Traditional Real Estate is Afraid of Rebates

One of the main arguments that the traditional real estate establishment is making against discount, flat fee, and online real estate companies is this:

• Your companies might give money back to the consumer, but the consumer is losing money overall because you don't know how to price their home.

Basically, traditional real estate says that rebate and discount companies do two things:

We advise our buyer clients to overpay for homes that they purchase

We advise our seller clients to sell their home for too little, ie. we list them at a lower price that a traditional Realtor would

So traditional real estate's main argument against the new breed of discount and rebate-based real estate companies is that the consumer ends up losing money. What?

This argument is so insulting to the average real estate consumer, and so flawed from a logic standpoint that it's difficult to pick a spot to begin my own criticism.

Let's start with point #1 from above: our buyers are overpaying for the homes they purchase. Let's say that I represent a buyer to purchase a house in Denver. Traditional real estate would have you believe that our agents advise you to submit an offer at that is very high (just so it gets accepted), and that it doesn't matter that our buyers get an average rebate of $8,000 from us, because they probably overpaid by more than $8,000 to begin with. Good God. This argument assumes a couple of things:

That you, the consumer, are not very smart

That I, the agent, am completely dishonest

Traditional real estate is accusing you of being unsophisticated by saying that you'd be so clueless in regards to pricing that only a "traditional Realtor" (read: a Realtor who charges 6% and does not give buyer rebates) has the incredible skill, honesty, and negotiating savvy to talk you into offering a lower price for the home you want to buy. Traditional real estate would have you believe that they have a corner on the market of pricing information data and that you had better use a traditional Realtor or you'll never really know how much a house is worth.

Can you see the incredible dishonesty here? Can we all agree that the Internet revolution has brought one thing to the public: ready access to lots of information. Do you think you could go out right now and find out what homes have sold for in your area? You're probably saying 'yes'. Many folks are using sites like Zillow, Cyberhomes, or even their county records to obtain comparable stats. I know that many of my clients who are interested in Denver real estate have already done this type of research by the time they come to me.

But you don't even have to go to these places yourself. You simply have to know that housing data is available. Wouldn't most of you want your Realtor to present you with recent sales data before you make an offer? Traditional real estate would have us believe that you don't even know enough to ask for this information.

They'd have us believe that you are so unsophisticated that unless a traditional Realtor tells you that you should base your offer on recently sold information, that you are in danger of allowing a dishonest discount broker like myself write an offer that ignores this basic information. Is the typical home owner that uninformed, or is traditional real estate's argument as flawed and insulting as I earlier suggested?

Let's look at point #2: I'm dishonest because I'm not a traditional Realtor.

Where to begin with this argument? This suggests that the public image problem of Realtors is a recent development brought about by rebate and discount-based companies who are trying to lower real estate costs for consumers. Did you get that? Traditional real estate would have you believe that traditional Realtors were respected by the general public until the rebate companies came along. Do you believe that?

In order for me to practice real estate with this level of dishonesty (forcing my clients to list their homes at below-market-value prices, and guiding my buyers to purchase homes at above-market-values) the vast majority of my clients would have to be completely clueless (see point #1). The truth is that most of my clients find me because they don't trust traditional real estate, or because they've been through the buying and selling process before and they realize that there must be a better way than the traditional method.

The truth is that my typical clients know more than the average real estate customer. So point #2 is ridiculous on many levels.

The truth is that traditional real estate is terrified of the competition from rebate and discount companies because they know that we're on to something. We know we're on to something here as well. And all of our satisfied clients can attest to our own honesty and incredible cost savings.