May 1, 2007

Today’s Real Estate

Is it really a discount?

By Donna Nardi
Special to the Times

“Sell your house for $4,995 flat fee.” No gimmicks, no tricks, save lots of money. Sounds too good to be true—and as we all know, if it sounds too good to be true, it usually is.

With the price of real estate climbing, albeit more slowly than past years, sellers are more and more hesitant to pay “retail” for real estate services. After all, they need to net as much money as possible out of the sale of their home to get into their next home.

Observing the surface activities of a realtor, many think they make far too much money for what they do. How hard can it be? Even I could do that. Sounds plausible, but is it? Are realtors worth their pay? There are many areas that require expertise bundled into the designation of a realtor that bears explaining.

What is a Realtor?
After the dot-com bust, a huge influx of realtors went into the business to make a quick buck. Study hard, take the test and viola, we have a fresh-off-the-press realtor, chomping at the bit to make a fortune.

Every company has its own methods of training new agents. Some realtors study seriously, and some don’t. Of huge importance are ethics and legalities. While some may function adequately, they may or may not do so with ethics and legalities. The influx of agents has watered down the industry, and ethics have been sacrificed. This can lead to lawsuits, and loss of large sums of money. There is just too much at stake to take ethics and legalities lightly.

A good realtor will know and abide by the law and the code of ethics set forth by the Department of Real Estate. They are trustworthy and loyal. Realtors also need loyalty from their clients to allow them to keep their focus and do their best work. They will know the current market and its trends. They will know how to prepare a home for market to net the best price, and won’t put it on the market until it’s ready.

They will take the time to educate and prepare each and every client to make the best possible decision for the clients’ current and future needs. They build quality relationships of trust. They are in the clients’ corner, and represent their best interests at all times. They add value to their clients’ lives, and will serve them well past the close of escrow.

Clients will want to refer them to their friends and family, because they know they will be well taken care of. They will have a “team” of experts that will also serve the client when needed, including lenders, inspectors, contractors, handymen, title companies, financial planners, CPAs and landscapers, etc. In other words, a realtor should be your “go to” person for anything that has to do with the purchase or sale of a home and be an invaluable source of information.

What about the commission?
A client wants to sell their $500,000 condo. They have shopped around for the best “deal,” and have decided to save a bundle by using the discount agent. The commission fee to the listing agent is the magical “discount” $4,995. But does that truly cover everything?

When the listing agreement was signed between the seller and realtor/broker, the amount to be offered on the Multiple Listing Service to the selling/buyers’ agent must be included at that time. That’s generally 3 percent.

Where does this 3 percent come from? Certainly not the listing agent—they aren’t making nearly that amount themselves. It’s coming out of the seller’s proceeds. So, what was advertised as a “flat fee” of $4,995 has now ballooned to $19,995! Discount brokers rarely offer full service. How could they? Full service costs money, and the agent must be out there searching for their next client, not servicing the ones they already have.

A large number of clients is of utmost importance. What services are they providing for their discount fee? Are they helping to prepare and possibly stage your home for sale? Are they patiently educating and guiding you? Are they giving the home the full advertising and Internet coverage it needs? Are they doing the open houses, or are you? Quality agents are trained and experienced to deal with potential buyers, ask the right questions, show the home and to negotiate in their clients’ best interests. Do they have a broker tour, what about flyers? The list goes on and on…

So, the question bears asking, is a discount really just that? When you add all the services together that a full-service agent provides, they sum up a better net price for your home. When a home is well prepared and properly marketed, it will gain more coverage, which translates to more interest often from multiple offers, which adds up to a higher price for the home.

If the home is ill prepared and dismally marketed, it stands to reason it will not net the best possible price. You do the math. I’m confident you will come to the conclusion that the value full-service quality agents bring to the table make them worth every penny.

Donna Nardi is a Realtor, ASP, Senior Real Estate Specialist with Prudential California Realty in San Jose/Willow Glen. You may reach her at (408) 918-4410, or donna.nardi@prurealty.com, or www.HappyWayHome.com or contact J. Barnes Construction at (408) 280-5092.