Conveyor-belt real estate

Letter to the Editor

By Inman News, Friday, February 20, 2009.

Re: 'The Commission Butcher Shop' (Feb. 18)

Dear Editor:

Will it ever end? Probably not. Always the proverbial question: the COMMISSION!

Just as in REOs (bank-owned properties), there will always be those whose business plan is to suck up as much as possible. Sometimes it works out for the sellers, like when they are first on the "I Love Lucy" chocolate conveyor belt. But other times, the seller is left with continuous reductions before selling.

It sucks when you are one of the last "chocolates" in a long line of listings!

There is only so much time in a day. And when your business model is flooded with low-commission listings, who suffers? It's a numbers game to those who choose that business model.

Many of us choose a different business model where we offer full-service, not service on a conveyor belt. Our sellers' calls are answered pronto, and "service" is of the uppermost in our business model. We don't suck up listings just for the count. We aren't Wal-Mart.

It's America, and there will always be a need to have conveyor belts for those who want to take the chance or can't afford any better. Some will choose to pay by a la carte and take their chances, only to find that they need full service and end up paying more in the end. But that's America ... choices!

With the current economy and many real estate professionals leaving the profession, along with those who chose to leave the name-brand offices going on their own or choosing a conveyor-belt atmosphere -- life will go on and offer a diversity of choices for sellers to choose from.

Gena Riede
Riede Real Estate
Sacramento, Calif.

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Submitted by Douglas Quenzer on February 20, 2009 - 5:06am.

The commission model will always be around, but so will other models. Not all consumers are the same, not all markets are the same, and not all houses are the same. At one point I did an appraisal on a home about 5 years ago when the market was hot. I told the homeowner who was very capable, "Honestly you could sell this yourself just by putting a sign out. It would tak about 3 weeks." He did, and he sold it in 3 weeks. By the way I got a listing off that deal from a referal by him. Had I had a different model I could have at least said, "Hey, for $1500 I'll handle putting the sign out, put it in the MLS, and negotiate the deal." I would have at least gotten something. Did he need to spend 15,000 in commission just to put a sign out? NO. On the otherhand I had an older lady on that same lake list with me because she wasn't capable of showing the property, closing it, etc. She wanted full service. So I listed it, and sold it in 4 weeks.

Today it's a little different. Agents have to work much harder to sell a house. There are fewer buyers. There are too many agents that are unprofessional and are really not sales people. They have taken a test and that's about it. They have no expertise in pricing properties, and they just take anything that comes along at whatever price the seller decides. The result is I see that too many agents take too many listings. They can't spend the time selling the house like they should. When I was a full time agent if I had 25 good listings at one time that was about all I could handle if I was going to really focus on selling the house. But today if an agent has 50 listings and only about 10 are good then what's the point. Those other 40 aren't getting any attention. They are at the end of the conveyor belt. I know that as a fact, when I thought about getting back into selling again.

I listed a property that had a protected buyer. It had been previously listed and didn't sell. Why? It was listed too high, and the agent was never up front and honest with the sellers. So we reduced it, and I told them what they needed to do to make it more saleable. It was when the market was starting to be soft, and a protected buyer wanted to see it again for the 4th time! I sat down with my sellers and told them, "You write the offer to the buyer." What a novel idea. Not really. The previous listing agent couldn't close the deal. She wasn't a sales person. She was a house shower. I told them to write the offer as a drop dead offer on the price. Anything else was negotiable, and state that if they don't take the price they can't look at the house any longer. The previous listing agent thought this wasn't good form, and I told the sellers, "Listen she can't close the deal so you have to. These people are "lambs" and can't make up their minds. You have to force them to." They ended up selling their house to those buyers.

You know what stinks. I didn't earn a dime off that deal. The listing agent didn't even write me a letter thanking me for my help. She didn't even offer a modest referral fee for helping her close the deal. This is the kind of crap professionalism that is out there. These types of agents don't deserve a commisson. Yet they are rampant out there. Un-creative house showers is what I call them. No ability to sell. In an up market they don't have to sell. But in a down market they better know how to close deals or get out of the business.

What's the point? The conveyor belt works both ways. I see that most houses that are listed get as much attention as the last chocolate down the line. Why should they pay full commission for dead beat agents (most of them) who can't sell? They have spouses that work, and so they don't need to sell to make a living. It's a part time job, and they act like part time agents.

I got out of real estate as an agent because I developed a good appraisal practice, and also in this kind of market you have to work really hard to sell a house, and most of the agents out there showing properties can't sell, aren't skilled negotiators, and can't price the properties to sell, and are just cut-throat in-it-for-themselves jerks. It was discouraging.