Volume 128 - We Don't Dance Alone!
I received some lively responses from my "salsa" piece before Winter Break. So having bragged just a bit about my dance moves, I feel compelled to now admit that my tale wasn't entirely 100% accurate (oh no!). In fact, I left out a very important piece of the story (ah ha!). As with all good collaborations (dance and otherwise) having an experienced partner makes ALL the difference in the world. In reality, I only dance well with those who know how to lead! The truth is, we don't dance alone!
Nor do we buy or sell real estate alone - although some Internet discount houses would have you believe it's a good idea to do just that. Moreover, they entice you by offering a juicy carrot: a rebate on the purchase or the sale of your home. Wow! That sounds attractive - doesn't it? Until you break down their offer and realize that a 20% rebate on the agent's commission (which is typically split with a broker) amounts to approximately .03% of the overall purchase price. How's it sound now? Not such a great deal after all - is it? Rebate or rip off?
Consider now the real cost to the buyer for this minimal benefit. . .Recently I had clients that were interested in a condominium purchase in Albany (list price: $485,000). When it became clear that they were the only buyers presenting an offer in a timely manner, we talked through their options and decided to submit at $10,000 less than the asking price (not atypical in this more conservative marketplace). Had they used a discount brokerage instead and paid full price with the hopes of receiving 20% back on their purchase, their rebate would have amounted to approximately $1,620. Working with The GRUBB Co., they realized an additional savings of $8,380 (which should come in handy with moving and closing expenses.) Rebate or rip off? Now imagine how this plays out on properties that list between two to three million dollars! Last year, savvy clients I represented offered several hundred thousand less than asking on a multi-million dollar home here in Piedmont and were ultimately successful in their pursuit, largely because I was able to reset the seller's expectations. (This can only happen with a complete understanding of the local marketplace and a tremendous amount of knowledge. ) In this example, there's NO way, a rebate would have ever come close to what these buyers realized by presenting an educated, sharp offer instead, nor do I believe that an online agent would have had a clue! Rebate or rip off? Consider as well, that the sellers typically pay BOTH sides' transaction fees. As a buyer, you are usually NOT absorbing this expense (unless you choose to do so as a tactical strategy). Add in any additional savings you might receive during inspection and negotiations and I have to wonder why any buyer in his or her right mind would ever choose online or discount agency? (It's those pesky carrots!) Plainly speaking, it's just not a good idea. Nor is it a good idea for sellers either. "For Sale by Owner" properties (FSBO's in real estate parlance) rarely have the overbids one sees in a correctly marketed and fully exposed listing! Why? Because the vast pool of qualified buyers (controlled by the Brokerage community) have been excluded by this foolhardy "do-it-yourselfer!"
When you focus on eliminating the broker's commission percentage of 6%, you often lose sight of the much larger 94% you stand to gain! (In other words, "Don't lose the forest for the trees!") In a more challenging marketplace, I find that positive results come from a well-choreographed marketing strategy and time-tested experience and execution. Working in this more thoughtful framework, you stand a far better chance of not only realizing a substantial savings on your purchase (as illustrated above) but more importantly, of successfully getting into contract on the property in the first place! Remember 20% of nothing, still amounts to NOTHING! Rebate or Rip off?
Given the time, energy, legalities and expense involved with purchasing or selling a home in today's increasingly litigious world, it behooves you to work with a professional. (Save the carrots for bunnies.) As with any good collaboration (as with any good dance) it takes two to tango. Given the choice, would you rather dance with Fred Astaire or Bugs Bunny?
The choice seems rather clear. Let's Dance!
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Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.