Clarendon Condo Seller Loses $67,360: The Dangers of Discount Brokers

by danlesniak

Focus on Value, Not Costs

Choosing a real estate agent to sell your home is a big decision and one that can make or cost you tens of thousands of dollars. There are several options available ranging from full service brokers to discount brokers and everything in between.

Full Service Teams

Full service teams typically have between 4 to 12 people working in specialized roles in each part of the buying and selling stage. Successful teams have the advantage of doing dozens or even hundreds of transactions per year. As a result of their volume they can leverage people, technology and systems very effectively to get your home in front of the most qualified and interested buyers. Because of the amount of people on teams and the systems in place, even when they are doing several transactions teams can effectively communicate with you and help get you through every step of the process from: pre-marketing, listing, negotiating, and contract to close.

Full Service Solo Agents

Full service solo agents typically do anywhere from 2 to 20 transactions per year. The average agent does about 2.8 transactions per year. These type of agents can try to offer the same range of services as teams, however they usually run into one of two problems. First, the agent that are only doing a few transactions a year typically do not have the resources to market your home to get it in front of as many buyers as a full service team could. Second, solo agents that do a significant amount of transactions can market your home effectively. The problem they typically run into though is that without other people and systems in place when they are doing multiple transactions at once things often fall through the cracks.

Discount Agents

Discount agents and brokers (and full service agents willing to cut their commissions) typically do very little to market your home. Many of them simply enter your home in the MLS. These agents typically to not have relationships with online marketing platforms such as Zillow, Trulia, and Realtor.com. They usually do not have an online presence of their own that is effective either. They do not offer direct mail or email campaigns. Many of them will not do open houses or even help with scheduling buyers. Many of them do not have the local market experience or time to implement strategies to get you the best possibly price.

A Real Life Example at Station Square in Clarendon

Recently the sale of two 2BR condos at Station Square show the difference in what to expect from the different types or real estate agents.

The condo at 1201 Garfield Street, Unit 812, Arlington, VA had 2 parking spots and 1,524 square feet and closed in September for $925,000. This condo was sold by Dan Lesniak and the Orange Line Living Team.

The condo at 1205 Garfield Street, Unit 403, Arlington, VA had 1 parking spots and 1,304 square feet and closed in September for $702,000. This condo was sold by a discount broker.

Since unit 812 had an extra parking spot, the value of that spot ($25,000), has to be taken out of the equation when comparing. That means that unit 812 on a comparable basis sold for $900,000 or $590 per square foot. Unit 403 sold for $538 per square foot.

A $67,360 Difference

The difference in price per square foot between both of these 2BR condos was $52. Had unit 403 achieved the same price per square foot it would have closed for $769,360, which is $67,360 MORE! As a percentage of sales this is a difference of 9.5%. No matter how much this discount broker cut their rate it could not have made up for the value lost. As a seller it is more important to focus on the value the agent or team brings to the table, rather than the cost alone.

GUARANTEED RESULTS

Many agents, full service and discount alike, will promise you everything to get your listing. My team and I do not make promises. We make GUARANTEES. Before listing we us we will offer your a guaranteed sales price and if we do not hit it, we pay the difference out of our own pockets. How many other agents do you know that will do this. To learn more about how Dan Lesniak and the Orange Line Living Team can help you sell your home for more and guarantee the results, call 571-969-7653 and start packing.

 

Responses (2)

  1. Daniel
    November 24, 2013 at 2:23 am ·

    I get the math and think it’s appropriate to make people aware of the potential to add or lose value on this basis. And to caution against being penny wise and pound foolish. But I don’t find the example utilized all that convincing. While I am aware of those two buildings (addresses), I have not been in either so I’m at a disadvantage to judge. Still, a quick glance at the photos is evidence enough that these 2 units are not an apples to apples comparison. One has spectacular views, one has none. There is substantial value there. More window space and greater light adds value as well. The more expensive unit also has a nicer kitchen, nicer floor, and crown molding. It includes a washer and dryer whereas the other does not. It should be a higher $/sf.

    You also neglected to factor in the seller subsidy in the comparison. That’s fundamental.

    Finally, I am surprised that the parking spaces there are only $25K. I own a condo, similar in age and concept but further out, and its parking spaces trade for $25K. I would think parking at these buildings, being closer in, would trade higher.

    Now if the comparison had been between 2 units in the same building and tier and otherwise comparable and there was that much difference in final $/sf, I would be impressed and surprised.

    • Dan Lesniak
      April 15, 2014 at 3:24 am ·

      Hi Daniel,

      Thank you for your response. You do bring up a good point about making sure comparison are apples to apples. These condos are both part of the same condo project and the finishes inside in terms of flooring and kitchen appliances were the same. The less expensive unit actually did have a washer and drier of the same caliber. They do have differences in views, with the more expensive one having great views. The less expensive one, however, was on one of the floors (the first floor) in the condo project that has the loft style finishing which gives the unit an additional 2.5 feet in height which creates more light and space and thus adding value. In regards to the parking spots, in Clarendon most units with a second spot get an additional 20 to 25k.

      In essence, the comparison was based on two very similar units in the same condo project. The Station Square condos have 3 different addresses which is why the addresses are different. Thanks you for comments. They are very much appreciated.

      Best,

      Dan

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