Real Estate Greed – Don’t Be a Victim
This month’s article pains me to write, but I cannot keep quiet any longer! Usually I try to provide an uplifting monologue, but this month I am breaking away from my normal style and taking the next few pages to vent! I have been hurt by some in my industry. By writing about this, it is my way of venting and making you aware of what exactly goes on ‘behind the scenes’ of Real Estate….the dirty little secret, if you will. These people are ‘friends’ within the industry. I have or rather had a respect for them and their business practices, but when I found out what they were doing I was hurt.
We insiders know the agents that have solid business practices and the ones that will fight tooth and nail for their clients.
The ones that protect and defend their clients’ well-being. The agents that build their businesses on a strong foundation of trust and referrals. Conversely, we know the agents that nickel and dime their clients, only looking out for their own self-interest. These are the ‘turn and burn’ agents, the ones that are always focusing on finding their next deal. I have seen many of these agents business explode in good times, because they are the ones running the huge ads. They are the ones bragging and advertising about how much they sold last year, or that they are the #3 agent in XYZ Company. But the problem with this type of business model is that it is ALL about sales not about relationships. I was recently told by a friend of mine- and it rings especially true in Real Estate- that “Professionals focus on Relationships while Amateurs focus on Sales.” These following real-life experiences clearly prove this point.
You know my Stagers at Limelight Staged Homes, Stacy and Sharon. I have written about them numerous times, and they are key members of my ‘team.’ Unlike traditional agents who claim to ‘Stage’ properties, the 3 of us have developed our own ‘Scientific Staging’ for our sellers. My sellers all have bought into my philosophy and are reaping the rewards of ‘Scientific Staging’ and my whole program where we educate our sellers to take a Value-Driven instead of the traditional Price-Driven approach when selling their homes. I have coined this philosophy as The Warren Buffett Approach to Sell Real Estate, because much like Warren Buffett himself we teach our clients to avoid fundamental mistakes that could sabotage their sale. And it works.
This past year, my clients have the 3 highest sold properties in their 3 respective neighborhoods; New Market West, Mountain Terrace, and Villas at West Winds.
Sorry, I got off track there for a moment; just wanted to provide some background. I have been using Stacy and Sharon exclusively for about 3 and a half years now. I recognized early the benefit of having my sellers’ listings ‘Scientifically Staged’. The benefit of having my team involved in the sale of my clients’ homes works. My sellers are able to present their home in the best light, and Stacy and Sharon also work hand-in-hand with Annie, my photographer, and Stage homes so that the photographs tell the home’s story correctly. It is working. Sellers are selling their homes faster and for more profits than other similar homes in the respective neighborhoods. Many agents are trying to duplicate my formula, if you will, but they are all lacking a key ingredient. Some may use Stacy and Sharon, but then do their own photos or hire another photographer, and these NEVER stack up to Annie’s. Or some agents will use Annie to photograph a home, but not properly have it Staged by Stacy and Sharon, and although Annie’s pictures are still good, they pale in comparison to the Staged ones. Other agents are cherry picking or picking and choosing, not offering the complete package that I offer. Warren Buffett would call this a ‘fundamental flaw’ in properly presenting a home for sale. The honest reason that others don’t offer the full range that I do, is that it is EXPENSIVE to do this. Coming from a business background I understand ROI and the benefits of properly selling a home. I invest my time and money into only the houses that I think will sell. Therefore, if we work together, there is a strict criteria you must meet because I’m investing my valuable time and a substantial amount of money in YOU and your home sale. Am I perfect and do I sell every home? No, but I properly position my clients to gain the most profits from their home sale.
Back to Stacy and Sharon and what a ‘friend’ who uses them has been doing. So, I do not have an exclusive on Limelight Staged Homes; other agents use them. Stacy and Sharon have their own company and they are trying to grow their business and their brand. Anyway that I can help them do that, I have, and I will. In fact, when Stacy and Sharon started Staging 3.5 years ago and I was their only Realtor they asked me to introduce them to Realtor ‘friends’ who I thought would benefit from their services. So I’ve introduced, endorsed, and talked them up to dozens of local Realtors, and they have gained significant momentum over the past few years.
One Realtor, in particular, uses them for a lot of her jobs, but what I recently discovered undermines the benefit of using Limelight. Here is how a typical listing occurs. A seller will hire me to list and sell their home, and I will do it for x%. From this percentage I have the costs that I incur. I don’t nickel and dime my sellers and add on additional fees, and my sellers never ask me to reduce or ‘cut’ my commission. My commission rate is what it is. From this x%, the industry norm is that you do what is called a co-op or cooperating agent and you in-turn offer half of that percentage to a buyer agent to bring a buyer to your sale. This ‘half’ of the commission is public knowledge and is offered through our MLS so every agent that is showing a home for a potential purchaser knows what they are going to get paid when they show a home.
I have heard of agents only showing homes that have a high commission rate for buyers. Is this right? Of course not, but some agents are driven strictly by money.
So I heard from another agent friend of mine that this particular listing agent, who now uses Limelight to stage her homes is offering a full percentage point less to buyer agents. So if she lists a home for 6%, she is keeping 3.5% and ONLY offering 2.5% to a buyer agent. Her explanation to this was, well, I pay for Staging. Huh???? I’ve been paying for Staging, Professional Photos, and other services for years and have NEVER offered a buyer agent less than half of the total commission. This is counter-productive to everything she is supposedly doing to help her sellers. You know who this is hurting? Correct, her clients. This is the equivalent of someone trying to lose weight and getting a Diet Coke along with their Super-Sized Meal at McDonalds. This person is sabotaging their diet, same as this agent is sabotaging the Staging. Staging is worthless if agents won’t show the house and feel taken advantage of by the listing agent. This is BAD BUSINESS! She is only hurting her clients. Once word on the street circulates her showings will decrease and this negatively affect her clients. All for the sake of a few extra dollars. If she is doing this to fellow agents, imagine what she is doing to her clients.
My next example of an agent being stricken by Greed was someone that I personally referred business to. He’s a local commercial Real Estate Agent who has a good book of business and is well-known within the community. I had a past client that was selling a unique multi-use building in downtown Frederick. The first level was 2 store fronts and the upstairs was 3 residential apartments.
Could I have done this transaction, yes, but it is out of my area of expertise so instead of underserving my client I referred my client to my ‘commercial friend’.
So how it works in the real estate world is that when you refer a client to another Realtor, be it, someone in another town, another state, or another area of expertise, when that transaction is complete the Real Estate Agent that referred their friend/client will receive a ‘referral fee,’ typically 25-30%. When my friend offered 20%, that was no big deal. I knew he would have to work his butt off to get this property sold and would earn his money. That is not where my issue lies. It took about a year for him to get this property sold. He called me a few weeks ago to let me know that it was sold. I congratulated him, thanked him for helping my client, and told him that he definitely earned his money on that one. I was flabbergasted when I received the referral paperwork in my mail-box. I actually had to have someone else look at it to make sure that I wasn’t missing something. Remember what I said before about when you list a home you typically offer half of that to a Buyer Agent???? Well, ‘my friend’, the one that I referred a client to took his full commission and paid my ‘referral fee’ out of the buyer agent commission! Again, who does this adversely affect? Yes, the seller, my past client! Yet again, I was amazed and hurt.
It felt like a kick in the gut. Someone who I HAD respected as an upstanding commercial Real Estate Agent lost my trust.
This shows me that if these 2 agents I respected, 2 agents with good reputations are doing this within our industry to each other (taking commissions out of Buyer Agent pockets) what are they doing to their clients that we don’t see???? This goes back what I said at the beginning of this story that ‘Professionals Focus on Relationships, while Amateurs Focus on Sales’. This illustrates people focusing on Sales and killing a relationship, because guess who will not get any more referrals from me? Guess who I will have to keep my eyes out for the next time we have a transaction together, that’s right. These AMATEURS!
My final pet-peeve and example of why Real Estate Agents are seen in the same light as ‘used-car salesmen’ and something that is actually common place in our industry-is Transaction/Administration Fees. I refuse to succumb to the ‘norm’ and our company policy is NEVER to charge a ‘Transaction/Adm’ fee. This is like the car-salesman saying, oh you wanted under-coating on your car? What the heck is under-coating? I have no idea and you probably don’t either, but it is a bogus fee that they charge to nickel and dime the consumer. In my opinion, under-coating is the same as the ‘Transaction/Adm’ fee that Real Estate Companies and Agents charge their clients.
Just because every other local company charges their clients between $250 – $495 doesn’t mean that it is right! My philosophy is that if I can’t run my business and provide the highest level of service and features to my client for the commission rate that I charge, then I should just QUIT. It is not your fault that these companies and real estate agents have flawed business models and have to nickel and dime their clients to survive. How in the heck can someone make a nice commission check and look their client in the eye and ask for an additional $350 and NOT feel guilty???? Well obviously, the typical Real Estate Agent can. Not me, I refuse!
My business is built on satisfying my clients and going above and beyond what others are doing.
That is why I have a team including; Stagers, an Amazing Photographer, Professional Cleaner, HVAC/Plumbing/Electrical/Painting/Septic/Roofing/Siding contractors at my clients disposal who are always willing to help. I refuse to nickel and dime, and that is probably why my clients come back to me and openly refer their friends and family to me.
I’m sorry this was not my typical uplifting monologue, these examples prove the Professionals focus on Relationships, while Amateurs focus on Sales.