Limited Services, Limited Fees: What You Are Really Paying For
We have received several phone calls lately from clients wanting to know more about limited services for a limited fee. With a strong housing market, it is not uncommon to see start-up real estate companies popping up with offers that make sellers question what they are really paying for. Let’s take a closer look at what limited services for a limited fee look like when it comes to selling a home:
Pick-a-plan-pricing: instead of charging a percentage of the sales price as a commission, you might see a flat fee pricing plan that has limited services included. While they may list your home for sale in the Arizona Regional Multiple Listing Service (ARMLS), the flat fee may not include a yard sign, or a lockbox. If you want those services, the price goes up. Keep in mind, even with a pick-a-plan-pricing, you will still pay a commission through ARMLS to a buyer’s agent; that costs is typically three percent of the agreed upon sales price.
No marketing plan: with a limited service real estate company, you might be saving on the commission money but you’ll also be giving up any professional marketing that might be included with a traditional listing agreement. If you want professional photos, virtual tours, videos or Internet exposure, you will be responsible for the cost and navigating which sites will help you sell your home. Of course, the limited service companies will offer a package that includes a marketing plan, but it will cost you more money.
Showing your home: when someone wants to see your home, you will be responsible for arranging the time, screening the buyer’s qualification, and verifying that the person calling is in fact a licensed REALTOR®.
Negotiations: in many of the limited service agreements offered, negotiating the purchase contract is not included in the flat fee. This means you will be responsible for negotiating the best price and terms on your home – by yourself. For a more experienced home seller, this might not seem like a big deal – but it could also be the moment you realize what the flat fee pricing is really costing you.
The Escrow Process: every limited service company is different and their fees may or may not include assistance during the escrow process. If the flat fee you are paying to save on commissions does not include representation during the escrow process, that means you will be responsible for making sure that escrow is opened (this means the buyer has deposited their earnest money funds with the title company), negotiating any home repairs the buyer asks for, following up on the appraisal, keeping in touch with the lender to make sure the buyer’s loan is proceeding and dealing with the buyer’s agent. It is important to point out that the buyer’s agent is not there to help you, and actually they would be putting their license in jeopardy if they did.
Not too long ago we published an article in our newsletter with a list of over 150 items that we do while representing our client in a real estate transaction. These five bullet points are just a few of the risks that hiring a limited fee company means for you. This year, we have been able to negotiate between 98 and 103 percent of list price to sales price for our seller clients. If you are worried about the cost of commissions charged by traditional real estate companies, I would ask that you consider what it is really going to cost you by when it comes down to having an experienced professional represent your best interest. You pay for what you get, and if it seems too good to be true, it usually is. If you are thinking about selling your home, please don’t risk your bottom line to save a few bucks on commission. Give us a call today – Frank
The Russo Team
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