The Case for Unbundling Real Estate Services
Bundled services seem like a good idea in a lot of industries. For instance, a cable and internet provider will offer cable TV, high speed internet and perhaps telephone services. Buying any one by themselves costs a certain price, but they will give you a discount if you bundle two or more services.
If you are going to need both cable and internet, this is usually a better deal for you right? Same goes for the insurance business and several others, where there is a need for multiple products and providers give the consumer an incentive to purchase all of those products with them rather than going to one of their competitors for other services that they offer.
Selling a house is also a bundled service proposition if you’re using a traditional real estate agent. It has been for nearly a century. Agents perform many services to get a home sold. They market the home in MLS systems, facilitate all of the paperwork and disclosures, provide a variety of negotiation services, coordinate with contractors, inspectors, landscapers, stagers, agents, attorneys and lenders. These are all core services that an agent does for a Seller to get their home sold.
Then comes the services they claim differentiate them from the rest of the agents out there. The fancy flyers, the open house where they will raffle off an iPad to get people in the door, the Agent caravans, balloons, flags, directionals, video tours, drone pictures, and all kinds of other spectacular tactics which make it seem like they are doing way more for the 6% commission than their competitors are. They won’t differentiate on price, so differentiating on services is all they do.
But what if you as a home seller know that most of that stuff isn’t going to contribute to the sale of your house? Sure, if you’re going to pay 6%, you’d like to see the agent earn it and spend as much of that 6% on marketing and advertising as possible, rather than putting it in their own pockets. But if it were up to you to hire a videographer or drone pilot, would you cough up that money? If you knew that open houses are no longer an effective way to secure a qualified Buyer, would you pay the Agent their hourly rate to sit in your house and watch your TV for 4 hours on Sunday? How does this bundled scenario actually benefit the Seller who is footing the bill?
I’m not arguing for a fully unbundled real estate product. Sellers need a certain basic level of service in order to have any chance at success, but outside of that, what is the argument for not providing a seller with some choices? If a particular service is critical, it should be easy for an Agent to sell to the Seller and convince them of the value. If a Seller is a staunch believer that a drone fly-over video of their property is needed to sell it, give them the option to purchase that service. But why force unnecessary services on a Seller who knows that they can sell their home with minimal effort in this market.
This is what Terrace 24 Realty is doing with our new listing model that brings transparency to the Customer. Sellers get a base level of service for a flat rate, regardless of the value of their home and have the opportunity to add in any other marketing services or tactics they like for a fixed fee per service. Those services are only paid for if they are actually performed by the way, so if you want an open house but the home goes under contract in the first 48 hours, before Sunday even comes, you don’t pay for that open house. Learn more about Terrace 24 Realty here…