In the late 1980’s, I adopted an “alternative” business plan. I was working for Shannon & Luchs, which was one of the two largest firms in the area, and I decided to make buyer brokerage the mainstay of my business plan.
My broker freaked,
“You’ll get us sued!” she exclaimed when I told her of my plans.
Then I explained that she was in far less danger of being sued by one of my clients than a customer of a traditional agent who represented the seller with only a perfunctory disclosure of that relationship to the buyer. This was especially true if the “sub agent” acted in a way that established her as a “non-disclosed dual agent”, the actual business model for many agents of that day. Then an irate seller might (and often did) sue.
Today, buyer brokerage is pretty much the normal way of doing business, but there are other alternative business plans cropping up, I Am Not A Dinosaur! as the Internet helps to rewrite our business models.
Tuesday, I wrote a post about limited service companies, and I noticed in the comments that a lot of the people on Active Rain don’t have a lot of use for these guys. But think about it for a minute.
There is nothing inherently wrong with offering cheap, bare bones services to potential real estate consumers. While I don’t choose to go this route, I recognize that there are folks out there who would prefer to do a lot of the legwork themselves to try to save a few dollars.
Now, I’m not sure that consumers, whether they are buying or selling, do in fact save money this way, but I respect their right to try.
As for the agents who provide the bare bones basics, I don’t have a problem with them either. I believe that they provide a service that some people prefer to mine. There should be a wide variety of price and quality options out there.
And I have three “buts”.
First, I don’t want to do their jobs for them.
Second, if they are doing business on my turf and want to get paid, they better be properly licensed.
Finally, it is crucial that the consumer understands the nature of the services, especially what the agent will not do for them.
I once went out with a man who was a complete dog, but he was totally honest about the relationship ground rules he played by. And he was attractive, funny and charming – not to mention a wonderful date. His secret with women, I think, was to set very, very low expectations and I’d think, “You know, he’s better than I thought! I won’t dump him this week”
And I think this is the approach that the limited service agents will have to take if they are going to make a go of it.
Alternative Business Models for Realtors
17 comments • Patricia Kennedy • May 29 2008 11:53PMComments
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Patricia: Thank you for presenting a very well thought-out and reasoned approach to limited-services brokers. I think there are some agents who are afraid of them, but as you say, they do have a place in the marketplace for those who feel they need that type of "limited service." Thanks for sharing.
Patricia- I agree with your buts. Totally! That is why I let them know in advance they will be billed:)
Patricia, congratulations on having your way in deciding how you want to run your business. By the way, the spaniel photo is truly precious.
Honestly Patricia, I think that is the key thing we are disgruntled about, that we do both sides of the transaction. I don't care what they pay, that is fine, some need to use a fee for service person. But, when the one Realtors, negotiates the whole thing with sellers who don't have a clue, that is the frustrating part.
Yeah, yeah, yeah.
"Consumers" lookking for the cheap way out have been around forever. They're usually referred to as FSBOs. I've worked with a few when I represented the Buyer. The FSBO wasn't licensed (didn't have to be) and they didn't do any work (didn't know how and didn't have to). When I work with buyers I try to stay away from two things -- FSBOs and short sales. They're just not my cup of tea. However, if a particular FSBO has a particularly nice house and the Buyer really, really wants to a) look at it and b) buy it, I'll do what it takes to get it done as long as the FSBO is paying the co-op portion.
There's also been full blown, licensed Realtors around forever that do "facilitation" for a hugely discounted fee or "MLS listing service" for a hugely discounted fee for a long, long time.
Now we're going to go into the Dot.com "buyer broker" in another State that a) never saw the house and has never been in the house and is just providing a web site for the consumer to look at and b) will want us to do all the work. My beef with that is I need to "cooperate" with that "buyer broker" and send them money. Of course, I have a repsonibility to represent the Seller's best interest which means getting the house sold.
Patricia, I agree with what you are saying and defiinitely agree with your 'buts.' And the last one is the catch. Seriously, will the consumer understand what they are getting. I think they will not fully understand this more often than not. That is where we will see many issues and again I think many ensuing law suits or at least attempts at one. More than anything I think the consume will be the one that loses the most.
In virginia Limited Service Agency is all about disclosure. A Limited Service Agent is required to disclose to their Client the services that they will not provide. It also allows the Limited Service Agent to charge a fee(s) for the specifiec services provided. This protects the consumer so they know the representation they are getting. It's also my understanding, if a full service broker does not provide all the services expected, they would become a Limited Service Agent and would have to propertly disclose this to the Client.
Thanks for bringing this to our attention. Good Post!
Pat--There are different levels of service and quality of for all products and services. That is part of a free market trade. I love your 3 qualifiers and your dog analogy...quite appropriate and to the point!
Marc summed up what I was about to say. Very nice post- I agree with every bit of it... especially your qualifiers. I do think those who use the limited services company tend to expect more than they receive.
Pat - So tell us, how long did you keep dating this 'dog'???? He did not make it to the husband category, did he????
Patricia,
Excellent post and topic for discussion!!! Thanks, Fran
Karen, Anne I think they are in our market place whether we like it or not!
Katerina, I do like your approach!
Vickie, I would have used a Wilie the Labradoodle photo, but it's hard to get him to pose!
And Missy, how about when the other agent doesn't have a clue? Although I guess we can use that to our client's advantage.
Ken, listing agents in Nebraska I don't mind too much. But when it's a remote buyer broker, I may resort to Katarina's approach.
Marc, that is precisely why disclosure is going to be so important. I think that full service agents who do't deliver the goods are far more vulnerable to law suits than discount brokers - the discounters' clients have lowered expectations.
Michael, it would probably be good to have a different listing and buyer broker agreement if you're planning to work on a limited service basis, although the NVAR boiler-plate doesn't require the agent to do a whole lot.
Sometimes I'll recommend that someone just buy a sign and put an ad on Craig's list - they can save even the "limited" fee.
So are you still dating him?
Before the proliferation of super cheap PCs, my DH did PC repair and built computers for folks.
Some people wanted "bare bones" and some wanted the works.
I took a class on business enterprise which discussed how innovation in the form of differing business models is better for the consumer who is the ultimate beneficiary due to lower costs.
After extensively researching this in several industries, I was sold.
Different strokes or business models for, different folks!
But I do agree....that whatever model you adopt, understand that your clients needs must be served to industry standards.
...and it's not cool to have other agents do your job.....