The advent of internet technology is changing the residential real estate business on a fundamental level as technologically sophisticated discount brokers have started to take an increasingly larger slice of home sales pie. Continue reading
We received this on Homefeedback about a listing that Steve Haas, a local real estate agent in Atlanta had shown. We actually send the feedback about showings to our clients. Keep in mind that Steve wrote this directly to my homeowner who is a licensee of my business model in Charlotte! Steve has bad timing too and seems to suffer from the old foot in the mouth syndrome that I get myself into sometimes.
His “feedback” that he left under Additional Comments about the house: You being a discount broker, I only show your properties when a client specifically requests to see one. My personal opinion from the past 10 years is that you charge 3% + junk fees and provide the buyer with zero guidance once listed.For an additional 2% sellers could have a fiduciary agent who can be held accountable and provide local insight and knowledge through the entire transaction including negotiations and marketing dollars.Website states how many homes you have sold but I would be curious about how many listings are pulled after having no success in selling. Trust me I am not bitter, I am just giving you my feedback as requested
My response: Steve:
Thanks for your “feedback” that you sent to my client regarding their home. In trusting you that you are not bitter, I want to get some clarification on a few things so that I can seriously consider your thoughts and see if I can make some improvement to my business, which I take is what you are attempting to give me as feedback.
I looked up fiduciary agent to make sure that I was not missing something in my clarification of it. This is what I found in the dictionary and in real estate law.
” A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.”
A fiduciary duty is the highest standard of care at either equity or law. A fiduciary is expected to be extremely loyal to the person to whom they owe the duty (the “principal”): they must not put their personal interests before the duty, and must not profit from their position as a fiduciary, unless the principal consents. The fiduciary relationship is highlighted by good faith, loyalty and trust, and the word itself originally comes from the Latin fides, meaning faith, and fiducia.
When a fiduciary duty is imposed, equity requires a stricter standard of behavior than the comparable tortious duty of care at common law. It is said the fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, a duty not to be in a situation where their fiduciary duty conflicts with another fiduciary duty, and a duty not to profit from their fiduciary position without express knowledge and consent. A fiduciary cannot have a conflict of interest. It has been said that fiduciaries must conduct themselves “at a level higher than that trodden by the crowd” and that “[t]he distinguishing or overriding duty of a fiduciary is the obligation of undivided loyalty.”
Your first statement in your note states: “You being a discount broker, I only show your properties when a client specifically requests to see one.” Looking at the definition of a fiduciary agent as stated above, how does that fit the description of someone who is extremely loyal to the client and does not put their personal interest before a client? I know that when you are working for a client, the job of the agent is to find the best home for the client, no matter who has the house listed, and whether or not you like the person or concept that has the house listed. I take it by your passion in writing me that you work on behalf of your clients, yet your comments are putting your own personal interests of not liking discount brokers before your client’s as you are not promoting discount broker’s listings to your clients unless asked.
My other concern is that you are a Realtor member bound by the ethics of that association. One of the ethics is that you will not falsely state things about competitors. It seems by your stated conversations with your friends that you guys are just spouting information that you made up, and did not research specifically about me and my business. That is dangerous and a violation of competition law, and on a lesser note, the Realtor ethics. And, I know that you have not spent much time learning about my business model at Duffy Realty because if you had, you would know that we don’t charge 3% + junk fees. We charge $500 plus .0034, just like all 10,000 of my listings have paid. Some have elected to rent a lockbox and get a virtual tour, but that is about all. No big secret here. No disclosures needed about hidden costs. These are the costs.
The seller is in charge of setting the commission that they want to pay a buyer’s agent and most of them elect a 4% commission. This fee of $500.00 includes 70 points of marketing, most of which I pay a lot of money to medias to advertise my client’s listing on. However, something that I don’t think you are aware of, we do coach our clients 45 hours per week and have a contract negotiator on staff, in office, 7 days a week for 80+ hours. As a result of our expert in every department instead of a one-man show, we (Duffy and our seller clients) have sold over 7,000 listings in 7 years.
I pay $28,000 a year to add my clients to Realtor.com as a showcase listing because my clients and I believe it brings attention to their home – the ultimate statement of marketing. I then spend additional hundreds of thousands of dollars in website fees to add my homes to almost every home related site in the industry. These include Frontdoor, Zillow, Yahoo, Edgeio and more. My website alone receives over 1.5 million hits per month and most of those hits are buyers. Of course to manifest that type of hits, you know there is a cost of money and time involved.
I also promote my listings with directional signs, yard signs and heavy radio and TV advertising. As a matter of fact, my accountant just reported that I spent over $600,000 doing just that last year alone! I have spent millions of dollars and thousands of dollars over the last 7 years educating the public about houses for sale and real estate in general. That is something that most agents wouldn’t dare spend their own personal resources doing. The reason that I believe agents won’t spend their money and time is that a homeowner may not cooperate by lowering their price repeatedly and they may decide not to sell at all. I get that. I have heard that from agents like you and your friends at cocktail parties. I just disagree with the thinking.
My listings are posted on for sale by owner sites because there are 4 types of buyers out there and some just don’t like agents. But more importantly, I give them rights to help me market their home to friends, family and neighbors and if an agent is not involved, they don’t pay the buyer agent fee which happens at least one-third of the time. As a result many of my homeowners are much more involved in the process than other stagnant homeowners. For example, your 3 listings that you have encouraged to drop their price $50,000 dollars to almost $100,000 after they have expired over and over. What magic do you have to offer them? They have lost almost 15% of their equity and probably have exhausted all of yours and their ideas and still have not sold their home.
To you a price reduction means hundreds of dollars in a lowered commission. To the homeowner it means thousands of dollars and over 10% to 15% of their equity in price reductions alone. So the question is, how has your coaching of the Atlanta market helped them? They are still for sale and most likely won’t like the offer that they get on their home because they are not only paying you 2.5% more to market their home than they would pay me and they have taken a significant price reduction.
Marketing is not the only place that my service beats yours. I have a 500-page customer website that helps my clients make rational decisions that they won’t regret. When they want to lower their price we give them the pros and cons and teach them how to yield the highest spread of buyer searches by using the internet strategies that many agents, including yourself have not spent the money or time to learn. You see something I know for sure is that once a price is lowered, we can not take that action back. My thousands of hours of learning the internet has shown me that homes are archived in websites and that is very dangerous to a homeowner who has regret.
I understand your comment about the Atlanta market but I also know that neither you nor I have magic that we perform to get listings sold. We also don’t make the ultimate decision about what a homeowner is willing to sell their home for and take as profit or a loss. So, whether a market is good or bad, our jobs are not rocket science, it really is simply a science of marketing in a shotgun, consistent approach. I think I go way beyond the call of duty to do this. As a matter of fact, one of my clients said today that I do far more than agents who charge far more.
One other comment that I am trying to wrap my head around is that you say another agent (or concept I think you mean) would be held accountable for the sale of the home. Do you mean that you pay your clients for their loss of time or money if you don’t sell their home? Or if they decide that they want to go higher in price after you lose your listing and they are archived at that price? How exactly are you held accountable? Isn’t the whole concept of the way that traditional brokerage is handled is based on some sell, some don’t so you have to charge more to everyone based on the fact that you don’t get paid on some?
As I revisited and re-read what a fiduciary relationship means I feel that my model is closer to the relationship that you were talking about than your model. You see our motives align with the seller. We have been paid for our marketing and can allow the seller to dictate their own strategy with our help. We are not in a rush to get to the lowest price possible and to exhaust all hope of selling so that we can move on to a “good” property with a motivated seller. We aren’t asking our sellers to lower their price to their rock bottom costing them 10 to 15% of their equity and then taking a huge commission. We actually are loyal and giving them all the pros and cons with no bias to our outcome. I am just not sure if the other real estate models can say the same.
Thanks for the debate Steve. Maybe we can meet one day and really have a long conversation.
My goal in this message back to you is for you to see that I don’t do my business model for the easy way out, I do it because I too, like you, believe in what I do for my clients. I appreciate that you have passion for what you do, that is what makes us care about the profession of real estate and I am proud to say that we have met.
What is a Discount Realtor?
I hope that everyone knows what a Realtor is, but in case you are not familiar, a Realtor is an agent who pays for a member designation from a club if you will of agents and brokers who are sworn to abide by a certain code of ethics. Any real estate agent and broker can be a member and most agencies encourage such.
I chose this topic of discount Atlanta realtor based on search terms that the public uses when searching to employ an agent to sell their home. But I am curious about how this term came about.
I have found that most of the public believes that a Realtor is every agent and every agent is a Realtor. Almost as if the designation of Realtor is the title given to anyone who passes their real estate license. I know the public is confused because I have asked them and I have never been asked if I am a Realtor.
But the bigger term that I find interesting is the word “discount”. What is discount? Webster’s dictionary defines it as: an amount deducted from the usual list price. Here is my point. Real estate commissions are not standard. In fact, fixed listing commissions are illegal. So, if discount means deduction from usual list price, i.e. commission price, and the term usual discount is not even legally possible, then the word discount can’t be applies in real estate.
So, I believe what the public is looking for is someone who is flexible in their commission or someone who is offering a commission plan that suits what the seller thinks the commission should be? And the only broker and their agents that would not fit in the category of discount broker or discount agent would be the broker and their agents that charges the highest commission ever heard of and paid by a client. What is that? 8, 10 or 12% listing commission. Once again, since there is no standard pricing, no one knows what that price would be. I have heard of some of those being quoted, so really anything less than those lofty prices is established as and should be considered a “discount”. So that really makes virtually every agent a discount agent.
Now, no where in Webster’s definitions of “discount” does it say that you get less service than what is provided to those who pay the highest price. Nor does it say that you get less of a product, it just says that “discount” means that you pay less than usual price.
I think that before we confuse the public anymore with words that don’t mean what we mean them to say, we had better get some new words that mean what we say.
Many buyers have a ton of questions before they can be serious about buying a home. Most sellers believe that the buyer’s agent who will bring these buyers to their home actually understands the features and benefits of the lifestyle that their home represents. Unfortunately, most of the time the buyer’s agent is new to the home as well, not prepared to answer the questions that will seal the deal. So, instead of waiting on the listing agent to play phone tag with the seller and then back and forth with the buyer’s agent and then buyer, the people who have most of the answers to the questions are the neighbors who are accessible while you are visiting the home.
Any buyer who buys a home should take the time to question the neighbors. Neighbors, in most cases will tell you everything that you need to know about the house that you are interested in, how the neighborhood works and what it has to offer. There are many questions that agents are not allowed to ask so don’t expect them to do your work for you. This is your opportunity to ask the questions that matter to you.
One time when I was working with a buyer, we found out that the basement of the house that we were looking and considering seriously had recently flooded. The owner did not state this on the Seller’s Disclosure and even though we could have pursued the house and the owner’s honesty, it turned the buyer off. They did not want to risk what else could be wrong with the home that the neighbors did not know.
Another time that stands out was when we questioned the neighbors and found that the owner before the current owner had committed suicide in the home. Whereas that does not bother many people, this buyer did not feel comfortable with the situation. This buyer was very grateful to be able to make an educated decision that the seller did not legally have to disclose, at least in Georgia.
Many buyers want to know how many kids are in the neighborhood. They envision a neighborhood like they grew up in or have seen on TV. The one way and only way that I know that you can accomplish this is to ask the neighbors point blank questions that lead you to the conclusions of what the neighborhood has to offer. And don’t forget to ask about teenagers in the neighborhood, they are babysitters, house sitters and mother’s helpers.
Every home that is for sale should be a for sale by owner. All homeowners should take the opportunity to market their home to friends and family, co-workers and social acquaintances. Many homes are sold the old-fashioned way, networking. But the traditional agent system has not promoted this side of networking. The high price of commissions have left homeowners thinking that the agent should be handling all of those responsibilities including doing plenty of networking, because frankly, in most situations, the homeowner is not rewarded when they find their own buyer, they still pay the full commission to their agent that they negotiated or the commission that is stated by the broker that owns the company.
Agent’s structures for most brokerages are that the seller pays a full commission when any buyer is procured. It does not matter where the buyer came from; the seller pays the full commission. So, without the incentive of a reduced commission and the fact that the commissions are higher than ever because property values have increased, less energy is actually focused on selling the home. The seller hands the transaction to the agent and the agent does not focus on every buyer in the market.
Every homeowner should send pictures and video to their friends and family announcing and then reminding everyone that they know that their house is for sale. Many times because there is a respect between the homeowner and the friend or acquaintance, the friend will recommend the house to someone they know. They may say “I know Joe and Sally very well and they really take care of their home.”
Also, there are buyers around the country who search for sale by owner properties first before they search properties listed by agents because they are looking for a great deal. Sometimes it is not even a great deal that they want; they just don’t want to have the commission added to the price of the house, which is what happens in most cases. Most sellers are willing to reduce the price of the house if they are not paying concessions like commission.
So why aren’t more brokerages flexible in their commission by allowing the seller to pay less money in commission if they pay find their own buyer. When homeowners focus on selling their home while using tools and expertise that they don’t have access to like the MLS and experience of doing more than a few contracts that many agents offer, they win by getting their home sold quicker.
Foreclosures are popping up everywhere. In Atlanta, it is reported that 1 out of 5 homes are foreclosed properties. Neighborhoods are suffering in both depreciation of homes as well as emotional suffering. However, this is just a state of mind. To compete with foreclosed homes is very easy when you know what to do and keep your thoughts and focus on the end of the mission; selling the home.
The strategy of some agents is simply broken, at least in this market! See what it takes to bring energy to your house and know for 100% certain that all buyers who are looking for what you have KNOW about what you have.
I want you to know who I am and what I believe. Watch here…
“Peace, Love & Catnip” was a tremendous success raising over $43,000 for the shelter! Thanks to our co-chairs, Nikki Gordon, Joan Peterson and Lori Trahan and the auction committee: Carole Bache, Pam Cobb, Christi Fisher, Debra Lieb, Kelly McNamara, Barb Murphy, Heather Pechter, Karen Redlew and Robbin Yeager. We also want to thank auctioneer, Rhonda Duffy, host of The Duffy Realty Show on 640 WGST, and Proprietor of Duffy Auctions and Duffy Real Estate and DJ Debra Lieb, lead vocalist for JAZZ-i-TUDE. Enjoy some photos of the evening – many people dressed in their 60’s attire!
I have also done many other charities lately which is a blast. I bring in my whole team at no charge to the charity. Let me know if I can help you too. I am a licensed auctioneer and I own Duffy Auctions where we auction houses as well.
All 4 news channels interviewed me when a house buyer turned up with a warrant for stealing a necklace in Sandy Springs while posing as a real estate buyer and working with agents all over town. I am very fortunate to be known by the media as an expert and this is not the first time that I have been interviewed to get the scoop. Of course, I always have a different spin on the matter. My take is that Sellers need to get smarter about what they leave lying around.
By the way, they did catch the guy in Richmond, Virginia a few days later. An agent googled his name after becoming suspicious, saw this story and called me at home to compare notes. She decided that it was him and turned him in.
Check out the article that WSB (Channel 2 – ABC) ran after the story was reported on air by all major news channels.