must have a detailed marketing plan, spend a lot of money on marketing, and have the staff to service and sell the listings. Discount brokers generally do little marketing, spend very little on marketing listings, and run a lean staff with little "service" provided. Most sellers today recognize the difference.
2. If you were a real estate agent and saw that the cooperating listing office was offering 1% or 2% commission compared with others offering 3-5% commission, which listing would you show? Sellers choosing an agent offering minimal compensation may discover their home isn't shown.
3. Desperate real estate agents are taking overpriced listings and discounting their commission just to get the listing. Consider this, last month there were 255 single family homes sold among approximately 3000 agents in our local MLS. There's a lot of hungry agents out there. I've heard of some Sellers who are shocked to find out their agent has now left the business. Discounting commission is a downward spiral to a failed business. Most sellers recognize this and are choosing full service brokers today.
posted by Dan Forbes at
1:19 PM
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