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Blog :: 10-2011

Get Paid to Buy A Home!

Recently a person made what I thought was a great observation about our services for buyers of real estate. He said to me, "so I get paid to buy a house. That is a smokin deal."

I had never thought about our service in that sense but I guess he is correct. Essentially our buyer clients get paid to buy a house.

Because the buyer agent commission is baked into every transaction and the seller is going to pay it regardless of which firm the buyer uses, then this person's observation is absolutely correct. When our clients purchase a home and we give them a check back, they are getting paid to buy that home through us. As far as we know we are the only firm in Vermont sharing our commission with buyers and thus our clients are the only ones getting paid to buy homes.

To learn more about Flat Fee's business model, click here.

Why Flat Fee Real Estate Canceled Its Realtors Membership

Many people believe that in order to be a real estate agent, you need to be a "Realtor". This is incorrect.

A "Realtor" is simply a person that is a member of a trade association or lobbyist group. The most well known real estate trade association and lobby group is the NationalAssociation of Realtors. In Vermont, we also have other real estate trade associations and lobbyists, including the Vermont Association of Realtors and local Realtor associations.

The primary goal of these real estate trade associations and lobby groups, like any trade group or lobbyist, is to promote the interests of its members. The overwhelming majority of the members of these associations are real estate firms that offer traditional models of brokerage services based upon a percentage of the sales price. These firms typically charge between 5-6% of the sale price as their fee.

Because the majority of members and those making the policy decisions for the "Realtors" associations support a 5% or 6% commission based model, their policies, practices and decisions are aimed at preserving this model.

While these trade associations have done a very good job of marketing themselves and conveying concern for the interests of buyers and sellers of real estate, they actually care much more about ensuring that their members continue to profit enormously from buyers and sellers of real estate by preserving the 5-6% commission based model.

Because their primary goal is to ensure that the 5-6% commission based model continues to enjoy a market dominance, they must take action against any threat to that market dominance. Flat fee real estate services such as ours represent the greatest threat to this market dominance.While it is possible that a decade ago a business like ours would not have been competitive, thanks to the great advances in technology and the internet, a business like ours is now not only competitive but represents the wave of the future in real estate brokerage services.

FlatFee RealEstate was a member of the NationalAssociation of Realtors, the Vermont Association of Realtors and the NorthwesternVermont Board of Realtors from 2008 until late 2011. During this period, there were several instances where it became clear that these associations had no interest in having FlatFeeRealEstate as one its members or protecting the alternative commission model we were promoting. In fact, at one point they demanded that we remove the blog post regarding real estate agent pay from our website because they were clearly concerned that the public would be alarmed by the outrageous commissions of "Realtors" inVermont.

It was after the "Realtors"Association demanded that we remove this posting that we decided to voluntarily cancel our membership in these trade associations. We could no longer in good conscience be a member of a lobbyist group like the NationalAssociation of Realtors. Like many lobby groups today, the National Association of Realtors is designed to protect the business interests of its members to the detriment of the pulic and FlatFee does not believe that the public's interest should take a back seat to those of lobbyists.

In addition to canceling our membership, we also ceased using the forms created by these trade associations. The Purchase and Sale Contract that members of the Vermont Realtors Association utilize was drafted by an attorney for theVermont Realtors Association. While most Realtors do not bring it to their clients attention, the Contract actually includes two provisions which limit the liability of the Realtors even though the Realtors are not a party to the contract. We believe these provisions, at a minimum, violate the agents fiduciary duty and loyalty to the client and may even represent a violation of the State of Vermont Consumer Fraud Act. This is yet another example of the Realtors Association putting the interest of its members above those of buyers and sellers inVermont.

FlatFee believes deeply in the spirit of healthy business competition inVermont and cannot in good conscience be a member of any organization which cares more about the interest of its members than it does in ensuring business competition.

To learn more about cases where "Realtor Associations" have been accused by the FederalTrade Commission of restricting competition visit the FTC's Website OnRealEstate Competition

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Real Estate Agent Pay - Chittenden County

The average Vermont family makes $51,200 per year. What do you think real estate agents make?

According to data from the MLS and based upon the traditional 6% commission model charged by other firms, the top 5 agents in Chittenden County so far this year (January to July 22nd) have made between $292,000 and $587,000. Thus, they are on pace to make between $600,000 and $1,000,000 this year alone.

It is remarkable during the worst recession in history that real estate agents in a small community like Chittenden County can make in excess of $500,000 per year, much less $1,000,000 per year, and continue to get away with it.

We believe the public should demand fairer compensation models from real estate agents. We believe that our flat fee model represents a fairer compensation model and keeps our compensation much more in line with average Vermont incomes.

To learn more about Flat Fee's payment model, click here.

Comments

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