Do Low Cost Real Estate Agents Deliver Poor Service ?
Do low cost real estate agents deliver a lower quality of service? Here’s what a low cost real estate agent has to say about the topic.
How do real estate agents get paid?
Traditional real estate agents will generally charge a percentage of the selling price of a property. This is known as the ‘commission’. This fee is negotiated at the time of listing between the seller and the agent.
Obviously, the lower the fee you pay, the more you will have in their pocket at the end of the process, so it makes sense to negotiate strongly with the agent to minimise the fee you’ll pay. Or does it?
Real estate agent scripts and dialogues
Real estate agents deal with fee objections every day, so their trainers and coaches have developed ‘scripts and dialogues’ to overcome fee objections. Typically a real estate agent, when faced with a question about lowering their percentage commission, will say something like;
“Well there are no trade secrets; we all know each other’s fees in a competitive market. Knowing that to be the case why didn’t XYZ simply match our fees rather than discount below us? Is it because they cannot match our results? We won’t discount your price to get a sale with a buyer tomorrow … and from that same position of integrity, we won’t discount our fees to get your listing today! We would rather you hired us for our negotiation skills rather than XYZ for their discounting mentality… ” – Rik Rushton, Elite Agent Magazine
Should vendors negotiate hard to get the lowest commission rate?
“Consider the real estate agent who is selling homes for customers with different commissions. The agent is more likely to spend their time on selling the homes which deliver the higher commission for them. In other words, sellers get what they pay for.” – Josh Rowe, realAs.
“It is not necessary that a real estate agent who offers a lower commission will be a reliable agent. It is possible that such an agent is not as good their at their job as they should be and they will fail to get you a good market price on the property.” – Josh Rowe, realAs.
Whilst these are certainly good points to be considered, not all real estate agents with lower fees are necessarily bad at their jobs.
Non traditional real estate agents can cut costs without compromising on quality
Real Estate is no different to any other industry, in that it has been subjected to dramatic changes in the past 10 years because of the rise in popularity of the Internet. As these changes have come into place, some real estate agents have adapted and created new non-traditional agencies. These technology savvy real estate agencies don’t have the same expense structures that traditional agencies do.
Have you ever noticed how most traditional agents are located in expensive retail shopfronts? They do this for a reason – it makes them highly visible to locals, and makes them appear large and successful, making them attractive to home sellers. But their great location comes at a huge cost to them, a cost they need to recoup from their sellers. The problem is, their fancy location doesn’t add one cent of value to the homes they sell. So you’re paying a higher fee for them to attract new sellers, not buyers.
The point is that an agency based in a ‘low rent’ location will attract the same number of buyers to a property (all other things being equal), but can afford to charge a much lower commission, because they don’t have to deal with the huge rental overhead of a traditional agent.
No franchise fees, greater reliance on smart-technology and less reliance on print marketing are other factors that can make non-traditional agencies a more affordable alternative without there being any compromise at all on the level of service, negotiating ability or the ultimate selling price of the property.
Savoy Real Estate
David Hooper is the founder of Savoy Real Estate, a seriously different real estate agency. Savoy Real Estate has changed 5 things about the way traditional Real Estate was done to save you thousands of dollars, and to ensure you’re dealing with an agent who is ethical and works hard.