Peter Pays Paul

Now I know that journalists are paid to sell newspapers, but sometimes they make absolutely no sense to me at all.

Case in point: The business section of today’s Contra Costa Times and the business section from yesterday. (more…)

Michael Cook over at the BloodhoundBlog wrote a great post about persistence in real estate investing. This is true in whatever realm of investing you venture.

Investing is a long-term game plan. If your only goal is to “get rich quick”, then the first sign of adversity will likely derail you and scare you away. Sports and investing have many similarities. In high-school I played football. We practiced for three to four weeks before we played our first game. Those first weeks were terrible. Included in that time was a week with two practices a day called hell week. Many times you questioned whether all the practice and pain was worth it.

But then… (more…)

On Sunday March 18 the Contra Costa Times carried an article on Redfin. Redfin offers sellers a lower listing expense and offers rebates to buyers.

My question is: But at what cost? The article in the Times stated that Redfin relies on buyers to do much of the work that traditional agents do. Redfin still gets paid but they end up doing less work. Sounds like a good deal to me.

According to the article, Redfin pays its agents a salary and not a commission. While this is beneficial to buyers, in a way, it also hurts buyers. How does it hurt them? Well, what motivation is there for a Redfin agent to work exceedingly hard for your home purchase? S/He gets paid regardless of the transaction. He has not put much time into showing you homes, helping you secure a lender, or closing the deal and if the deal goes south s/he is out very little.

What about for home owners looking to sell their home? The fixed listing fee strategy can be great for a seller’s bottom line. Traditional agents get paid a commission only if a home sells. This is a strong motivation to price your home correctly and assist you in preparing the home for sale. A commission based upon sales price is also a strong motivation for negotiating a higher price for the seller.

A quality real estate agent will always seek the best interests of their client, whether that be the buyer or seller. This will reap rewards in the long run as well. An agent that does not seek the best of the client above their own individual reward (read pay check), is jeopardizing future relationships with that client. Common marketing lore has it that an individual will tell a minimum of 10 people about bad service or a bad experience that they have received. Can an agent with any hope of longevity afford this? No.

This is not something that I can afford. Nor is it something that I even want to consider. If my clients are not thrilled with the service that I provide for them, then I have not done my job well.