Vague piece on using online brokerages/fsbo... Thoughts?

3 Replies

Many of these companies operate at a loss. As is typical, companies operating at a loss have a high failure rate when we enter a recession. Expect somewhere in the range of 50% of them to go under during the next recession.

Hi Kyle,

I think they are gaining in popularity, but not sure how long that will last. In my opinion, their only selling point is that they cut commissions. I've had a few people here in my market (Seattle), who have used brokerages such as Trelora and have been extremely disappointed. The simple fact is that even with a "team" of people managing a property, the attention to detail and personalization is just not there. They are relying on the MLS to sell a property, not marketing, experience or relationships.

For instance, I had a property owner contact me who used a "discount brokerage," which shall remain unnamed, and their property sat on the market literally 8 times longer than it took for the longest listed house in his neighborhood to sell.  He ended up cancelling his contract with them and going elsewhere.  Property sold in 7 days, above asking price and the home was listed at the same price as the initial brokerage.

These types of brokerages overwork their agents, pay less attention to detail and hiring, because if they don't, they'll never be profitable.  The question then, is how long can they outlast NOT being profitable...  Their whole model relies on having a lower overhead and attracting large numbers of people to appease investors.  Unfortunately, real estate is a "people" business, and "people" can only do so much.

Just my 2 cents.

If you were looking to hang your license with one of these brokerages, be wary.  Focus on providing clients VALUE, not a discount.

Edit: I 100% agree with the post above me.

@Kyle Miller there are some that are really changing the game and as others have said they often operate at a loss to gain market share, but with Technology changing, we are going to see changes in the space. Just think about it - before Charles Schwab, you would call your financial advisor/broker and pay $200 to sell/buy a stock. The good agents will stay in the space and continue to win the business of people that understand the value they provide. The 90% of agents that didn't want to be an agent but fell into it and are just trying to quickly turn from client to client are the ones that are going to be hit the hardest by these types of companies!