Real Estate Professionals are breaking out of traditional roles to adapt to an ever-changing market.

By Katrina Daniel
July 01, 2013
There is no question the real estate business took a bloodbath when the economy nose dived in 2008. While few people actually used the “D” word, as in Depression, the economy was in dire straits, and real estate was among the businesses most affected.
 
During those dark days, some real estate agents working on commission were so hard hit they resorted to other careers, or took tide-over jobs until the market picked up, which it’s just beginning to do now.
 
But not real estate agent Charlotte Sarvis. In fact, Sarvis says the real estate downturn didn’t affect her at all. “I didn’t really have any bad years. I weathered the real estate slow down very well. I am a single mom and at that time, (2008 and on) I had two kids at Clemson and I didn’t really have any bad years. We didn’t suffer at all.”
 
Sarvis attributes her personal economic stability to the fact that she works as a flat fee real estate agent, not as a traditional commissioned real estate agent.
 
“I chose to become a flat fee agent, not a commissioned agent, 11 years ago, and it is because I believe in the concept of flat fee real estate sales. I like being involved with people during the stressful time in their lives, selling or buying a house is one of the most important things they will do, it is their biggest single investment and I believe I’m having a real impact on their lives, ” says Sarvis. “And what I like most, I believe I am helping save money.”
 
In fact, some industry experts believe the rise of flat fee real estate agents and agencies are the wave of the home market future, citing the fact that industries have to evolve and change to adapt to the market. And the real estate market is certainly one of the most volatile, referred to as the “canary in the mines,” indicating trends of the economy at any given moment.
 
“Flat fee brokerage is just one of a number of ‘newer’ business models developed in the last 15 years,” says Nick Sabatine, CEO of the Greater Greenville Association of REALTORS. “These non- traditional models give buyers and sellers a choice when it comes to hiring a real estate professional. The key for buyers and sellers is to ask the right questions when interviewing an agent.”
 
“The real estate industry is changing, whether the industry wants to recognize it or not, “ says Dave Edwards of Dave Edwards Realty. “In my opinion, traditional and more established agencies will take much longer to embrace some of these changes, especially as they relate to client fees.”


Edwards has become what would be considered a hybrid, offering both flat fee and commissioned transactions. Edwards is tailoring his business to what he believes the public wants and needs now.  “One of the reasons I started my own company was so that I could have more options and offer my clients more options.”

Edwards goes on to say his hybrid version of the business just evolved on a case by case basis. He adjusts his fees according to the clients’ needs and wants. “Each real estate issue is different and involves a different level of time and business cost. I wanted the freedom to have open discussion with real estate clients and present their payment options for my services – hourly fee, flat fee, or commission.”
 
Carol Pyfrom took the leap from traditional agent to flat fee agent 12 years ago when she founded her namesake flat fee real estate company, Carol Pyfrom Realty, thereby becoming the frontrunner in the emerging flat fee real estate agency business in the Upstate.
 
Pyfrom had been a traditional commission agent for several years, working for one of the country’s biggest home developers in Boca Raton, Florida and in Greenville when she moved here. “I was number 2 in the company and in the top 1% internationally for Coldwell Banker. I sold a $700,000.00 home in one week for a very high commission for a good friend and I was embarrassed at the fee. I really felt badly that the seller had to pay so much commission out of their equity. So it started me wondering why I couldn’t do traditional real estate based on a flat fee, not on a commissioned based on the sales price of the home. When I left Coldwell Banker I realized I could no longer sell real estate for a commission instead of a fee, I had to try it. I started working out of my home, and here we are today, growing strong with 16 agents who believe the same way.”

Not surprisingly, flat fee agencies aren’t always welcomed by traditional agencies.
Seabrook Marchant, President and Broker-in-Charge of The Marchant Company, says, “Flat fee real estate companies are a concept that has gained some traction recently. They like to say that they offer the same service at a discounted price, but I would caution a seller to be sure that the service they are getting from a flat fee company is the same as they would receive from a traditional company. In my opinion you simply cannot provide the same service (advertising, marketing, etc.)  for a fee that may be 50 to 75 percent less than a traditional company. To my knowledge they offer no discount to buyers. They still accept the customary co-broker buyer fee from other companies, so their main appeal would be to sellers. There are also ‘fee for service’ companies whose business model is a little different from flat fee companies.”
 
Not so, asserts Pyfrom. “We provide the same services as a traditional real estate company. We do extensive advertising, we schedule all showings, provide feedback to clients, negotiate contracts, assist sellers in handling repairs requested and inspections and attend closings.” 
 
Despite change on the real estate horizon, traditional real estate agencies are still the primary force in the business, for now.
 
Greater Greenville area agent Karen Joy Dakers explains why she chose the traditional real estate career. “I chose commission over flat fee primarily because there is a difference in the scope of services provided. Flat fee offices charge the seller a fee, then in some cases offering limited exposure and services for the listing.”
 
Marchant also disputes any suggestion that flat fee agencies are a threat to established traditional real estate giants, like his company. “We do not look at flat fee companies, or for that matter, any of our competition as a ‘threat’ to  our business, but rather as something that keeps us on our toes as well as constantly finding ways to improve.”
 
Pyfrom believes flat fee agencies will continue to gain ground. “We find that due to the economic conditions of the world, more and more people have less money to spend on real estate fees, so our system works very well. The sellers receive more of their equity back at closing and have to spend less for real estate fees. It’s a win-win for everyone. We have given back to the residents of the Upstate hundreds of thousands of dollars. Our company provides what the general public has been wanting for years. Yes, I went out on a limb 12 years ago when I started my company, but I have no doubt God provided the idea and I followed. Now the timing is perfect.”

Dr. Robert Benedict, Director of Clemson University’s Master of Real Estate Development Program, agrees, and goes on to predict even more changes in the business. “The residential real estate market has become increasingly competitive and Realtors have utilized untraditional approaches to carve out a niche. This would include Internet-based services and flat fee commissions. A flat fee arrangement seems to work best for a listing agent as compared to a buyer’s agent if you factor in the time and expense associated with riding around and showing multiple listings. Each transaction can be very different, and a traditional commission arrangement does adequately compensate an agent if it is a difficult  sale or purchase.”
 
The only thing all sides agree on is the real estate business as a whole is in transition and will likely evolve under the Darwinian theory, that survival depends upon evolving to adapt to the needs of a changing market.

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