The Modern Realtor’s Value Proposition
by seb frey
Don’t tell anyone, but I watch a fair amount of Reality TV. Not sure how it began – but I think it was Survivor. Then before you know it, I was watching forgettable season after forgettable season of the Bachelor(ette), and I’ve seen all the housewives from coast to coast, humiliating themselves and each other with wild abandon, for more years than I care to count.
Of course, my true love is Million Dollar Listing New York. I just love looking at that gleaming Manhattan real estate. Million Dollar Listing L.A. is another show I watch every episode of, but the agents on the show are just a little too L.A. for my taste. Not that there’s anything wrong with L.A., of course!
The reason I mention this is because I also watch Selling Sunset on Netflix, which is kind of like Charlie’s Angels, Real Estate Edition. In a recent episode I saw, head honcho Jason of the Oppenheim Group (the Charlie of the show) mentioned that they had recently introduced their Concierge Program.
Any time I hear the words “Concierge” in the real estate context, my ears perk up. I’ve offered “Concierge Services” for many years, where I help homeowners do whatever it takes to get their property ready for market, given the time and resources available.
In fact, when I shuttered my independent brokerage and moved my license to Compass in 2019, a large part of the impetus for that was because of the Compass Concierge program. Compass Concierge is a wonderful program where Compass will front the cost of repairs, up to $75,000 per home in the Bay Area (including Santa Cruz and Monterey), with no cost, fee, or interest whatsoever.
This solves a big problem for many of my clients, a great number of whom struggle to scrape up the cash to repair and refresh their homes to get them market ready. Many people around here are cash poor but house rich, and if you’re retired and on a fixed income, even qualifying for a HELOC (Home Equity Line of Credit) to get the funds to get your home looking its best is impossible – but even when it is possible, it’s still expensive and time consuming, making it a less-than-desirable choice for many homeowners.
Today, many brokerages have copied the Compass Concierge program. It’s become almost de rigueur, although most competing firms charge a fee or interest and/or won’t front as much as Compass does.
One of the hallmarks of the “pandemic economy” is the booming real estate market – prices in Santa Cruz are up probably about 20% in just a year, and I’d swear they’ve jumped up by 25% in Watsonville. Given the stratospheric home prices, and the perceived ease of selling a home in this market, many homeowners are wondering what today’s Realtors are doing to earn those “juicy” commissions.
I point to these Concierge programs as just one example. Realtors – the best of them, anyway – have long pointed to the value that they help create, unlock, or preserve through their services. It’s becoming increasingly common in Santa Clara county, for example, for Realtors to also pay for staging – which can easily run $3,500-$5,000 per house, and often quite a bit more.
Helping their clients clean up, repair, and modernize their homes is one way that Realtors do for sure earn their fees. One back-of-the-napkin figure I use to calculate the return on investment for this kind of work is 2.5x the cost – so, for example, $50,000 spent readying a home for sale might increase the sale price by $125,000, or an increased profit to the seller of $75,000. $75,000 by the way is the equivalent of a 5% commission on a $1.5 million sale – so it’s easy to see how just this one service alone easily pays the cost of the commission, and then some. All the marketing, negotiation, counseling, and transaction processing is just gravy for the seller at that point.
Now, here’s the rub: there’s still plenty of old-school Realtors out there who eschew professional photography and video, social media, paid advertising, repairs, and staging. Yet, many of these Realtors charge just the same as a modern full-service agent does. Working with these “no-frills,” full-cost Realtors still has value vs. selling “by owner” – but clearly, the value is commensurately lower.
If a pared-down service (and lower sale price) work for you, I want to point out that there are numerous discounted, local Realtors you can tap – just turn on the Google machine and see what comes up.
But if you’re looking to make the most on the sale of your home, please know that there are Realtors out there who provide a level of service, expertise, and value that make the cost of the commission very much worth every penny, and then some. You just have to know what’s possible, and where to look for it.
Seb Frey was the 2019 President of the Santa Cruz County Association of REALTORS. He’s been selling homes locally since 2003, and is the author of Get It Sold! (available at TheSoldBook.com) and stars on his own YouTube channel on SebFrey.TV