Didn’t You Used to Do That for Free?

That’s the question my wife asked me a couple of weeks ago when I came home from an appointment where I provided a market analysis and advice/guidance for a seller preparing to put his home on the market.

Why did I get paid for this consultation when in the past this has been one of the “free” services I offered? Simple. I set the customers’ expectations beforehand. The services a competent, professional Realtor can deliver are valuable. It is beyond the time to start expressing that value. (even the Charlottesville bubble bloggers agree)

Setting potential customers’ and clients’ expectations is a start, not the least through my new services page. In the past (and still today) Realtors would provide free market analyses in the hope that they might get a listing. Sadly, hope doesn’t pay the bills.

Many Realtors still tell buyers that their Buyer’s Agent services are “free.” Any buyers buying this line need to ask a few more questions. Such as – “how exactly do you get paid?

The subject house came on the market a few days later within the price range I advised, with another Realtor, and I am ok with that.

When I got into this business nearly seven years ago, my wife questioned why I did so much for free. Guess I should have listened to her.

Nothing is free, not even Representation.

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6 Comments

  1. Tony Arko July 23, 2008 at 07:39

    Nice job. I hope it catches on with the other competant agents. I started doing non-refundable retainers at the beginning of this year and no longer take a listing without a check for the services I will provide whether or not the house sells (market analysis, signs, brochures, online listings, mls access, etc). I have lost a couple but I have never lost money on a listing.

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  2. Bob July 23, 2008 at 08:05

    I used a buyers agent that required a $100 upfront payment that was refunded/credited at settlement. This was during the housing boom. The purpose of the fee was used to weed out people that were not serious about buying. Our agent fully explained this “are you really serious” fee upfront and it gave us an opportunity to clarify our expectations of his services. Given the scope of the transaction, $100 wasn’t a big deal. However, it did make our relationship with our agent seem more “real” and professional.

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  3. Dave July 24, 2008 at 01:09

    Uh-oh. Houses aren’t selling, commissions are down, and now you have to charge a fee for an hour’s work that used to (and still should be) part of the cost of doing business.

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  4. Jim Duncan July 24, 2008 at 05:44

    Dave – the market’s slowing is not a factor in my decision to charge for my services. I have long thought that Realtors/I do too much for free – we give away expertise in the hope/wish that we might get business.

    If I had met this person with the intent of earning his business to market his home, that may have been different, but that wasn’t the expectation set by either party.

    Look at it like an attorney or a doctor – an initial consultation may be “free” but the respective advice/diagnosis comes with a fee.

    Why should that hour be free?

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  5. John July 24, 2008 at 09:44

    I kind of see where Dave is coming from. I suspect my first reaction would be to pass on paying a fee and simply work with a different agent. That ability is one of the nice things about a competitive market – there’s bound to be some young upstart willing to forgo such a fee to grow their business.

    I don’t think the same works for doctors because, while there are alot of doctors out there, they are well organized and you really can’t find a viable substitute for their services. Lawyers have some, but not all, of the same breaks as doctors on that front. Hence, you can “shop around” to some extent for legal services.

    By the way, Jim, I closed on my home in Ruckersville!

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  6. Pavel July 26, 2008 at 13:53

    A well organized price-analysis presentation usually takes a lot longer than one hour – especially if one travels out to the home site (may be even several times). I think it’s very interesting that people are willing to spend thousands of dollars on a real estate commission as long as they “pay” at closing (usually not out of pocket), but would pass up an opportunity to get a consultation from an expert who obviously knows what he’s talking about for a reasonable fee.

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