Posted by: msundermier | November 10, 2016

Do The Big Brokerages Have Big Advantages?

Last month I posted about how RE/MAX, one of the world’s largest real estate franchises, is beginning to mimic our business model of offering one-stop-shop services with mortgage brokers and real estate agents all under the Re/Max umbrella. Imagine that!?! The little guys like me who offer combined, efficient, and effective services must be doing something right if the big guys are catching on.

How about other features of our services? Do the big brokerages still have other advantages due to volume and brand recognition? For example, some homeowners believe they’ll have a better shot at selling their home faster and for top dollar if they list with a big brokerage since they have huge advertising campaigns and a broader marketing reach. Is that true?

david-v-goliath

Do little guys like me even have a fighting chance in providing superior service and results compared to the Goliaths of our industry?

Let’s look at the stats, shall we! Since 2014, the median days on market for my listings was 9 days and the median sales price to list price percentage was 100%. This means that, on average, I sell your home in a little over a week and for the price for which you list. Additionally, I didn’t have a single canceled or withdrawn home listing. In other words, no one backed out of listing their home with me.

How do these figures compare to the big brokerages? By my account, Folsom’s three largest brokerages are Re/Max Gold, Keller Williams, and Coldwell Banker, accounting for a combined 240+ active agents and 2000+ listings over the last 3 years. Here’s how their figures compare to mine on  closed listings from 1/1/2014 thru 11/4/2016 (from Metrolist):

Brokerage Days on Market Sales Price to List Price Percentage Expired or Withdrawn Listings (as %)
Matt Sundermier 9 100% 0%
Re/Max Gold – Folsom 13 99.49% 24.9%
Keller Williams -Folsom 13 100% 22.9%
Coldwell Banker – Folsom 16 99.73% 20.5%

As you can see, there is not much difference on how fast and for how much we are selling our listings. Big brokers are not performing any better than me in these regards. And check out the far-right column, which represents the percentage of listings that expire or are withdrawn from MLS. At the big brokerages, 20-25% of listings don’t even end up closing escrow. Say what?!? Imagine meeting with an agent in preparations to sell your home and they say, “I have a 75-80% chance to sell your home.” Doesn’t exactly instill confidence, right?!

As a reminder, these numbers represent the total population of agents within these offices, so surely there are agents who have a better track record than that. Frankly, the individual agent makes a bigger impact on your listing and selling experience than the broker and brand they represent. But the big take home lesson is this: the big-brokerage advantage is a myth.

In order to effectively sell your home, you don’t need a brokerage with nation-wide TV commercials and a household brand name. You need an agent that has three primary traits: market knowledge, industry experience, and the ability to articulate both of those to you throughout the home selling process.

The next time you’re in the market to sell your home, don’t limit yourself to just the big-brokerages. As these stats and my track record suggest, there is no distinct advantage to you for going big. In fact, I’d make a VERY strong case it’s probably better you go small!

What other features of mortgage and real estate services that vary from big to small operations may be of interest to you? Let me know and I’d be happy to consider discussing your topic on an upcoming blog post. Until then, thanks as always for reading Matts Memos!

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