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Discount vs. Full Service Real Estate Brokerage-the Lowdown, the Illusion in Metairie,Kenner,River Ridge,Jefferson & New Orleans

Discount vs. Full Service Real Estate Brokerage-the Lowdown, the Illusion in Metairie,Kenner,River Ridge,Jefferson & New Orleans

As an experienced broker of over 43 years I find the discussions swirling around full service real estate brokerage verses discount brokerage to be interesting but in many instances to be deceitful to the general public. Indeed, advocates and proponents of full service brokerage attempt to paint a picture that really does not exist in the real world of real estate brokerage. When asked to explain the difference between them they have great difficulty drawing distinctions.

For example, many mega brokers are condescending with brokers who do not adhere to rigid commission schedules. This is done by intimating that if you as a broker charge less than your mega broker competitor that you have to be leaving out important aspects of marketing and that you can not possibly do what they do because of their higher commissions. Let us analyze that for a moment. In the New Orleans and Jefferson Parish area many mega brokers have resorted to classified advertising only on Sundays, because they save money that way. Monday, Tuesday, Wednesday, Thursday, Friday and Saturday are days where they usually do not advertise. Not because the public does not read classified advertising on those days and not because the public does not look for real estate on those days, but simply because they save money that way. If you charge a lesser commission (negotiated) and you advertise 6 days a week are you to be dismissed as a discount broker by those self serving mega brokers ? If your office is open for business 7 days a week and the mega broker chooses to close on Sundays are you providing a higher level of service at perhaps a lower cost to the public ? 

Economics works in real estate brokerage just the same way that it functions in retailing, purchasing automobiles or any high end product or service. If my firm can deliver a high level of professional brokerage service and get your property SOLD at a lower net cost in terms of commission, why should you pay mega brokers more for service which at times is worth less ? Mega brokers want you to believe that the extra 1% or 2 % that you are charged in terms of commission is worth while and that a broker who does not adhere to rigid commission schedules is categorized as a discount broker and therefore is stigmatized  as being less competent and less efficient simply because you are being charged a lesser commission. If you are selling a $300,000 house and you are asked to pay several thousand dollars more you have a right to know what those several thousand additional dollars buys in terms of marketing. More than likely, you will ascertain that the additional cost of commission is not commensurate with whatever the additional marketing( if any) is supposed to deliver. At least you will then be able to make a rational decision and determine whether the perceived additional services are worth thousands of dollars more. The rationale behind higher commissions buying superior service is a self serving illusion and a distortion concocted by mega brokers in order to justify their desire for higher commissions - not necessarily a higher level of service ! Some mega brokers urge their associates to prevail upon sellers to purchase advertising contracts in order that their property receives adequate advertising exposure. At Larry Trunk,Inc. sellers are not asked to buy advertising contracts as all advertising is paid by the company and is considered a normal business expense and we make no effort to pass that expense off on our sellers. The controversy and discussion of full service verses discount brokerage promoted in some publications is once again in my opinion very misleading. How do you draw the line between one and the other ? The simple truth of the matter is that you can not. Some proponents of higher commissions are, interestingly enough, the first ones to haggle for better prices and bigger discounts when purchasing goods and services, particularly high end items. If it is economically desirable, honorable and wise to shop for the best prices for such things as automobiles then why does that same logic not apply to selection of a real estate brokerage based upon, among other considerations, commission rates ? If you negotiated the purchase price of a new car at a 24 % discount off list price would you be stigmatized and labeled as a discount shopper/consumer ? If you purchased real estate at a 14 % discount off the list price would you be cast condescendingly as a bargain hunter ? No-in both instances you would be admired and applauded for your business acumen and your negotiating skills.

What is truly remarkable is that in the realm of brokerage services, often, both superior service is received at a lesser commission and that higher commissions do not necessarily equate to a higher level or a more professional level of service. You, however, may very well be led to believe that such is the case. Analyze for yourself and determine whether higher commissions will get your property sold faster or will put more net dollars in your pocket at closing. Some mega brokers make an argument supporting that but I personally believe that labels such as full service means simply that you, the public, oftentimes pay more-for less ! The decision is yours and there are many options available in marketing real estate and the fact that competition( a basic principle of free enterprise) functions between brokers is most invaluable for you the property owner.

In conclusion, it is my opinion, that classifying brokers as full service or discount brokers is an exercise in futility. I categorically reject any effort to label brokerages as either full service or discount based solely upon the amount of commission charged. There are many factors which enter into the efficiency and professionalism of a brokerage the least of which may well be amount of commission charged. We negotiate commissions and we do render a consistently high level of professionalism in brokerage and our effort is neither increased nor decreased by commission amounts. We have been doing it the right way for over 33 years and will continue to do so, not contingent upon higher or lower commissions, but because you the public deserve the highest level of professional service which we can render !

The preceding article is subjective in nature and represents the opinion of author/ real

estate broker, Larry Trunk

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This page contains a single entry by published on March 19, 2007 12:15 AM.

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Larry Trunk, Inc. is a full service real estate brokerage firm located in New Orleans, Louisiana. Larry Trunk brings 45 years of experience in diverse real estate transactions. He has proven time and time again that "Everything We Touch Turns To S-O-L-D." Larry Trunk focuses on real estate transactions in the areas of Metaire, Jefferson, New Orleans, Harahan, Kenner, Gentilly, Lakeview, Gretna, Harvery, Westwego, River Ridge and Ormond / Destrehan. His staff can help you with real estate transactions ranging from first time home buyers to four plex and investment properties. It doesn't matter whether or not this is your first or fifth real estate transaction, you can trust the experience and real estate savvy of Larry Trunk.

Larry Trunk, Inc
2412 David Drive
Metairie, LA 70003