Question for the SE crowd. I've got so many requests from buyers who did NOT want a buyer broker, they want to bid directly with seller, but they do want personal, non vested interest consulting from someone they consider to be knowledgeable in the field of Manhattan real estate. These buyers already found the property they want, and they want individual consulting on property valuation, comps... [more]
Question for the SE crowd.
I've got so many requests from buyers who did NOT want a buyer broker, they want to bid directly with seller, but they do want personal, non vested interest consulting from someone they consider to be knowledgeable in the field of Manhattan real estate.
These buyers already found the property they want, and they want individual consulting on property valuation, comps analysis, bidding strategy, negotiating, etc..
My question to you guys is, what do you think a flat fee service like this might be worth for buyers? What would you be willing to pay for this?
The way it is now, there is no loyalty for buy side brokers BUT when a deal is done, hey split the commission at closing with the seller broker; usually between 2-3% of purchase price.
So, what do you think a buyer interested in this type of consulting, would be willing to pay? Thanks for all positive and nasty responses that may come.
[less]
Response by urbandigs
about 17 years ago
Posts: 3629
Member since: Jan 2006
I really would like to take down the sell side business model here, and the big players use of no public MLS system here. That turns me on. The current model just seems both antiquated, inefficient, and not in the best interests of the consumer. Thats all.
Ignored comment.
Unhide
Response by JuiceMan
about 17 years ago
Posts: 3578
Member since: Aug 2007
"Seller agents really don't care what the seller gets, they are typically volume shops who need to move on to the next deal."
Absolutely right. The biggest myth in real estate is that listing agents want to keep the price as high as possible to drive higher commissions. In reality, they will drop the price (if you let them) in a heartbeat if it speeds the sale. The first thing a listing agent thinks about when meeting you is how to secure the listing the second is how to manipulate you into lowering the price.
Ignored comment.
Unhide
Response by urbandigs
about 17 years ago
Posts: 3629
Member since: Jan 2006
"The first thing a listing agent thinks about when meeting you is how to secure the listing the second is how to manipulate you into lowering the price."
Now that is spot on! Juice, I wish I can get your feedback on something. If you dont mind emailing me, I would appreciate it. You too eah. You guys are harsh voices, and I would love feedback on something in private.
Ignored comment.
Unhide
Response by urbandigs
about 17 years ago
Posts: 3629
Member since: Jan 2006
Ante148 - "Btw- I came to the 1.5% thinking the typical buyer looks at an average of 10 apartments if not more and your service is going to cost them $9000 (for 12 apts). I would rather have your unlimited expertise for a few more bucks. In the grand scheme of home buying its not a lot."
Well no, the buyer would see 10 properties on their own as they search, and then when they find something they like and may purchase, I am brought in as a consultant on the 2nd showing! So, they fine tune a few properties and then go back with me for the consulting service.
I think making 3 packages is the way to go.
PACKAGE 1 - 1 property consult for those that found the property they want already and 100% want to buy it
PACKAGE 2 - Up to 3 property consults
PACKAGE 3 - Up to 10 property consults
I think each will have a fee, rather than make it a % of purchase price or other.
Ignored comment.
Unhide
Response by ante148
about 17 years ago
Posts: 70
Member since: Apr 2008
UD- makes sense, you definitely have a nice approach. Everything from building your brand to dismantling the crooked system. Getting a legitimate MLS for the industry as you and front_porch describe is KEY to your business plan. Otherwise the unsophisticated buyer will not know where to start and thus resort to the traditional buyer broker route. What about if the buyer just wanted recent comps in building neighborhood? I assume in your example above you would have the seller's fee be at 3%?
Also, can you please explain further, or give an example of this statement. Kinda sounds like something I would say on a marketing roadshow ;-)
"Sometimes I made a very ballzy move with my buyers that worked out wonderfully for them, and when I told other brokers about what I did after the deal was done, they said I was crazy and they would have just advised the buyer to raise their bid."
Ignored comment.
Unhide
Response by YJBO
about 17 years ago
Posts: 88
Member since: Dec 2008
UD---I'm not using a broker, and I recently bid (unsuccessfully) on an apartment. I would have been happy to hire you for a reasonable flat fee to strategize.
Ignored comment.
Unhide
Response by urbandigs
about 17 years ago
Posts: 3629
Member since: Jan 2006
YJBO - what do you think is fair, considering I would not be your buyer broker and would not earn a split, 3% commission of purch price at closing? THANKS for any feedback!!!!
for 1 property consult, soup to nutz, throughout the bidding process until contract signing, what do you think would be fair?
Ignored comment.
Unhide
Response by YJBO
about 17 years ago
Posts: 88
Member since: Dec 2008
UD---Amount depends on how much of your time is required. Maybe 20 Hours @ $100/hr = $2,000.
I'm happy to discuss this with you offline if you want.
Ignored comment.
Unhide
Response by urbandigs
about 17 years ago
Posts: 3629
Member since: Jan 2006
email me! nrosenblatt + at + halstead.com thanks
Ignored comment.
Unhide
Response by JohnDoe
almost 17 years ago
Posts: 449
Member since: Apr 2007
'digs, I know I'm a little late in responding here, but one thing I've been thinking about is how professional service providers' compensation often seems to provide the wrong incentives. E.g., bankers who get a percentage of an issuance are incented to get the deal done even if it's not in the best interests of their clients, lawyers billing by the hour are incented to spend too much time on projects. But, in these fields, some people develop reputations for excellence in representing their clients, so that the concern about incentives is minimized.
Similarly, with a real-estate buy-side broker, a reputation for excellent client service, and for fighting vigorously to advance client interests (rather than, e.g., pushing a client to pay a higher price just to get the deal done and get paid) could do a lot to mitigate the negative impact of the percentage-based model. In addition to your consulting services (which I think are a great deal), I think you really have the potential to continue to cultivate a reputation for excellent client service and for putting your clients first in a way other brokers may not. I've worked (unsuccessfully) with two buy-side brokers who I never thought really had my interests at heart. At the point that I'm ready to buy (i.e., when the market declines seems mostly done), I'd have no compunction about using you as a broker if you were still in the game - even if we used a traditional compensation model.
'/%3e%3c/g%3e%3c/svg%3e)
I really would like to take down the sell side business model here, and the big players use of no public MLS system here. That turns me on. The current model just seems both antiquated, inefficient, and not in the best interests of the consumer. Thats all.
"Seller agents really don't care what the seller gets, they are typically volume shops who need to move on to the next deal."
Absolutely right. The biggest myth in real estate is that listing agents want to keep the price as high as possible to drive higher commissions. In reality, they will drop the price (if you let them) in a heartbeat if it speeds the sale. The first thing a listing agent thinks about when meeting you is how to secure the listing the second is how to manipulate you into lowering the price.
"The first thing a listing agent thinks about when meeting you is how to secure the listing the second is how to manipulate you into lowering the price."
Now that is spot on! Juice, I wish I can get your feedback on something. If you dont mind emailing me, I would appreciate it. You too eah. You guys are harsh voices, and I would love feedback on something in private.
Ante148 - "Btw- I came to the 1.5% thinking the typical buyer looks at an average of 10 apartments if not more and your service is going to cost them $9000 (for 12 apts). I would rather have your unlimited expertise for a few more bucks. In the grand scheme of home buying its not a lot."
Well no, the buyer would see 10 properties on their own as they search, and then when they find something they like and may purchase, I am brought in as a consultant on the 2nd showing! So, they fine tune a few properties and then go back with me for the consulting service.
I think making 3 packages is the way to go.
PACKAGE 1 - 1 property consult for those that found the property they want already and 100% want to buy it
PACKAGE 2 - Up to 3 property consults
PACKAGE 3 - Up to 10 property consults
I think each will have a fee, rather than make it a % of purchase price or other.
UD- makes sense, you definitely have a nice approach. Everything from building your brand to dismantling the crooked system. Getting a legitimate MLS for the industry as you and front_porch describe is KEY to your business plan. Otherwise the unsophisticated buyer will not know where to start and thus resort to the traditional buyer broker route. What about if the buyer just wanted recent comps in building neighborhood? I assume in your example above you would have the seller's fee be at 3%?
Also, can you please explain further, or give an example of this statement. Kinda sounds like something I would say on a marketing roadshow ;-)
"Sometimes I made a very ballzy move with my buyers that worked out wonderfully for them, and when I told other brokers about what I did after the deal was done, they said I was crazy and they would have just advised the buyer to raise their bid."
UD---I'm not using a broker, and I recently bid (unsuccessfully) on an apartment. I would have been happy to hire you for a reasonable flat fee to strategize.
YJBO - what do you think is fair, considering I would not be your buyer broker and would not earn a split, 3% commission of purch price at closing? THANKS for any feedback!!!!
for 1 property consult, soup to nutz, throughout the bidding process until contract signing, what do you think would be fair?
UD---Amount depends on how much of your time is required. Maybe 20 Hours @ $100/hr = $2,000.
I'm happy to discuss this with you offline if you want.
email me! nrosenblatt + at + halstead.com thanks
'digs, I know I'm a little late in responding here, but one thing I've been thinking about is how professional service providers' compensation often seems to provide the wrong incentives. E.g., bankers who get a percentage of an issuance are incented to get the deal done even if it's not in the best interests of their clients, lawyers billing by the hour are incented to spend too much time on projects. But, in these fields, some people develop reputations for excellence in representing their clients, so that the concern about incentives is minimized.
Similarly, with a real-estate buy-side broker, a reputation for excellent client service, and for fighting vigorously to advance client interests (rather than, e.g., pushing a client to pay a higher price just to get the deal done and get paid) could do a lot to mitigate the negative impact of the percentage-based model. In addition to your consulting services (which I think are a great deal), I think you really have the potential to continue to cultivate a reputation for excellent client service and for putting your clients first in a way other brokers may not. I've worked (unsuccessfully) with two buy-side brokers who I never thought really had my interests at heart. At the point that I'm ready to buy (i.e., when the market declines seems mostly done), I'd have no compunction about using you as a broker if you were still in the game - even if we used a traditional compensation model.