Midvalley real estate firm takes bold step with its fees
August 10, 2005
A midvalley real estate firm is banking on getting a competitive edge and increasing its listings by offering home sellers a variety of services at different commission levels.Harrington Real Estate is apparently the first firm in the Roaring Fork Valley to formally offer different levels of service for different fees.For a 1 percent commission on a sale price, for example, the company will offer some key help to people trying to sell their own property. Additional advertising and marketing efforts will be undertaken for 2 and 3 percent commissions. For 6 percent – which is the typical size of commissions – the firm makes property available for sale by other brokers that belong to the valley’s Multiple List Service.Co-owners Matt and Terry Harrington said the initiative for their new business approach is simple – competitive edge.”There’s so much competition out there – we’re trying to capture business we otherwise wouldn’t get,” said Terry. “When we tell people there are choices and options, the phone’s really going to ring.”
Matt said the move is needed to adjust to the times. They have owned their real estate firm for 15 years and have concentrated in the midvalley. A 6 percent commission was common years ago when an average home price was $200,000. The commission was never adjusted even though property values have soared.Matt said many people selling a midvalley home cannot afford a 6 percent commission with the current prices. A $700,000 sale, for example, earns a $42,000 commission at 6 percent.In some cases, people haven’t earned enough equity to pay that size of commission. In other cases, their level of debt interferes with their ability to pay that size of commission.The Harringtons also figure that offering professional consultation and limited services, like prequalifying buyers, will earn them listings from the “For Sale By Owner” market – a market that otherwise doesn’t produce listings. The hot real estate market in the valley has spurred an increasing number of homeowners to try to sell their homes themselves.Lynn Kirchner, owner and managing broker of Amore Realty in Carbondale, said tailoring commission levels to clients’ needs has been going on “since real estate deals were done on a handshake and a single piece of paper.” She’s used the concept since she’s been a partner in local real estate firms in 1995.
What’s “unique and bold” about the Harringtons’ approach is that they are advertising it, she said.Kirchner said she offers different levels of service and commissions as another way to provide customer service, but she doesn’t use the differing commissions directly as a way to attract listings. She figures that customers earn a lower commission level if they listen to her advice and price property as she advises. That way it sells quicker and requires less marketing time and effort on her part, she said.The Harringtons are going well beyond advertising their different services and commissions. They are basing their entire marketing plan on the concept and creating a highly visible division of their firm which will be called Harrington Choices in Real Estate.One advertisement the Harringtons have prepared features a picture of mouth-watering pie with a slice cut out. “Why should you pay for the whole pie when you’re having only one slice?” it asks.Both Harringtons scoffed at the idea that the new marketing direction could be perceived as an act of desperation. They claimed they have a history of taking bold steps to successfully increase market share. One was paying more for a more visible site adjacent to the El Jebel City Market. Another was using the Internet to showcase listings.
“When no one was doing virtual tours five, six years ago, I was doing virtual tours. Now everybody is doing them,” said Matt.”We’re taking a gamble,” Terry acknowledged, “but I can’t imagine it’s not a sure bet.”Scott Condon’s e-mail address is firstname.lastname@example.org