Discount Brokerages VS Full Service Brokerages

Real Estate

There have been a lot of discussion's recently about Brokerages such as Redfin and Purple Bricks,  who claim they can provide the same service as traditional full service Broker's, at a steep discount to the listing side, plus  the selling broker's compensation. They are volume based, and most of their agents have 50+ listings at any given time. They simply do not have the time to do what a full service agent can.For instance, I had a high end seller who was home all day with a toddler and was uncomfortable being there with an agent and their buyer for showings, so I met every single agent, whether seller was home or not, for 30+ showings and 2 mega open houses, that included a wine and appetizer broker open , and got 6% commission.  They have ramped up their ad campaigns , striking fear in full service agents,who typically  charge 5-6% ( our market anyway) that they will  lose business to these brokerage's.  Full service agents pay upfront costs, such as professional photos, video's, staging and marketing, on top of E&O insurance and split/fee with their broker's and can't afford to reduce their fee's to compete. You don't have to and here's some insight why...

When I started out as a hairdresser in the late 70's, Supercuts was revolutionizing the industry with it's model of only doing haircuts, no other services such as coloring ,perming or styling. You got a haircut for $6 and could add a shampoo and blow dry for $3 each( rarely happened). They taught us 7 haircuts that worked on virtually anyone, done quickly and accurately in 15 minutes. I did 40 haircuts a day, as did most of the staff and we usually  had a 1 hour wait time. Volume. Clients who wanted the  full service treatment , shampoo, deep conditioner, color or highlights, blow drying and curling iron etc continued to frequent those salons and willing to pay the higher price. By the time my 27 year career was over,  at a full service salon, I was charging $45 for haircuts and spent 45 minutes with each client.

There will always be buyer/seller's who don't want the full service treatment , are comfortable with minimal contact with agent,minimal oversight, prefer text/email communication over in person/telephone, tend to be tech savvy and the bottom line is what's most important. I believe the majority of buyers/sellers want a full service agent, believing we earn that commission , getting a higher sale price, negotiating repairs , going over seller disclosures and answering questions in person, accommodating sellers showing preferences, personalized marketing videos and refer trusted reliable vendors, such as licensed contractor, moving company, pest inspector and more.

I believe there's a place for both types of brokerages and recommend interviewing agents, to fully understand what they offer, and chose the right one for your needs. KarenFunk.net