What does it take to gamble on a new service model? Money, imagination, and the iron nerve of a risk-taker, are just a few cards to have in your hand. After sitting for several years on the notion of paying sellers to represent them, Winnipeg REALTOR® Dave Davidson is now ready to put the idea to the test.

An early Internet pioneer, Davidson is the principal of U-List Advantage, a fee-for-service brokerage. He's always on the look-out for new and better service models. Davidson got the idea for paying sellers from Sheldon Bowles, his wife's first cousin's husband. Bowles, author of Raving Fans, suggested that Davidson pay sellers $500 for a listing.

"I wasn't ready to take the plunge," says Davidson, "Obviously some rules would have to apply, but as an agent you are in control. You don't need to take overpriced listings, and you can set some guidelines to reduce your risk."

The more he thought about it, the more he began to think it might work. "Why should a home owner give you the rights to sell their home for free, with the opportunity for you to make thousands of dollars?" wondered Davidson. "With the existing system there is absolutely no risk on the brokers' part with the exception of a few hours work and some advertising and the payback is huge."

Davidson is also considering the changing dynamics of the market. "The fee-for-service concept is catching on. Perhaps for the sellers who want to have full service and pay a big commission this would work," surmised Davidson. "With the e-commerce sites some consumers are paying $595 to list on the MLS, why not pay the seller $595 for the listing?"

No reason. Except that it takes guts and courage. The pay-off would have to be in using the money as leverage to put yourself in better control of the listing.

Consider what is out of your control with the worst-case seller:

• The seller can insist on overpricing the home putting any of your marketing efforts at risk;
• The seller can refuse to do certain repairs or improvements that would make the home easier to sell;
• The seller can insist on an unreasonable amount of marketing expenditures (many of which don't work) which may agree to in order to get the listing;
• The seller can insist on an unreasonably short contract expiration which you may agree to in order to capture the listing;
• The seller can wiggle out of the listing agreement at the slightest whim (in some cases);

By offering them a carrot, you can reduce your chances of marketing an expired-listing-waiting-to-happen and gain control by offering money up front in exchange for:

• A reasonable listing price and the seller's agreement to accept that price or a price close to that;
• The seller's agreement to complete repairs and upgrades to your specifications;
• An agreed-upon limit on the marketing you will do (Internet, newspaper, magazine, signs, etc.,) and;
• An iron-clad expiration date on the contract of your choosing.

Davidson thinks it will do more than that. "Failure to perform will say good-bye to your listing investment, unless you want to pay another fee for more time," he speculates. "Sort of like dollar cost averaging on the stock market. If you believe in the product, you will pay more. If not, take the loss and move on."

He says, "It could take competition to a new level and start to get rid of the BS in the business. It is a reverse guarantee where you are paying for performance on the part of the seller."

The implementation of the service model is another story. Many questions need to be asked and answered. How will you pay the money? At the signing of the listing agreement? Hold the money in escrow to be rebated at closing? Will the usual commissions apply at closing? Reduced fees at closing? Which incentive will work better remains to be seen.

Could paying the seller be part of an auction process, or a bid to ask for and retain higher fees? "No bids for the listing will certainly tell the consumer that agents don't feel their home will sell at the price they are thinking," muses Davidson. "I can see that by purchasing a listing for a given time period that the broker should be able to command a higher commission structure."

That could be interesting. What do you think? Should brokers pay sellers for their listings? If you think it is a good idea, how would you implement the concept? How would you ask the seller to "perform?, and what do you think are fair fees to charge for the service?

Published: September 22, 2000

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.