- 1 year’s tuition with room, board and flights home from Princeton
- A 2008 Mercedes GL320 CDI SUV
- A10% down payment on a luxury condo with panoramic views at the Rivage Tower in Panama
- A month’s vacation at Frégate Private Island in the Seychelles
- 1 pear-shaped 4.25 ct diamond ring flanked by 2 tapered baguette diamonds at Doyle New York
- A Montessori education for a child for their first 8 years of schooling
- Marriage counseling 2 days a week for the next 5 years.
- A fully remodeled kitchen
- A liver transplant
- The commission to sell my home at 6%.
The argument over protecting real estate commissions will continue until the services performed by agents are viewed by consumers as being equal in value to the other luxuries in its class.
This has nothing to do with Redfin and their right to price their service anyway they want. This is about the traditional model steeped in yesterday, unyielding to change and unwilling to put a ladder of benefits in place that resonates with the consumer.
Ask 10 consumers to:
- Describe the benefits of a stay at a 5-star hotel.
- Define the experience of driving a Mercedes.
- Speak of the miracle that is a liver transplant.
If you asked these people if these things are worth their high-dollar price tags, most will say yes. It’s why the Wynn Hotel in Vegas and Macau are both sold out for months in advance and why Doyle of New York gets 50% more than list price in their estate auctions.
What about real estate services?
Can consumers define what agents do, differentiate one agent from another or one brand from another, describe what a luxury real estate experience would be like or describe what innovations they believe Realtors bring to the table?
When they can, the industry will no longer ever need to bother justifying itself or worry an iota about Redfin. Ever.
- Davison
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The biggest challenge to commissions isn't discounters like Redfin, it's agents who can't explain the value of their own services and Associations that don't discuss the value of services because their membership includes discounters.
Every time I read or see a story about a discount brokerage, there is a quote from a consumer saying "I can walk people through my house." That should be a red flag to real estate professionals and Associations that consumers don't understand the real estate sales process beyond holding open houses.
Unfortunately too few agents can illustrate their own value. Associations have historically focused on marketing ethics, a strategy that missed the biggest threat to the income of their members and failed to resonate with consumers.
Everyone says they have ethics. Learn to differentiate on value or you will end up having to differentiate on price until you reach the point where you become little more than a commodity with a fixed price, like the 1% crowd.
Regarding ethics, I think Real estate needs to reconsider hanging their entire hat on this hook. Between Tyco, WorldCom, Martha Stewart, Enron and with the DOJ biting at NAR's behind, placing all the of the Realtor's eggs in the ethics basket seems misguided and disconnected from reality.
As for value, the sad thing as we see it is that there is great value sitting there that is by our measure totally untapped by everyone.
This industry needs to quit deluding itself with the idea that "we just need to better communicate and package the value of our services." It's a complete crock– there is simply no WAY the work involved in 99.9% of all transactions will ever be worth $66,000!! Folks– it is ludicrous! The effective hourly rate is insane! And for a set of services and tasks that's becoming more automated, digitized, and commoditized by the day.
The arrogance and sense of entitlement this industry has towards such an outlandish fee structure is flat-out unethical, and flies in the face of how almost every other service industry works and is valued. More and more Americans are finally realizing this, they're disgusted by it, and are just plain FED UP with the hollow justifications. The writing is on the wall– it is PAST time for real estate to aggressively move to a rational, fair model.
So let's quit trying to find ways to somehow defend that the everyday sale of a 1M house is worth the same as 8 years of private education for a child, or almost TWICE the per capita ANNUAL INCOME in the USA!!
The landscape is filled with value inconsistencies Will, not just in real estate. For example:
- Bottled water that cost more per gallon than refined gasoline.
- Despicable corporate executives with salaries and perks and grandiose lifestyles earned from over priced products.
- Athletes
Few in the public complain about their out of pocket contribution because somehow they believe in the value.
Take a UFC champion that beats people up for a living. Yet millions forked over $40.00 for the Paper View fight two weeks ago. Would the public pay that see me debate one of them? I doubt it. No value there.
That's how I see it in real estate. Few prove value because they hide it behind cheap websites, inane blogs, lack of listings, no pictures or crappy ones, horrible marketing and no leadership.
Realtors that provide something different — something great —something professional — you'd be hard pressed to find a customer of theirs who doesn't swear by they or say their fee was well worth it.
I'm one of those people. I own a home here in CA – an investment – that I really want to sell. But I won't list because I have yet to locate one agent that actually delivers a 6% service. But if I could find someone who could price it right, not blow smoke up my ass, market it right and get that puppy sold in 60 days, I'd gladly write a 6% check.