08/07/2021
A friend of mine owns a landscaping business. Over the years, he has compiled quite a large customer base. Most of them are homeowners in what might be described as upper scale neighborhoods. (We middle class minions mow our own.) We were having lunch together and he was picking my brain about real estate. He shared that he was successful because he bundled various services that his clients chose from a menu of things he offered. The conversation went along the lines of "I try to sign up groups of people in specific areas. That way I keep my costs down. If I had to, I could sub-contract the work and still make money." I asked, "How will you be sure that those doing the work for you will do it to your standards?" He responded, "It's cutting grass and taking care of a lawn, it isn't rocket science. There are plenty of guys out of work that would jump at the chance to earn a little money.". He then shared that he was thinking about branching out and doing real estate. "i know you guys are making all the money. You get like 6% to sell a home. I've seen agents at work. They drive up to an empty house and unlock a door, walk around with their clients and move to the next house. I watch t.v. and how hard can it be to show somebody three houses, let them pick one and make 6% of the sale. You must be rolling in dough." I smiled, "That's not exactly how it works, there is a bit more involved.". He shook his head. He then went on to share his idea. He would create a website for buyer's to visit and sign up. He would also sign up real estate agents that were not real busy and offer them contract work. "No different than what I do now. I collect the $60 for mowing the lawn and give $20 to the contractor. I keep the rest. In my real estate venture, I figure I can collect the 6% and I will give the agent 2% and here is the kicker, I will give the buyer 3%. Leaves me with a fat 1%. I may retire early! Fool proof get rich in real estate plan, don't you think?" I shook my head (aka smh) and said "Not exactly".
He was excited, even picked up the lunch tab and hurried for the door. I think he was going to call his new company SavePro or something like that. As he drove off, I knew one thing was for certain. It would be the last lunch check he could pick up. While there is a wide range in commission structures out there and they are all negotiable, in the majority of cases there are two brokers sharing the commission. In most transactions, those brokers are sharing their portion with the agent that represented the client. Furthermore, any agent willing to do piecework is not very busy for a reason. Here's a clue, the reason is not because they are at the top of their profession. But new ideas crop up all the time. Business owners large and small, with minimal understanding of the actual business of real estate become convinced they can make a killing cutting corners. They come and go like rotting seaweed on the tide. We real estate folks experience their coming and going on a regular basis. Our only solace is that the tide comes in but twice a day and the stench of that seaweed is soon replaced by fresh ocean air when the tide goes out. Oh, and if anyone believes that buying a home is as simple as looking at three homes, having coffee and choosing one, well, as the old joke goes "I have a bridge in Brooklyn that might interest you.."
If you want to deal with a professional regarding the sale of your home or the purchase of a home - call me. 301-509-5111
