Originally Posted by shahhet2
Experts can help me here, but am I thinking this right way?
Lets take one example.
There are two real estate brokers X and Y selling lots of homes named 1,2,3,4,5
X charges commission of $100 and says price of home 1 is $1000+$100 = $1100 to buyer (Consumer)
Y guarantees seller that he will get his $1000 but on condition that Y takes 30% profit and he has to change price to $1300 to buyer (Consumer)
Now Seller of home 1(to5) forces agent X to raise price of 1 to be $1300 as well else he will not list his home with X.
Is this analogy correct?
Aren't the consumer at loss here?
I am sorry if I thought this wrong way, may be end consumer will think wrong way like me and needs to corrected similarly.
No, it's more like this:
Seller wants 1000 for his house. Broker X actually puts it on the market for 999 or less. Broker X waives all fees, and promises to pay the seller a dollar out of his own pocket when it sells. Turns out Broker X just wants to sell all the houses on the street as fast as possible, because his real game is to raise the value of his other properties in the neighbourhood, particularly commercial property, and those values are down because no-one lives there.
Seller is not happy because Broker X bought already bought the commercial property from the seller for a song, well under value, because Broker X convinced the Seller that the commercial property would never attract buyers and was not worth much. Broker X pulled this convincing presentation by taking over all marketing and PR for the property and keeping it out of the nicer magazines and listings -- "see, no interest in your property"
Now, Broker Y comes along and says, "hey Mr Seller, we also think your property is worth 1000, but we won't attempt to devalue it in order to pursue an agenda of our own. We aren't using you to manipulate the value of our other properties and transactions. We will showcase your property and build it up for what it is. It gets front page treatment. We have a glossy property magazine and great photographers, and will put your home in front of 500 million parties who get our magazine. We will take care of everything. What we ask is that you give us a 30% fee when your property actually sells. The selling price is up to you. If you really must receive 1000, then you must sell for a little higher because we cannot waive our fee; however, if you list the property with more than one broker, please work it so the asking price is the same or less at our agency, not more.
"The advantage of listing with us, is that you have these other houses (2- 5) that have variable values, each on its own merits, due to its architect, building materials, newness, grounds, placement on the street, etc. You will be able to price house 2 at 1200, house 3 at 1500 and so on, as a fair valuation would indicate. Broker X baulks at making any differentiation between your properties and he would be trying to get you to come down to standard pricing agreements, even if it means reducing his fee in the process. He can afford to do this, because he owns all the other property-related businesses in town (lawn maintenance, contractors, etc.), and he wants to become the only game in town; he wants to control the expectations around property transactions."