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Source of Title Blog

Competition For The Six-Percenters
by Robert Franco | 2007/05/07 |

The existing home sales figures are disheartening, to say the least, and they effect all of us. Fewer home sales means less work for Realtors, appraisers, surveyors, title companies, and abstractors. What will it take to spur more home sales? Perhaps the innovation of some of the discount brokers is the key.

I mentioned one of these companies last week, in 'Selling Your Home May Get Cheaper,' but another company recently made the news. The 2007 edition of the Swanepoel Trends Report ranked Help-U-Sell Real Estate the second best new national real estate franchise brand. Help-U-Sell provides an alternative to the 6 percent commission structure, offering consumer-focused, full-service real estate at a low set fee. According to the company, Help-U-Sell has challenged the commission structure by perfecting a full-service set-fee model and delivering more for less.

Its really pretty simple math. 95 percent loan-to-value mortgage, plus 3 percent decline in home values, equals 2 percent in equity. Any second-grader could tell you that 6 percent is more than 2 percent... so how can any of these people afford to sell? Well... a discount, flat-fee, real estate brokerage may be the only answer for many.

Even for those who have the equity, six percent is a but much to swallow for many home sellers. From an article in Realtor Magazine Online, one discount broker had this to say:

We often get customers who were listed with a traditional broker, but the listing expired. The sellers don't feel as if they got the service they deserved. Very often, the salesperson they were listed with is a name you'd recognize, a high producer.

But the sellers say, "The salesperson didn't do anything. For the open house, the salesperson sent someone else." The sellers’ perception is that they didn't get the service they expected. I hear it time and again.

So the sellers are happy to come to us---and pay a lot less.

I have a friend who had a similar experience recently. He hired a traditional realtor to sell his $400,000 home. He said that it was advertised very little, aside from the brokers own publication, and they held two open houses. The Realtor he hired didn't even show up to the open houses. She sent her assistant. He was frustrated at the thought that she had the potential to make a $24,000 commission on the sale, and he didn't see $24,000 worth of effort. Where is the value in that?

He cancelled the listing when it was up and has decided to sell it himself. He is going to purchase a domain name and put up a Website devoted to the sale of his home, with much more than the few pictures the Realtor had on their site. He plans to advertise the home himself in the real estate section of the local newspapers in the area. If he is successful, he can sell the home for less and still net more money from the sale.

But if that doesn't convince you of the tremendous market for discount brokers, maybe this will. About a year ago I was shopping for used car. I spoke to one of the salesmen at a dealership about what I do for a living. He told me that he was getting into the real estate market. He and a friend were getting ready to buy a Help-U-Sell franchise. I found that very interesting... a used car salesmen was enticed by the concept of selling homes with a discount brokerage.

The traditional real estate market is changing dramatically. While it may not be good news to the traditional six-percenters out there, it may be the best thing that ever happened to the real estate market!

Robert A. Franco

Source of Title Blog ::


Categories: Realtors

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Source of Title Blog

Robert A. FrancoThe focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco



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