Beware of the Discount Broker

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Discount Brokers Bring Discount Buyers

So, we all know it’s a hot housing market right now.  I’ve said it many times, you’ve heard it on the news, and along with it all, you hear about discount real estate firms and discount agents offering you rebates and low fees to sell your home. I get it. The attractiveness of the smoking deal never goes away and it is a part of all our human nature to want to pay the least possible when it comes to service fees.

But…. here is cautionary tale!

Has there ever been a time that you have been offered a super smoking discount, say, to put on a new roof for your house, or to fix your car, or to get laser eye surgery?

And have you ever gone with the cheapest price, only to find…. that it costs you more and hurt you more in the long run?

Well, if that has happened to you – and who hasn’t had that happen to them – it’s because CHEAPEST is not always THE BEST.  Cheapest sometimes is just… cheapest.  And when it comes to a huge important financial asset like your home, or your investment property, isn’t it worth it for you to get a roofer who doesn’t give you the cheapest quote?  Like maybe the cheapest quoted roofer isn’t using the best material, lacks proper insurance and hires inexperienced labor?  Or when you’re getting laser eye surgery, don’t you want to use the most reputable surgeon, not the cheapest surgeon?

Exactly!

Yes, I know what you might be thinking – selling real estate is not eye surgery – I get it – it’s not, but it’s not as easy as I make it look!   It has a lot of detail.  Things can go astray. There’s a lot of fine print.  You want to hire someone who does this day in and day out, not as a part time gig.  You want someone who understands the small finer details and makes sure you don’t miss them, and you aren’t misled.  In this strong hot market, you want someone who is not only going to sell the property, but keep it sold, and by that, I mean, keep the property in escrow, or under contract, and closed, with the most money in your pocket, not just have it fall apart a couple days after you have popped the champagne and thought you were home free.

You want to hire someone who knows how to handle a multiple offer situation and negotiate for you the best possible outcome.

OK I promised you a story to illustrate my concerns with using a discounter.  Yesterday I was talking to a colleague, who was representing a buyer.  His client bought a house in Aliso Viejo, listed by a discount real estate brokerage.  You know, the ones who will give you a rebate of $1500 or something like this to entice you to list with them.  House was listed at $540,000.  His client offered $550,000 and got the house.  Appraisal came back at $610,000.  My colleague knew the house was worth at least $600,000 – nothing in the area sold for less than $600,000.  So, his buyer got $60,000 worth of instant equity.  Seller lost $60,000, but hey they probably saved $1500 from the rebate and maybe even $8000 on the discount broker.  But the seller LOST $60,000.  How’s that math add up?

Fact is, in our industry, we know that Discount Brokers Bring Discount Buyers.  And when we are representing a buyer, and we want a great deal for our buyer, guess what we are delighted to see?

The fact is, if you hire a discounter, they will cut some corners to do the volume business, and your huge important asset may just be one of many they are dealing with – take the first offer – price it a little off – so what?  But at great cost to you.

So, be careful.  Selling your home may not be the best time to go with the cheapest. Go with the best.  Go with a reputable Realtor.  Go with a great negotiator that will protect your equity and fight for you to get the highest sales price possible.  Go with an agent that knows their own value and will protect yours.  Don’t undersell yourself by not getting the best representation money can buy!