Selling the cost instead of the service.

Hi folks. Today I want to write a little bit about ABMs(Alternative Business Models) or “Discounters” as they are commonly called, not by me but by themselves and many others. Personally, I think we need to drop the term “Discounter” since real estate commissions are ALWAYS negotiable. I prefer the term ABMs.

First, I want to mention that I have NO problem with ABMs. In fact, I think the consumer should have options when it comes to who to hire and how much to pay. I welcome ALL business models and have done many transactions with folks that choose to work for an ABM.

There are many ABMs that provide very good service just as there are many “traditional” offices that do not.

I am NOT a fan of the old cliché, “you get what you pay for”. I do not believe that to be true. It’s too much of a blanket statement and certainly does not apply in many cases.

BUT……here’s my problem. I know many ABMs that will argue with you that they provide just as much service as a “traditional” brokerage only at less cost to the consumer. I agree that in some instances this is a true statement.

However, if this statement is true, then why “pitch” the discount instead of the service provided?

Here are examples lifted directly from the web sites of two national franchises:

  • Created 30 years ago, the xxxxxxx model was the pioneer for providing an alternative to the dated 6% commission structure, something that had virtually gone uncontested for years in a market overrun by a monopoly of traditional brokerage firms. (bolding is mine)
  • We discovered that by CHARGING LESS, more sellers choose our company. This gives us the opportunity to offer more homes for sale, which of course helps to attract more buyers. We can afford to make less per sale since we sell so many more homes. In other words, VOLUME! Everyone benefits at xxxxxxxx. (bolding is theirs)

In the first ad they are basically selling their business by “cutting down” traditional brokerages. In fact, they are calling traditional brokerages a monopoly and out dated. Why? Is their service not good enough to stand alone?

The second ad is doing nothing more than selling the “discount”. An astute consumer would also see that they are taking listings in “volume” in order to use them as “bait” for Buyers. Why advertise that way?

My question is, why not advertise the service provided and what you bring to the transaction and then use the “discount” as the icing on the cake?

Maybe I’m missing something here but these ads sound very negative to me. They are attempting to sell the cost before they have sold the service. In my World, that won’t work. So what am I missing?

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