Using Discount Broker a ‘Horrible’ Experience
Miriam Spear sums up her experience with a discount real estate broker in just three words: “Horrible. Absolutely horrible.”
She and her husband listed their Orange County home in December, 1987 with a brokerage firm that agreed to a flat fee of $3,950. She agreed to share her story on condition that the company not be named, fearing that the broker might sue her.
Miriam had been tracking sales in the neighborhood and talking to local realtors and she figured the home could fetch $220,000 or more--and sell within a matter of weeks.
More importantly, they figured the $9,000 or so they’d save by using a discount broker instead of a firm that charged a 6% commission would come in handy after they moved to their new home in Arizona.
“I should have known I was asking for trouble when the (discount) brokers said we could only get $210,000 or $215,000,” she said. “But I finally talked them into putting it on the market for $218,000, so I signed up with them.”
No Prospective Buyers
The discount firm put a sign up in front of the Spear’s house. Several days passed, but no prospective buyers toured the home.
Finally, Miriam came home one day to find the discount broker on the first floor of the home and two prospective buyers walking around, unattended, upstairs.
“I was furious,” she said. She had told the broker not to visit without calling first and not to let people wander through the house by themselves, fearing that valuables might be stolen.
Several more days passed before the next prospects came along. “The home should have sold quickly, but nothing was happening,” she said. “Nobody was even looking at our house.”
Finally, the Spears asked to sever their 60-day marketing contract with the discount broker, but their request was refused.
A Bidding War
“They said we’d have to wait the entire 60 days, and that we couldn’t get out of the agreement until midnight of the last day,” she said. “I realize that we had an agreement, but you’d think they’d be professional and release somebody who was so dissatisfied with their service.”
Just hours after their agreement with the discount broker expired, the couple signed up with the local Grubb & Ellis office, a full-service firm. The next day, four different couples were in a bidding war for the Spear’s home.
“Everybody was offering full price, and then they started overbidding,” Miriam Spear said. “I stopped it when it got to $231,500--it just wasn’t fair to all these people who wanted to buy our house.”
Even though the couple wound up paying a 6% commission of about $14,000, Miriam figures the higher price they got for the property more than offset their higher marketing costs.
“Maybe these discount companies work for other people, but they sure didn’t work out for us,” she said. “If I was going to do it all over again, I think I’d go straight to a full-service company.”
Difficult to Show
The Times contacted a partner in the discount firm used by the Spears, who essentially confirmed the Spears’ story, but said that the home was originally listed for $221,900, not $218,000.
The partner also noted that the home first came on the market in the dead of winter--traditionally the slowest time of year for home sales--and that it could have appreciated several thousand dollars by the time the Spears signed up with Grubb & Ellis.
The home was “extremely difficult” to show to prospective buyers, the discount broker said, in part because the Spears sometimes did not want to be inconvenienced.
The discount broker said the records indicate the Spears did not hold an open house, a key marketing tool.