“Sounds good,” she says. “But I don’t want the eggs.”
“Then I’ll have to charge you $1,30, because you’re ordering a la carte,” the waitress informs her.
“You mean I would have to pay for not taking the eggs?” the lady asks disbelievingly, “Then I’ll take the special.”
“How do you want your eggs?” asks the waitress. “Raw and in the shell,” the lady replies. She takes the two eggs home.
The real estate client of today is a much different animal than one of 10 years ago. Traditional real estate had a client putting their total trust in an agent to do a cradle to grave job on their transaction. These days, you’ll more likely find a client approaching an agent after they’ve already found a home they like; we have become discerning and informed.
How does the real estate broker best accomodate the savvy seller or buyer? I believe the next phase of real estate is the unbundling of services to allow the client to steer the transaction the way they would like.
How does that work? Let’s pretend for a moment you are a buyer looking for a house. You scour Craigslist and find a “For Sale by Owner” (FSBO) which on the outset looks exactly like your dream home. Great! You and the owner can walk through the whole process yourselves or you may wish to consult a broker about things like:
- Comperable prices in the neighborhood — is what they are asking in the ballpark for reasonable?
- How to obtain the owner’s disclosure statement
- What forms to use
- Who to recommend for inspections, financing, escrow, etc.
In simple cases like this, you probably wouldn’t want to bring an agent in. The seller has decided to offer their property FSBO to avoid having to pay a broker. What you need is the ability to consult with a broker, much as you would consult an attorney on the specifics of your contract, without necessarily having them draw the contract up. This is a win all the way round. The seller doesn’t pay a commission, the buyer pays a lower price for the home, the broker gets paid for their actual time and progress marches on, unimpeded by tradition.
A word of warning – your broker still needs to do agency disclosure. If they work for you only, no problem. If they are billing both sides of the transaction, they need to be very careful to disclose either dual or non-agency and act accordingly.
Investors can also benefit from this arrangement. It is the nature of the beast that investors generate a lot of paper. Finding a broker who will stick with you through the 9 which don’t go anywhere to get paid on the 10th is a challenge. Now, to solicit the services of that top notch real estate professional, ask if the services can be broken apart and billed.
Investors tend to be a savvy lot, most of whom have mentors with specific investing strategies. Imagine if all you needed was a good set of comps on each property you were looking at, and those could be obtained anytime you wanted them because of your relationship with someone who was willing to work on those terms. Investing just got a whole lot easier!