This is what John Ruskin knew more than 100 years ago: “There is nothing in the world that some men cannot make a little worse and sell a little cheaper, and he who considers price only is that man’s lawful prey.”

When someone perhaps not properly informed is preyed upon, buying business by offering lower prices is relatively easy.  This is the essence of real estate commoditization, and in my opinion, using the cost of selling is the laziest and riskiest method to market with.

The home buying and selling public do not always understand a real estate sales professional’s value, and in many cases they believe all real estate agents do the same thing.

When the consumer is presented the full spectrum of service models (and credentials) to understand and make an informed choice, value versus price commoditizing will win every time and besides, the risks that can accompany a bungled transaction far outweigh the costs.

In “Balanced” and “Buyers” markets there are many Sellers getting in “pennywise, pound-foolish” situations, and it has been proven time and time again that far too many lose.

The real estate industry commonly offers the public something called, “Full Service”, which is a bundled package that is generally undefined.

Even some of these generically named, “Full-Service” real estate models will provide for economizing consumers, but can only maximize the ROI with some regularity in a “Sellers” market.

Selling using William’s “fee for service” model certainly won’t guarantee that a Seller doesn’t face additional commission fees. If a Seller posts through William for $109 and the buying party is using a real estate agent, commission fees based on the selling price will likely apply.

Research findings of Richard Robbins International show that a Buyers representative spends on average 32 hours with a Buyer. When the other costs are figured in, that Buyers representative will expect to be fairly compensated if they deliver a pre-approved Buyer to the Seller.

Offering a low Buyer’s commission is counter intuitive if a Seller wants to attract pre-approved, qualified Buyers.

Despite being unaware of the many issues that can complicate a sales transaction, some sellers using low cost fee for services are successful in getting what they pay for.

An “economical” sale is more likely to cost unsuspecting consumers more money, take up much more time than selling with a professional, and has additional risks.

The time spent planning, preparing (the home itself, making signs, printing feature sheets, etc), advertising (newspaper, Internet, etc), taking or returning phone calls, arranging showings (to sell an average home requires 12-20 showings, each showing takes 30-45 minutes), etc., is daunting.

Unlike a Realtor, the public is not covered by errors and omissions insurance and will face the risks of showing the home and everything in it to unqualified buyers.

Many buyers who do look at private sales are bargain-hunters looking to save, and don’t kid yourself, they are well informed and expect the full commission deducted from the sales price.

What if, like the majority of unassisted sales, your house undersells by 3 or 4% because of the discount mentality? Ouch!

If by chance (or because it was priced too low) you were able to obtain multiple offers are you able to deal correctly with them?

Don’t forget the fact that dealing with unqualified buyers often leads to private Sellers having numerous offers collapse.

A discounted service that loses sales, reduces marketability, results in a lower selling price, or misses any opportunity, could be a very expensive lesson.

When you lower your commission, you essentially have two choices – to reduce your profit margin, or to cut back on what you use to get the home sold. Neither scenario is very attractive or helpful in guaranteeing you earn the highest possible price for that home.

Think about how much you really saved in commissions? What other experts offering low cost solutions do you know?

Remember that a Realtor offering fee concessions has already given away a part of their commission before they’ve even started. Do you really want them negotiating for you?

Your choice of Realtor could be the best investment you make as either a Buyer or Seller.  Why compromise?  Well it is your money and it is your choice, so choose wisely.

Going into a real estate transaction few people understand what (value) they are getting, which has contributed to a belief by some that Realtors are overpaid.

You should question the value of the business model that you choose for your real estate services because most REALTORS work on a contingency basis, which means they don’t get paid unless you are successful.

The value of loyalty offered by REALTORS working on a contingency basis (versus, “fee for service”) to consumers in a real estate transaction is unquestionable and underestimated.

Sure, we’re more expensive than the competition, but there’s a good reason for that …

All things are not equal and I set myself apart from the low cost, minimal care and short service providers, and I will not compromise my reputation, or my customer’s best interests.

We’re certainly not about to start compromising our reputation by downgrading our service and offering concessions, or most importantly our results.

If you’re looking for cursory services you’ve obviously come to the wrong place. I really want to help people who are interested in what I have to offer (real value for money).

Delivering the high-level of service the customer pays for and the results expected, is where the real differentiation begins.

The most important question we can ask is, “What do our customers expect?” How could I possibly be fulfilling my professional obligations, working in the customer’s best interest, without knowing this?

Through an interview and assessment process I want to clearly understand what a prospective customer expects at the outset.

Then I put together a customized but flexible project plan in writing for the prospective customer to clearly understand what they will get, and if the plan needs to be changed it will be.

Photograph by: Files, Vancouver Sun

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The national mortgage insurer counted 1,173 new homes across Metro Vancouver in May, a dramatic 150-per-cent improvement on the same month a year ago, which was still in the doldrums of B.C. housing downturn.

For the year to date at the end of May, builders have started work on 5,631 new homes, which is 103 per cent more than for the same period a year ago.

However, Robyn Adamache, Canada Mortgage and Housings senior analyst for Vancouver, said the annualized pace of construction, the estimate for the number of starts that will occur by the end of the year, had slowed some seven per cent compared with April.

Adamache said builders are likely taking their cue from the housing resale market where sales, while still brisk, have eased off their torrid pace of late 2009 and price gains have slowed.

Its the resale market that sets the tone for whats happening in new housing, Adamache said. I think builders are looking at that and will be adjusting accordingly.

Construction of single-family homes has been particularly strong, Adamache said, with the 424 starts in May a 102-per-cent increase from May 2009. Surrey alone accounted for 180 of those single-family starts.

And in Surrey, single-family starts topped multi-family (townhouse and condominium) housing starts both in May, when there were 74 multi-family starts, and for the year-to-date with 921 single-family homes versus 569 multi-family housing starts.

In Vancouver, by contrast, single-family starts are up dramatically, but the 78 homes builders started work on last month and the 261 begun by May 31 were still overshadowed by the 324 multi-family starts in May and 1,306 started as of May 31.

Adamache said the strength of single-family starts, which are higher than their 10-year average for this time of year, was not a surprise given the dynamics of the recent housing downturn.

She added that single-family housing starts slowed the least when builders scaled back construction plans and were the first to come back because single-family construction projects are the easiest to stop or start.

The multiple-unit sector remains below their 10-year average, although market indicators still suggest that the new-home construction market is in balanced conditions, Adamache added.

Vancouver saw the highest number of multi-family starts in May with 324 compared with only 20 in the same month a year ago. For the year-to-date at May 31, Vancouver recorded 1,306 multi-family starts and 1,567 total housing starts.

Peter Simpson, CEO of the Greater Vancouver Home Builders Association, said his members are cautiously optimistic about the future and are launching new projects while keeping one eye on whats happening around them.

They are concerned about where interest rates are going, thats kind of very much up in the air, Simpson said. They’re concerned about the HST [harmonized sales tax] impact.

However, the builders he’s talked to are confident about the projects they are launching and sales they are making.

Deborah Calahan, vice-president of sales and marketing for Morningstar Homes, said the company has seen solid sales at its developments, including North Delta and Abbotsford, and we don’t see that changing.

The market is cyclical, you get your ups, you get your downs, Calahan said. We address the market at whatever point it is at, and always do it in a very positive way.

depenner@vancouversun.com

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You would probably also be aware that an increased numbers of permits and starts are being reported by home builders, which along with the new product being rushed to market before the HST is introduced on July 1^st, probably means, “Hello Buyer’s Market!”

Of course, all real estate is local so in Metro Vancouver, where we enjoy a consistently high net in-migration, our local market conditions have little to do with what is going on in the rest of the country.

Are prognosticators of a double-dip “W” shaped recovery model starting to look smart?

Today we’re fast approaching 17,000 listings in the REBGV.  It was only 15 or 16 months ago, when prices had dropped, that our MLS re-sale inventory was at over 22,000.

At that time what little new stock was available then was also being sold at “blow-out” prices for the developers to recoup their cash. It was amazing to see how much they were actually able to discount (obviously BIG margins).

Unfortunately the combined true local supply of “new” plus “re-sale” housing is not very often aggregated or reported. WTF (what’s that figure)?  A meaningful combined supply figure is unavailable for a true metric (of supply Vs. demand) to be reported regularly to the public; Go figure!

So there are certain REALTORS® who will accept the owner’s price, or just about any price, just to get the listing (and the “For Sale” sign placed).  In the real estate industry this action of the “highest bidder” is known as, “buying a listing”.

More than 70% of today’s real estate market involves Generation “Y” and “X”, and they conduct most of their research online, paying little attention to “For Sale” signs.

Seeing lots of “For Sale” signs for a particular REALTOR® should not be relied upon as social proof, or in any way whatsoever, in fact looks can be deceptive.

One key question the “X” & “Y” generations insist on knowing the answer to is how many unsold listings the REALTOR® has had the past 3 or 4 years. What could be more important for a Seller to know?

The goal of the homeowner is to sell, and not just list, so an expired listing is a failure, and unfortunately “Top Producer” awards don’t consider how many failures were produced.

All REALTORS® have a legal and ethical obligation to be working in the best interest of the client; it’s called a fiduciary duty.  Taking an over-priced listing (at least based on my best judgment) would be a professional compromise that personally I’m not prepared to make, although others do, and regularly.

Occasionally I’m unable to justify what a Seller has proposed for a list price, and so are they. I’d rather turn that listing down now than to let them down later, and especially in a “Buyer’s Market”.

I have some more thoughts to share should you decide to list your home with the “highest bidder” (instead of me):

• When you complete the listing contract be sure to get a cancellation clause included, which can be invoked at your discretion. Although you’ll have to sign to list for 60 days, you might need to get out earlier.
• Next, make sure the highest bidder has a really pleasant looking “For Sale” sign because you’ll likely be looking at it for a while, just like all the others out there.
• By the sixth week the unsold listing starts to give buyers the impression that there is obviously something wrong. The listing is now referred to as “stale-dated” as it painfully approaches 60 days unsold.
• Make sure to have other REALTORS® thank you for helping to sell their listings.
• Soon you’ll be asked to reduce your list price to lower than what I had suggested in the first place. It isn’t fun chasing the market down.

The reality is your home hasn’t sold yet and it’s likely that your options and market value are now rapidly diminishing. I guess that marketing plan didn’t work!

I’ll still be here when you get serious about selling your home, but make sure you’ve cancelled the listing contract first before you call me.