Another Gimmick

There's a gadget, a widget, or a whatchamacallit for every task out there.  Sometimes the gadget is a miracle tool and sometimes they are nothing more than a gimmick designed to separate you from your hard earned cash!  Every field has gimmicks.  Gimmicks are rampant in the marketing game.  If you use XYZ, you'll get a free flat screen TV.  Buy by a certain date to get a refund.  Some gimmicks are legit and others are just that . . . gimmicks.

Real estate is not devoid of its gimmicks either.  Despite the fact that some consumers feel real estate is easy to maneuver through, it is a very complex field requiring experience and training to do well.  One of the most important services provided by an agent is agency representation, the willingness of an agent to use all of their professional training and expertise to their client's advantage.  Regrettably, this representation is the one part of real estate that most consumers care very little about until something goes wrong! 

Last month I ran across a real estate website proclaiming a new gimmick.  This real estate company will refund 75% of the buyer's side commission to the buyer if they use their services!  Now, I don't know about you, but they definitely had my attention.  How can they do that?  What is the catch?  The home page sounded good: 

1. Find the home
2. Let the BuySide experts (They omitted the word agents.  Hmmm?) guide you through the offer and closing
3. Receive your 75% refund!

I dug a little deeper to find you cannot use their property search without registering.  Closed door number one.   Another page instructs the consumer to use their property search to find their own home (No problem!  That's what the Internet is for.), but that the BuySide agents do not show houses.  What!?!  They never leave the confines of their office!?!  The consumer has to get into the house by hook or by crook by either visiting open houses (not very efficient), calling the listing agent and requesting that the listing company show them the house, or knocking on the seller's door?  (Don't knock on the door in Minnesota.  Real estate agents have instructed our sellers not to let strangers in.  Sellers have been attacked doing just that.)  Closed door number two. 

I still hadn't found the catch, the true bottom line of how this company can do business this way.  There had to be more.  Maybe I would find it on the "Terms of Use" page.  Item number 11 clearly states certain MLS regulations require the consumer acknowledge "entering into a lawful broker-consumer relationship with us.  Being a 'consumer' does not mean that you are a client, or that we represent you.  It does mean that we may provide ministerial services to you, such as letting you search for homes on our Site."  Now we're getting to the crux of the issue.  They do not act as agents representing the consumer.  Further digging found that the consumer decides on prices, etc.  No advice is given as to how the offer is designed.  The words negotiate and advice are left out because that would create an agency/client relationship.

To the public, these services sound pretty good and the refund sounds even better.  To someone who understands the importance of agency, the refund is clearly do-able because there is no risk to the agent, no liability for the company, no representation for the consumer.  The consumers truly are on their own and the agents have no responsibility.  If the consumer wants to pay too much for the house, not ask for an inspection or inspection repairs, or not ask for help with closing costs, it means nothing to the agent who is facilitating the transaction.  It means nothing because they have no legal responsibility to look out for the consumer's best interest because they are not acting as agents in the transaction.  Closed door number three.

My opinion?  The consumer who uses their services risks paying too much for the house or buying problems which will materialize later.  Their refund may very likely be less than what they lose over time.  Will the consumer ever realize this?  Probably not unless they need to sell close to the time they bought their house.  The problems usually become apparent then.  Unless that happens, the buyer focuses on that nice refund and proclaim what a deal they got!  Buyer beware!

BuySide Realty is not licensed in the State of Minnesota, so Minnesotans will not be hooked by this gimmick yet!

Comments

[teresa boardman]

Thanks Bonnie. I am seeing a lot of scam flim, flam stuff going on out there. My favorite is the web site that promises buyers area experts but pulls up a list of agents who have never sold homes in the area. Most consumers do not have access to the roster in the MLS so they can't check. The agents pay for the leads, I would advise consumers to never become an "internet lead"

[Bonnie Erickson]

The lead aggregator companies are one of the parts of the industry that many people don't understand. It's only been recently that I became aware that signing up on a directory means that company will sell my name to the highest bidder.

[Jonathan Dalton]

The buyer also might be stunned at the some point when they realize they are not receiving a refund on the house they love because their so-called agent isn't getting paid.

If I show the listing, the odds are against me paying someone else for writing the contract. Ah, the joys of procuring cause.

[Bonnie Erickson]

Jonathan, Welcome! Since we're Yankee Blog Swap partners it's good to see you checking me out! Yes, procuring cause is definitely the issue as to whether the buyer's facilitator gets paid or not. Procuring cause is one of the intricacies of the business that the public doesn't fully understand. We need to do more educating. My reaction to BuySide's site when I finally found out the gimmick was that they are using the listing agents and companies and don't deserve to be paid a dime. No advice, no negotiating, no liability, no service for the client. What are they doing that is worthy of a commission?