Let’s discuss the TV ads that are running by this company:
Home sellers have a sneaky suspicion that they should hire a great agent, but they don’t want to pay 6%. These ads combine these two pain points beautifully, and offer to pair you with a Top 1% agent for only 2%!
Their fine print seems to back it up too:
*Our agents will list for 2% and offer the typical Buyer’s Agent commission in your market ranging from 2% to 3%. The average Buyer’s Agent commission nationwide is 2.5%. If a buyer calls on your house directly without an agent, our agents have agreed to do the entire transaction for only 2% total. Homes under $150,000 will have a minimum list side commission of $3,000.
Let’s get to the real truth. Several points:
- They say their service is FREE. But they are running national TV ads? Who pays for those? The realtors pay for those! They have to give a split of their commission to the advertising company. Do you think the Top 1% of realtors are jumping at the chance to work for 2% and then give up 20% to 30% of that to the lead source? No way. They have enough other retail businesses that they don’t have to discount their commission.
- The commission is ‘pre-negotiated, but that only means that the realtors have to offer 2% as one of the commission options. Because the listing agent will also have a 6% commission option, they get paid LESS with the 2% plan. Because the best agent teams have buyer agents who get a spiff too, the 2% option will only rarely get implemented – there’s not enough $$ to go around. The home’s listing goes onto the MLS/open market, which means the chance of an outside agent selling the home is at least 90%, and because of the disincentive, it’s probably more like a 98% chance of not being a 2% commission plan.
- The listing agent may normally offer a 5% commission plan. But because he has to pay the 20% to 30% to the lead source, it will get passed on to the seller in the form of a 6% commission.
- Because of the seller’s zest to only pay the 2%, they will sign up after a spectacular listing presentation that doesn’t reveal the truth about the chances of the 2% commission being so unlikely.
- The sale will go smoothly, and the sellers will be on their merry way. If they happen to glance at their closing statement, they might notice that they paid 6% in the end, but hey, it’s over and they shrug it off.
There is one revelation of truth at the bottom of their website: