Was it Price or Competence?

The battle between the discount brokerage models and full service rages on. Examples abound that seem to support the side that presents them. Those with a moderate view believe that there's room for many business models in the practice of real estate. I agree with that, but where I don't believe we have extra room is for incompetence.

In a well written and interesting post, Mark Lederer presents an example of pricing by a discount brokerage and a full service firm. Accepting Mark's figures as accurate, two almost identical properties next door to each other sold for dramatically different prices. The comparison would seem to point out that the much lower price resulting from the listing by the discount firm was a "you get what you pay for" story.

Here's a quote from the FAQ page on a site in that same franchise: "How Do I Know What My Home Is Worth?

Answer: We help you! We prepare a free comprehensive Comparative Market Analysis(CMA) using the same technique as appraisers."

Assuming similar marketing across the franchise, there should be no reason for the seller of one home to lose $67,000 in equity due to a "discount" business model. Could two professionally prepared CMA's have produced such a huge difference in the same time frame? I'm sure that the marketing is well-intentioned and that every effort is made to provide that comprehensive CMA. Any franchise or single brokerage doing discounting or even full service could have produced a similar result. It isn't about discounting. It's about competence and knowing your business.

Some may want to place the blame on the "discount" model or the franchise, saying that there isn't enough money using that model to properly train their agents. I don't believe that to be the case, and wouldn't want to use the "discount" card against them at all. It's more likely that it's the fault of that single brokerage and their lack of concern for the level of expertise of their agents. That can happen anywhere and in any pricing model. We simply have to do a better job of ensuring that the people we send out to serve our customers and clients are exceptionally well trained in the core competencies required.

Perhaps consumers should be taught another way to compare agents before they list their homes. Throwing all the experience, volume and charismatic stuff out, maybe they should look at what I've coined as the CEI (Continuing Education Indicator). See the next post.