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John 's articles on the real estate practice, and related subjects, appear in local newspapers and business publications. Check out a sample and revisit as new articles will appear. Your feedback is welcome!

Penny Wise…Pound Foolish!

John Doran

REALTOR®/Educator

Penny Wise…Pound Foolish!

There are many ways to choose a real estate professional to represent you in the sale of your valuable home, but, in my opinion, the worst way to make that choice is by picking the one who charges you the lowest commission. Don't get me wrong, I am not here to knock "discount brokers", or to pump up the image and/or fee of "full service" firms. Nor do I begrudge you "saving money on the commission" and maximizing the return on your housing investment. I am merely here to state that if that low fee is the sole criteria on which you base your decision, you may be making a big mistake. Saving money on the commission is a big mistake if it results in reducing the potential return on your real estate investment.

The real estate business is a bizarre study in contradiction. Fierce competition between firms is tempered by the reality that half or more of the typical firm's sales are completed through cooperative efforts with competing firms. One firm lists the house; another firm brings a buyer; a sale is transacted. In order to provide incentive to the other firms to bring in buyers, the listing firm offers a cooperative fee through the MLS. The amount of that fee - what is offered for cooperation - has a direct influence on co-broke response. Background to all of that... federal laws against "price fixing" prohibit members of competing firms from discussing what commission amount they charge sellers in their listing contracts. As a seller, when you list your property, you not only agree to pay your listing broker a commission, you decide how much of that commission is to be offered to MLS participants as an incentive to bring buyers into your home!

Before listing your valuable home with any agency, it behooves you to know just exactly what they are going to do to bring you the best possible offer in the most reasonable period of time. Accurate pricing advice, help in preparing the house to be shown, handling of proper documentation and legal disclosures, and a marketing plan all are instrumental in your accomplishing your goal. You want your home exposed to the greatest number of ready, willing, and able buyers to assure that you will get your best possible offer in a timely manner.

That marketing plan may include listing sheets, promotional e-flyers, internet exposure, signage, print advertising, and entry in one or more MLS systems. If, as a seller, you are trading down on any of these to enjoy a lower commission, you may be working against your own goals. It is well known among real estate professionals that the greatest source of actively looking, qualified, motivated, educated, ready, willing, and able buyers at any point in time is other real estate professionals. The real professionals are actively working with numbers realistic buyers and they make sure those buyers are pre-approved!

Bottom line on your "bottom line" is this: In deciding whom to hire to handle the sale of your home, look at more than what they charge. Look at what you are going to get. Ultimately, we all know that we get what we pay for. To save a few thousand on fee, but end up with a limited market and not the best possible offer, may cost you several thousand more in the long run than what you "saved'. Base your decision on maximizing, the competence, the knowledge, the effectiveness, and the exposure available to you. Negotiate a reasonable fee, yes, but think it through and make sure you get the service you deserve and the exposure you require.


By John Doran
All rights reserved

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RealtorJohn DoranEqual Housing
REALTOR® / Educator

5 Webster Street
Nashua, NH 03064
Office / Cell: 603-566-9921
jdoran7@comcast.net