Bare bones real estate firms will list homes on restricted MLS database
By Linda Water Nelson
Memphis Business Journal
Updated: 7:00 p.m. ET March 19, 2006
A trend in do-it-yourself home sales is creating big bucks for a new breed of real estate broker, but full-service agents warn consumers that the method isn't a quick and easy method for selling a house.
Limited-service real estate firms are popping up in Memphis, touting their ability to list a home on the Multiple Listing Service -- the restricted database real estate agents use to help clients buy and sell homes -- for a flat fee of about $500.
"Anyone can slam a property into a computer. It may generate some showings, but for most home sellers it is an expensive, time-consuming way to avoid costs that, in the end, they pay anyway," says Rip Haney, an affiliate broker with Marx & Bensdorf real estate.
Limited-service real estate firms and other for-sale-by-owner approaches are gaining ground, Haney says, but they will never replace full service for most home sellers.
Think of limited service as an equivalent to having the lawns mowed and edged by a gardening service, while the homeowner does the planting, weeding and other detail work. Whether it is a desirable approach is wholly dependent upon the individual situation, the sophistication of the seller, knowledge of how real estate transactions are handled and other conditions.
"These owners are surprised to find that selling real estate isn't easy when they actually try to do it themselves," Haney says, citing a National Association of Realtors study showing that in about 75% of sales, homeowners netted the same amount or more using a full- service Realtor.
Marc Diaz, president of Mid-South Residential, a new limited-service residential real estate firm, says that offering multiple levels of service within one company confuses consumers who equate real estate with full service.
"When we provided limited service through another firm offering mixed service levels, consumers had unrealistic expectations of what could be done without charging a 6% to 7% commission," Diaz says.
Diaz' current firm provides access to the MLS, a lock box for the door, and a package that he calls a Realtor's tool kit with information on how to market a property. The service costs $500 plus 0.5% of the sale price at the closing. The seller is also expected to pay the 3% commission to the buyer's agent.
He does not give advice to the seller, tell them how to fix a price (although the tool kit gives information on how to do so), or handle showings, open houses or any advertising. If a property does not move within three months, Mid-South Residential can refer the seller to a full-service Realtor who charges a 6% commission. When a homeowner opts to do this, the initial $500 is applied to the full service commission.
"We see our service eating away at FSBO (For Sale By Owner) rather than full-service realty," Diaz says. "We provide the critical MLS listing that the owner cannot otherwise obtain, but we are no substitute for a full-service agent and broker. That is not our mission."
firm is MLS Mart Realty LLC. Founded in
Ted Malkasian, a broker for MLS Mart, says they take listings from about 10% of people who contact them, and that they are not looking for business from the "clueless" home seller with a single property to market every 20 years.
"Our customers are professional investors who understand that we do not fill the same needs as a full-service Realtor," Malkasian says. "Half of them sell one to two homes per month using our services, and they know the ropes."
MLS Mart charges fees that are comparable to those of Mid-South Residential, and sellers can expect to pay the 3% commission to the buyer's agent, if one is involved.
"Our customers are looking for that all-important MLS listing, as well as access to Web sites like Realtor.com. We are the conduit for that," Malkasian says.
The limited-service firms recognize that many full-service Realtors think little of their approach to the business. Jan Gordon, a life member of the Crye-Leike Realtors' Multi-Million Dollar Club, says sellers need to understand that when using a limited-service firm, they are unrepresented throughout the process, while most buyers have full-service agents.
"National Association of Realtors statistics show that of those unrepresented sellers who are successful in the sale of their property, 40% say they wouldn't do it again," she says.
That's because do-it-yourselfers are unaware about the time commitment for showings, open houses and other events, or the cost of advertising.
"When the limited-service seller is not available to show a property, it is often skipped in favor of others with more convenient access," Gordon says.
And those sellers might expect the agent representing the buyer to handle all aspects of the sale.
"When that happens, they are actually unrepresented since the agent is working for the buyer. Not a smart way to do business," Gordon says.
And unrepresented sellers have no buffer between themselves and the buyer when complaints arise regarding undisclosed defects or other issues.
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