Blog > Do cut rate Agents save you money?
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Hey, it's Steven Brown with red rock brokered by real with the Steven Brown Utah real estate team.
So in this video, we want to address the question,
do cut-rate brokerages really save you money or the cut-rate agents to do it for a minimal or set fee.
Crazy market. Crazy competitive offers. Homes going into contract in hours and above list and appraisal price.
Practically can sell themselves........right!?
It caused some homeowners to go into one of two camps. 1. I will sell myself, anyone can do it
or 2. I will go with the cut-rate agency and sell for a minimum commission.
Let's talk about #1. Selling yourself. Why does anyone want to sell themselves?
Statistics from interviewing For sales by owners say the #1 reason they want to sell themselves is to save on the commission.
Now I won't rehearse all the reasons why that's, not a good idea here, but watch my previous video you shouldn't sell yourself.
The 2nd category homeowners go into to try to save money on the sale of their home is listing with the
"Help-U-Sells' or the cut-rate agent that does volume over quality and service.
And if you have paid attention, there are more cut-rate agents and brokerage that have left or gone out of business
than agents that have been in the business for years.
Zillow tried to undercut agents with I-buyer. Homie has a high turnover of agents. I could go on.
I would like to present a Paradigm shift.
So what is a paradigm shift?
Webster says it's a fundamental change in approach or underlying of assumptions.
It's looking at things from another angle through a different lens through a different filter That completely changes the
way we look at things from the past to how we understand them going forward.
So that being said, going through these 2 previous examples is not about the money you save.
It's about the money you didn't make.
It's not about the money you saved, it's about the money you didn't make.
Let me explain:
You want to save on the commission so you hire a cut-rate agent.
He offers to do the Seller side ( his commission) at 1%
and offer the Buying agent 2.5%
The agent has you seeing dollar signs by saving 2.5%
Which equals $10,000 on a $400,000 home. Wow! That's great! RIght!? Not even!!
It's not about the money you saved, it's the money you didn't make.
Let me give you an example of one of my previous listings.
Clients approached me to sell their homes. Moving to Vegas and wanted $400k out of their home.
When I looked at the comps non would support that price.
In fact, the neighbor home, right next door with the same features, a cookie cutter home with the same sq footage
came on the market and no offers. Expired at $349,900.
I told them to get to $400k we needed to start at $369,000.
They enlisted with my marketing strategy to flood all the social media,
lists on Washington County, Iron County, and Wasatch Front MLS.
We also marketed with a Drone video to frame the home in the beautiful landscape in our area.
And besides 20-30 Quality HD pictures, we also included a Matterport Virtual walk-thru model.
It creates a 3-D dollhouse model. This way, Buyers who do not like the flow of the home eliminate themselves from
tying up the home that kick out the seller unnecessarily.
Also sent "Just Listed" postcards to 100 of their nearest neighbors, who usually know someone that wants to move to the area.
As it turned out, several of the agents were from Northern Utah that saw the listing on their local MLS.
Our strategy was to list on Wednesday and look at all offers through the weekend and decide on one Monday.
Long story short, we had a full price immediately. Could have taken the easy way out and accepted it.
The full price was above Appraisal and everyone feel good about it. Right!?
But you say Steve we received the full price offer in 20 hours. Here's another paradigm shift.
You excluded the other 20 possible offers By accepting the 1st offer. actually the path of least resistance and the least work.
We continued to get over 50 showings. I lost track.
After we received several offers over $400k
I told everyone after that if you are not at least above $400k you won't be considered.
Then we received an offer for $419k. Waving appraisal and cash.
My clients were shopping for a home in Vegas and found one they wanted to make an offer on. They had to be in contract on the sale of their home.
We had not quite hit the end of the weekend and I told them we can accept this offer, but if another one came in higher we would have to pass.
They agreed and the next day another offer came in, $429k Cash with $50k non-refundable Earnest money upon acceptance.
$60k over list price.
$80k over anything else I saw for comps.
But everyone was happy. Accept the nonaccepted Buyers.
So back to the paradigm shift. It's not what you saved... it's what you didn't make.
We did the hard work with over-the-top marketing and by reviewing over 20 offers.
Had we been the Cut-rate agent, I guess I would have saved over $1,500 in marketing and time.
Accepting the first offer at full price for $369,000. In the magician's Sell, he would tell you he just saved you $9,225. Light applause..
But going with a full-service agent we made them over $19,000 over what they wanted out of the home ($400k)
with other offers passed on for $30k over what they were asking. ($429,000) heavy applause.
A full service, do the hard work agent will make you money while on the other route you are supposed to think you saved money.
It is a paradigm shift to change your thinking this way.
I can't help if other agents' worth is only 1%. A good experience agent is worth it and will earn a full commission.
I know I am.
So when you're considering hiring an agent and you're doing the interview look for the one that will do all the work, he won't go the easy route by offering the lowest commission for himself and or the buyer's agent.
A lot of times that kind of agent their 1st marketing strategy to sell your house if you don't get any activity as to ask you to do a price reduction..
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