RRR Austin

Sunday, October 01, 2006

New Age creates NEW ways to Sell Real Estate

Real Estate Selling used to be very much organized and run by Gov'ts. Through the ages, individuals were given land rights and due to various reasons they needed to sell their land. Real Estate Agents entered into the picture not too long after that, but didn't represent anyone. They were "middlemen". They tried to connect a buyer and seller then go paid for it. Due to way too many seller's being scammed of their money, regulation set in for "Real Estate Salespeople" which eventually involved agency representation.

Enter today's Age: Real Estate Agency in North America is pretty much a no-brainer. Sure there has been a small niche that has tried to do a "For Sale By Owner", however time has told that a house sells quite a bit higher if sold by an agent, more than enough to make up the commissions paid.

Then a few years ago we entered into the information age and real estate has been feeling out the internet ever since. More information is available to the "client" consumer than EVER BEFORE! Yet this doesn't necessarily SWAY to mean "ADVANTAGE SELLER", rather it may actually BALANCE the PLAYING FIELD a little more. Now buyers can have just as much information as the sellers do about real estate. Because of the "Balance" there is still a great need to have "representation" in today's market. There is soo much regulation and hair trigger attorneys yet fraud is still prevalent. Having a "Professional" on your side whether the buyer or seller is very necessary.

YET in today's market there are also MORE diverse ways to sell a home than ever before! In each of these scenarios an Agent's responsibility is to look to the best interests of their clients. Each client's needs may be different and though and now there are options.

In each of these scenarios there are different agencies that add value that is not included here:

1. Conventional Selling - This is your typical 6-8% broker. They spend money to advertise the home, either directed to buyers or other agents. Usually half of this commission goes to an agent representing the buyer, IF a buyer's agent is involved in the process. These agents will be fully involved with negotiations, handling contracts, inspections, & closing the house.

2. Flexible Selling - This is the same as the Conventional broker, except the commission charged is lowered a little if there is NO buyer's agent involved.

3. Discount Brokerage - This one charges a very low percentage commission, like 1% (4% if a buyer's agent is involved). There are two MAIN ways these work for the seller. One will merely list the property on the MLS and the subsequent websites that come with their MLS agreement and others will spend more money to do additional advertising including flyers at a house, Open Houses, and some inexpensive newspaper advertising.

4. Flat Fee Selling - This one charges either a very low fee (usually under $1000) to merely list the property in the MLS to get the exposure, but will not assist with negotiations or contracts. The other will charge a higher flat rate but will perform most or all of the services that a Conventional Broker would do. The flat rate may vary based on the price of the home & in both situations there are companies that charge the fee up front and others that'll charge after a sale of a property.

5. Real Estate Auctions - Traditionally known for the preferred method of selling a foreclosed home, this method is slowly gaining mainstream appeal as well. In most cases this option is run just like any other auction. There is an auction fee that must be paid up front, which is used to pay for advertising. This comes from the seller, then the property is sold at auction within a couple of months. 10% commission is charged to a buyer on top of the sales price, which the buyer KNOWS ahead of time and will adjust their bid price accordingly.

6. Online Auctions - These are run similar to #5, there is a fee usually charged up front, but a much smaller commission, if any when the property sells. Ebay now has a real estate section and there are other sites such as PROPERTYROOM. The seller usually doesn't spend any money on a direct property rather than the website.

7. FSBO - This is still a viable option for those with time and money especially with the advent of online avenues such as Craigslist.

The Conventional/Traditional Way of Selling a Property has been to leave the advertising costs in the hands of a Selling Agent. If the property doesn't sell, then the agent is out the money, but if it does, they'll recoup the advertising costs through a commission payout. For sellers with money available to spend on advertising, they have the other alternatives of Auctions - where the agent for the auction company will spend advertising dollars using their professional expertise, & Some Discount or Flat Fee Brokers where the seller may benefit from MLS exposure, but handle all other advertising on their own, or FSBO where it's all on them!

**I do not profess to be an "EXPERT" on how each of these formats are run, and these are just some of the basic ways most of these are run from my personal experience.***

If you have additional input, it would be very welcome!

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