discount real estate Archives - Richard Cricchio's Hawaii Real Estate Blog

Why ‘Discount’ Real Estate Companies Are Growing

Let me address something right up front: Help-U-Sell Honolulu Properties is not a discount real estate company! We are a progressive, full-service real estate company that charges differently for our service. That difference – our Low Set Fee pricing – is much less than what most ordinary real estate companies charge, but our clients give up nothing when they take advantage of it.

The problem with ‘discount’ is that it implies that the customer must sacrifice something. At T.J.Maxx you may pay less for an item you could get at Macy’s but you give up selection, assistance, ambiance, and more. It’s a trade off.

That’s not true with us. At Help-U-Sell Honolulu Properties, we do everything any great real estate company might do – and more – but instead of a big percentage based commission (like, say, 6%), we charge a Low Set Fee. Our home sellers save thousands over what they might pay anybody else and still receive full-service and excellent care.

There has been some research done recently about what part of the residential real estate market is being handled by ‘discount’ real estate firms. Since we charge less than ordinary companies, we get lumped in with the discounters (can you tell this burns me up!). Still, I believe there is some wisdom in the reports I’ve seen.

Today, 65% +/- of home sellers are listing with traditional, full-fare real estate companies. The remaining 35% of sellers are seeking less expensive alternatives. About a third of them sell By Owner. Two thirds sell through a discounter – like, say, Redfin, who charges less but also limits the level of service – or through a company with a different and better idea – like us!

It is true that the numbers seeking alternatives to high percentage based real estate commissions are up and growing, but what’s important is why. Why are people seeking less costly alternatives?

The obvious first reason is that regular real estate commissions are absurdly high. Here in our own neighborhood, sellers are routinely paying regular real estate companies $35,000 – $50,000 or more to sell their homes. If that doesn’t motivate you to look for alternatives, nothing will!

The second reason is they don’t think a full-service real estate agent is necessary.

Let that sink in for a moment. It’s a little startling to me. I work in this business every day and the landmines and complexities of selling a house today are plentiful and scary. I don’t recommend anyone attempt it without expert assistance. But $35,000 +?

What that second reason is telling us is that the Internet has put many of the tools REALTORS(r) used to use into the hands of consumers. That’s a good thing. Our processes are far more streamlined today because buyers and sellers can participate in the process. Buyers and sellers find themselves doing some of the work agents used to be paid to do, but there has been no corresponding reduction in what ordinary brokers charge. It’s a disconnect. It doesn’t make sense.

What makes sense is Help-U-Sell Honolulu Properties where we take extraordinary care of our clients, shepherd them carefully through the transaction and then save them thousands of dollars in real estate commissions.

If you’re fed up with the magnitude of regular real estate sales commissions, let us explain what we can do for a low set fee. All it takes is a phone call.

Help-U-Sell Honolulu Properties is a full service real estate company that provides exceptional service while charging less than ordinary Realtors. We’ve been successfully helping buyers and sellers all over Oahu for more than 12 years and we’d be delighted to help you achieve your housing dreams. Contact us at (808) 593-8811, or visit our website.

Is It Time For A Real Estate ‘House Cleaning?’

Inman News is a big real estate industry portal. It’s not the National Association of REALTORS, but carries a lot of weight in Realtor circles. Recently, Inman surveyed real estate brokers and agents along with a smaller group of “industry insiders” about the biggest challenges and opportunities in real estate.

The results were strong enough that the published report bears the title: Why and How Real Estate Needs to Clean House. The respondents put much of the responsibility for the industry’s tarnished image on their own shoulders, citing lack of professionalism, ease of entry, part time agents, and poor supervision as issues.

Here is a smattering of comments from respondents:

“Inexperienced and uneducated agents intentionally or unintentionally commit ethics violations and give the industry a bad reputation.”
“As technology becomes better and faster, the relevance of agents in the next three to five years could be in trouble.”
“Customers are already finding homes without agents, can process a loan online. The next phase is title search, inspections, closings, etc., without leaving your desk.”
“Technology is watering down the personal touch consumers need to feel confident the agent is taking care of their need.”

I admit it: I chuckled. Not to downplay the professionalism issue (the industry could probably shed half or more of all licensees and better serve the public), I am amazed that nowhere in the report did anybody ever question the pricing structure of traditional real estate brokers!

There’s all of this chatter about consumers using technology to marginalize agents and yet no questioning of why they’re doing it. And yet the reason is so simple: real estate sales commissions are way too high. Consumers no longer see the value return for those high commissions and are opting to go it alone.

Over the past 50 years there have been huge changes in the way real estate professionals transact business. Think about it! We’ve got lock boxes and talking signs, websites and the MLS, Facebook, email and blogs, mobile phones and tons of technology that didn’t exist a few decades ago. Every bit of it has made real estate easier and less costly to sell. But what has happened to commission pricing? Nothing. Traditional realtors charge home sellers exactly as they did 50 years ago: 6% (or 7% or 5% or any other %). It makes no sense.

It made no sense a dozen years ago when I made the decision to become a Help-U-Sell broker, and stopped charging consumers like everyone else. At Help-U-Sell Honolulu Properties, we charge a Low Set Fee for our service and consumers save thousands of dollars over what they’d likely pay an ordinary Realtor. It’s logical and fair; and it’s like a breath of fresh air in a stuffy room.

Nobody has a problem with the service we offer because it is at least as comprehensive and complete as what our competitors offer (and in some ways it is far superior). We don’t cut service. We just charge differently and we charge less. At Help-U-Sell Honolulu Properties, the fee you pay is a bargain for the service you receive.

You don’t have to be fed up with the poor service and high commissions typical of regular real estate to call us; you just have to be curious about how we can save you thousands when you sell your house. Make the call today: (808) 593-8811.

Help-U-Sell Honolulu Properties: NOT a Discount Service

I ran into an old real estate friend the other day. We met at a training meeting years ago. He had bounced from company to company, staying in one place for a year or two, then moving on to what he perceived to be a better deal. I think he’d been with four companies in seven years. He even got out of the business for awhile a few years back when the market was difficult.

‘What are you doing these days,’ he asked.

‘I’m still building my Help-U-Sell Honolulu Properties office,’ I replied. ‘We get bigger and more productive every month.’

‘I don’t understand how you can do that!’ he quipped. ‘I mean, discount brokers have their place, I guess, but you can’t be making any money and the harm you’re doing to full service Realtors is huge!’

I paused, letting the steam pour out my ears. ‘I’m not sure I know what you mean,’ I finally replied.

‘Well, people don’t care too much for realtors anyway, and when you charge a couple hundred dollars to put a sign in the yard and the listing in the MLS – and that’s it – it just makes things worse.’

‘Is that what you think we do?’ I asked.

‘Well, sure. I don’t mean you personally, but that’s what Help-U-Sell is famous for, isn’t it?’

‘I guess it depends on who you’re listening to,’ I answered. ‘If you pay attention to the chatter of traditional real estate agents – particularly those who are nervous about losing market share to Help-U-Sell brokers – I’m sure that’s what you’ll hear. But if you talk with the consumers we’ve helped, you’ll hear a very different story.’

‘How so?’ he asked.

‘First off, we’re not discounters,’ I responded. ‘A discounter takes the ordinary cost of a good or service, cuts it and makes a corresponding cut in the good or service to offset the price cut. Maybe widgets are selling for $2.00 apiece. The discounter will find a way to make them for less – probably with inferior materials – and then cut the price to, say, $1.5o. People who shop price and don’t care about quality will often gravitate toward discounters.’

‘What’s that got to do with real estate,’ he asked.

‘A real estate discounter would look at what most other brokers are charging – say, 6% of the sale price – and then find a way to charge less. For example, maybe the discounter would charge 4% but provide a minimal or limited service.’

‘Yeah,’ he came back, ‘That’s what you do, right?’

‘No,’ I said, ‘We’re not discounters. We don’t charge a lower percentage of the sale price for our services. Our pricing model is completely different. We charge a set fee to sell a house, just like your dentist does when he fills a tooth. Everybody pays about the same thing. But we do everything traditional brokers do – and actually more. There is no reduction in service. We are absolutely a full service real estate company. We just have a different business model – a much more efficient model – that enables us to charge differently, and charge less.’

‘Well, that sounded like somebody’s script!’ he quipped.

‘It’s not a script,’ I answered, ‘It’s the truth. When a seller lists with us, we put a sign in the yard, create professional fliers and a website with dozens of photos and a virtual tour. We put the home in the MLS and market it aggressively to other Realtors. We put the listing up on dozens of Internet real estate portals including Trulia, Zillow and Realtor.com. We hold open houses, screen buyers for financial capability, show our listings, help our sellers weigh the good and bad of offers, calculate anticipated net proceeds, coordinate inspections and all details, solve problems when they arise and look out for our clients’ interests all the way through closing.’

‘And how much extra do your home sellers have to pay for that additional service?’ he asked. I was getting perturbed.

‘Jim, are you listening to me?’ I asked. ‘That’s what we do for all of our listings and we do it for a low set fee instead of a big percentage based commission. There’s nothing extra, no additional fee for any of our services.’

‘If what you’re saying is true,’ he came back, ‘Why wouldn’t everyone sell with Help-U-Sell?’

‘Well, of course, everyone should!’ I answered. ‘But do the math: there are about a million traditional real estate agents and brokers out there – just like you – and there are just a few hundred of us in the Help-U-Sell system. We have to reach a lot of consumers before most people begin to understand how we are different and better. But we’re doing it! little by little, every day.’

‘Ok,’ he said, ‘Fine; for now. Just do me a favor and stay out of my area, ok? And next time the market tightens up and it gets harder to sell real estate, I expect you’ll be closing up shop anyway.’

‘Jim, old pal,’ I began. ‘I have a listing appointment in a few minutes so I’ll have to cut this short, but let me remind you: I was here before the market went down seven years ago. I did ok when the market was in chaos and real estate companies were closing right and left . . . when you left the business, in fact. And I’m still here, making more and more Oahu consumers happy with our service every month. Help-U-Sell Honolulu Properties isn’t going anywhere except up!’