FEES FOR SERVICE - PART II

PART II - FEES-FOR-SERVICE AND HOURLY COMPENSATION

You Can Save Money Without Being Discounted!... In real estate, quality representation is essential for keeping the most money in your pocket when you close. Is that mean that you’re locked into paying a commission in order to get that quality? The answer is NO.

My advise to potential clients is to explore and weight different options, based on their individual needs and comfort level. Many consumers find the traditional commission is their best choice. Hopefully, they make that choice because it’s the best option, not because it’s the only option. Find out which one may be better for you!..

Before going into some of the different compensation choices you may want to consider, it is important to look at what is involved when you pay for real estate consulting services by the hour or by a flat fee. When paying a flat fee or by the hour for real estate services, you can save a lot of money. Unlike using a discount agent who agrees to cut their commission, you don’t have to sacrifice the number or the quality of service you receive.

By choosing a flat fee for a bundle of services, or paying by the hour, you’re receiving and paying for only the services or time received, Not a guaranteed outcome. By the same token, you don’t have to pay a premium for that guarantee (commission paid when the house sells is what makes this method of compensation so expensive to the consumer).  When you pay a specialist in any industry, A CPA,  Attorney, Title Company, Inspectors, no matter how skilled they are, they cannot control the outcome, and still get paid, they’re paid for services rendered regardless of the outcome. The paradigm that Real Estate professionals have traditionally been paid contingent on an outcome, does no longer produce the desired results, numbers count and if they don’t add up, and create profitable transactions for consumers, it defeats its purpose as they can no longer control the outcome.

WHAT IF THE AGENT DOESN’T DO A GOOD JOB?

By that reasoning, you would have to question whether any service provider would do a good job if their pay was not contingent on the outcome.  The fact remains, that you don’t have a guarantee with any services you receive. Asking for credentials, experience, their ethical conduct, getting testimonials, or a referral from someone you trust. A face to face meeting will show a greater scope of their skills and knowledge. Your objective is to find the agent who can walk you through the process with confidence, dedication and know how to achieve the results you expect.

Again, it is not for everyone, some people are risk-aversive, they’re better off paying a traditional commission, than paying for real estate services in a non-contingent basis. Yet, there are a growing number of consumers, with understanding that the outcome is not controlled by the agent, who are willing to forego the guarantee and pay a lot less by fee, while still getting quality services and counsel.

I often work with domestic and overseas clients, and have developed compensation alternatives very suitable to them. The end result is very satisfactory, as I can offer choices than otherwise, would have brought transactions to a halt. The very nature of real estate is a dynamic flow, for it to be a healthy market.  In today’s real estate, consumers are not given the alternative choices, existing delays exacerbate the already sluggish and  motionless real estate activity. The real estate industry is very resistant to change, often portrayed as a “me to” industry with over a million realtors, all doing the same thing. There is nothing written in stone, that says real estate services have to be paid by commission and commission only. Yet, the merry-go-round of parties continues because that’s the way they’ve always done it.

I decided that to compete in this arena, and in order to seek out my client’s common interests, I would have a different value proposition to offer consumers. Those

who see my role as an agent focusing on their needs, rather than trying to sell them a service not suitable to them, or commit them for long periods of time, see the value of my services.

There is no right or wrong choice, when looking at the three choices, hourly rate, flat fee or traditional commission. As in the legal profession, different choices work in different scenarios. It’s the same in real estate, because consumers have different needs and comfort levels. It has been said for over a decade that consulting was going to be the wave of the future. The truth of the matter is that one size does not fit all, reason why Waters Real Estate offers those three choices to our clients: traditional (percentage) commission, a fee-for-service schedule, and an hourly rate.

In the meantime, don’t be hesitant to seek out good agents and ask if they (and their brokers) would be willing to offer options on how they get compensated for whatever services are required. Be aware of those agents who are not prepared for real estate consulting and have never thought about doing real estate in any way other than the traditional sales model. If you, as a consumer, need to sell your home, you may not have time for an agent to learn consulting services, so speak to an agent about what services you need and how you might like to pay for them.

Please bear in mind ~

Buying or Selling a home is unlike any other service, and not to make that decision lightly or based on third parties online who claim to be experts in real estate. The one advantage that true industry specialists have is they know that every home, neighborhood and transaction are unique, and value can only be quantified by comparison. Even the most die-hard consumer can reap the benefits of having an expert agent to help them succeed in their real estate pursuits. Without complete market knowledge of a given home and its neighborhood, it is anyone's guess whether the seller sold for too much or too little or the buyer paid too much or too little. Only the Real Estate agent knows for sure.

More on part III - Consulting Options to Consider.