PAY LESS FOR GREAT QUALITY AND RESULTS? YES YOU CAN!
Is it really possible to pay less but still get great quality? What about great results? Is there a connection between the price you pay and the experience you have? Most people have a general belief that “you get what you pay for.” There are tons of companies out there spending millions of dollars to drive that point home.
My wife Vikie and I share a real affinity toward getting every mile out of every dollar. We shop at Winco, Marshalls, and we actually met while I was the store manager of the Boise TJ Maxx! Did you know that every grocery store shelf tag shows the cost per some measurement? They allow you to compare various sizes of an item or across product lines to find the best value. I read them all the time! I’m amazed at the number of times the Family Size is actually more expensive than a smaller size.
PAY MORE AND GET LESS? Sometimes…
My most recent triumph came when I was grocery shopping. I picked up 2 packages of asparagus labeled Buy One Get One Free. They were on a feature table at the entrance to produce and were priced at $5.99 each. I thought, “Wow! That’s a great deal! $12 worth of asparagus for $6 bucks!” So I grabbed 2 and continued my trek thru produce.
Then I noticed the “regular price” for asparagus was $1.99/lb. So I turned the $5.99 BOGO package over and noticed the label showed the weight at 1 lb. I know I’m not a mathematician but even I could do the math on this deal. The cost of 2 lbs of asparagus in bulk was basically $4.00. The BOGO deal was also 2 lbs but even at BOGO, it was $2.00 more than the bulk produce. Not only did I save 33%, the bulk option looked fresher than the packaged option. I later shared the news with Vikie and beamed with pride like I had just finished the Boston Marathon.
If you are thinking about now, “why are we talking about asparagus on a real estate blog?!?” Because it confirms that you don’t ALWAYS get better quality and results by paying more. And in my asparagus example, I would have actually paid more and gotten LOWER quality.
HOW TO SPOT A GREAT DEAL –
V Squared Realty is committed to providing an exceptional experience to homeowners selling their home. We provide a full array of service and marketing support to every client. If you consider everything we provide, you will likely agree that we are certainly a Full Service brokerage.
Three things that make us unique in the market is 1) how we price our services, and 2) the unbeatable level of service provided, 3) great results we achieve. While most brokerages still charge a percentage of the sales price to list homes, we charge by the size of your home. Why the difference? Transparency. Ask the typical homeowner how much their home would sell for in this market. They would give you a range based on their knowledge of the market or maybe they have no clue. But if you ask that same homeowner how big their home is, they can probably tell you to the square foot. When you apply a flat fee to a known square footage, you get a real price.
TWO SIDES TO COMPENSATION
There are two “sides” to a real estate transaction compensation. There is the side to list your home, and the side that compensates the agent working with the Buyer.
A percentage-of-sales-price brokerage may quote 6% or more to sell your home. 3% is intended to be retained by the listing brokerage and 3% is offered to the cooperating brokerage. The cooperating brokerage is the Buyer’s brokerage. The Buyer’s brokerage may be the same as the Seller’s brokerage. It may even be the same agent within the brokerage. When that happens, its called “double ending.”
V Squared Realty determines the square footage of your home (usually based on tax records) and applies a price/sf fee. At the time of the post, its $3.64/ft. That becomes the Listing Side of the total brokerage fee.
In most cases, it may not be necessary to offer more 3% to the Buyer’s Agent. There is a misconception in the market that the “standard” buyer’s agent fee is 3%. Fact is, there is no “standard” fee. We feel the compensation offered should be commensurate with the unique nature of your home and the number of Buyers that it may appeal to. If homes like yours are rare and the number of Buyers few and far between, you might want to offer more. If homes like yours are selling in a matter of hours or days, and there are tons of Buyers in the market for a home like yours, you might offer less.
SHOPPING BROKERAGES
Let’s go through a mock listing presentation and interview with two brokerages – Brand X Real Estate and V Squared Realty. Your home is 2500sf, located in an area of Ada County highly desirable to Buyers. Both brokerages provided a Competitive Market Analysis. Both agree that your home should be listed at $600,000. Homes like yours in your area are selling in a matter of days.
Brand X Real Estate has an office policy that directs agents to charge 6% Total Brokerage Fee to list your home (3% Listing Brokerage Fee, 3% Selling Brokerage Fee). Since their fees are based on the sales price, at $600,000 that’s $36,000 in total brokerage fees ($18,000 Listing Brokerage, $18,000 Selling Brokerage). If your home sold for above list, you would pay even more.
V Squared Realty charges by the square foot of your home. Currently the cost per square foot charge is $3.64/sf for its Full-Service listing fee. At that rate, the listing side of the total brokerage fee is $9,100 (2500sf X $3.64). That’s nearly half the listing fee compared to Brand X ($18,000-$9,100=$8,900).
Based on the speed at which homes similar to yours are selling, we feel there is no reason to offer 3% to the Selling Brokerage as recommended by Brand X. We suggest in your case, you should consider offering 2% to the selling brokerage. At 2% of $600,000, the Selling Brokerage Fee would be $12,000. That is another $6,000 savings in selling fees over the Brand X office policy. So if you list with V Squared Realty, the total brokerage fee is $21,100 ($9,100 Listing Brokerage, $12,000 to the Selling Brokerage). Compared to Brand X, that’s a savings of $14,900! A 41% savings over Brand X!
AWARDING THE LISTING CONTRACT – what you may hear
So you call the Brand X Real Estate Agent and tell them that you are going with a different company. After they press for more information, you tell them its V Squared Realty. After sharing the details of what V Squared Realty’s proposal was, you are presented with the following argument from Brand X Real Estate’s agent:
Brand X Agent: “There is no way a full service real estate brokerage can provide the level of services and marketing that we are offering by charging half of what we charge.”
V Squared Realty Response: Simply compare the features offered in our Full Service listing with any other “full service” brokerage. You will find that you will Save Thousands AND Sacrifice Nothing. As a matter of fact, we have a Written Guarantee.
Brand X Agent: “If you are only going to pay the selling agent 2%, there will be agents who won’t show your home or if they do, they won’t hold the property in a favorable light.”
V Squared Realty Response: First of all, there is no data available to support this claim. At best, that statement is based on rumor and speculation about why other agents within the brokerage feel their homes are getting poor traffic. At its worst, it suggests that agents may be inclined to steer clients away from qualifying properties, or even conceal the property’s existence.
DUTIES TO THE CLIENT – A Non-Negotiable
We feel making such statements degrades and hugely misrepresents the ethics and standards of the professionals throughout the valley. This steering activity, if it even existed in a few agents, is a violation of the REALTOR Code of Ethics AND the agent’s legislated and contractual duties to their clients. They should be reported to the Idaho Real Estate Commission and their local Board of Realtors.
As a client, the agent must promote their clients’ best interests in good faith, honesty, and fair dealing. The agent also must perform the necessary steps to find a property for that meets their clients’ requirements. How would you feel if you found the agent you put your trust in was more motivated by their commission than helping you find your next home?
Based on our experience, homes we list that offer 2% to the Selling Agent still see tremendous showing activity as well as on-line activity. And they sell at some of the highest historical prices in their neighborhoods and many at well above list price. And that is true for our $300,000 listings as well as listings well over $1 million.
FINAL THOUGHT
Most real estate companies in the Treasure Valley are still using the same percentage-based commission structure developed over 50 years ago. Each brokerage has office policies about the system and fees their agents are to charge. Isn’t it interesting that many charge the same for their services in this red-hot market as they did when the market was at its worst? We think you deserve options as well as tremendous value and we are committed to delivering.
Technology and buyer’s shopping habits have changed dramatically and continue to do so. The actual cost to list homes has changed along the way too. The V Squared Realty full service flat fee structure based on the square footage of your home comes from an analysis of the actual costs that go into a listing. The cost to list, market, and sell a home in today’s market really has absolutely nothing to do with the home’s price. We feel the percentage of sales price fee structure is more about convenience and tradition as anything else. It drives the effort to go after high-priced listings. And while there certainly isn’t anything wrong with that, we believe that everyone deserves the highest level of service, support, and results, regardless of the economic category their home may be in.
If you are interested in saving thousands and thousands of dollars to sell your home but aren’t willing to sacrifice anything in service, support, or results, V Squared Realty was designed for you. Call us today for your no-obligation complete market analysis. You will be amazed at how much you can save. As a matter of fact, We Guarantee It. Call us today at 208-870-3062. Or use the Contact Us page.
