Lately there have been many radio ads in our region touting the benefits of an innovative real estate selling technique that is “free or 1%, your choice” according to their brazen claims. While this method of “no agent” selling is certainly viable, their claims of costs involved are misleading and fraudulent. I was impressed by their claims enough to contact the source and investigate to be sure that I wasn’t missing something!
The process is an online bidding format where any bidder can see the amount of the opening minimum bid and each successive bid. The company claims that you get a free home inspection (normally about $400 cost to buyer) that gets handed to the buyer when they write an offer, free professional photography (value of $80 - $500 depending upon the package, free yard sign (value of $50-$75), free flyer box with professional flyers, free MLS key box and listing entry, AND they provide all of the necessary paperwork that you need to put your do-it-yourself deal together. If you don’t think you can handle it on your own, you can pay a 1% fee and they will provide an agent.
If you do the math, you may wonder how they can provide all of this for free? Their answer is that they charge a .5% premium to the buyer. I guess that works since all they do is sit at a computer. But wait! That’s not all!
In the case of a represented buyer who wants to purchase a property being presented in this manner, they claim that the buyer’s agent will get paid a full 3% commission. But if the seller is not paying, where does this come from? It comes from the sellers proceeds! So their claim of “free” is an absolute falsehood. They also claim to issue an Appraisal Guarantee Certificate, which sounds as if they guarantee the appraisal to match the purchase price, when in reality if it is less they just let you out without paying anything which is what happens in any normal agent represented transaction. Nothing special here,.. just a lot of loud talk.
Another local company uses a similarly misleading radio message. They lure you with the claim that they only charge 1% of the sales price that goes to the listing agent, but then in a quiet, quick announcers voice they let you know that you also pay a buyer’s agent 3%, which means it really is a 4% commission, not 1% like they say loudly at the beginning of the advertisement. If it sounds too good to be true, it probably is!