I am amazed every time someone has a perceived success with a model in our industry people tend to act out of fear not abundance. Right now the discounters seem to be getting a lot of attention, and full-service brokers and agents believe the way to get rid of them is to legislate them away or freeze them out of MLS participation.

If you want to limit the effectiveness of the discount model, do it within the spirit of competition. How good are your agents at negotiating? Are they trained? Do they have a specific strategy? Do they include new construction as a comparable in their market analysis? Are your agents offering attached, fixed mortgage rates to their listings to help attract buyers if interest rates go up? Do they really know how to make a listing competitive besides pricing the property properly?

If you can answer with a resounding, “Yes!” to these questions, then you’re not too worried about the discount commission company.

If you are worried, here's a tip. Get better. Period.

Agents that are educated, trained and truly serve their clients get fabulous results and can charge accordingly. Higher skill equals higher commission. What is your leadership doing in your full-service company to ensure their agents are the best?

If you are feeling pricing pressures, look in the mirror. Obviously there is a market for the discount broker. The basic business model says value = quality over price.

Every year, we are ranked close to last by the public as a profession. Our customers brought the discount commission model to our business, and we are responsible. Passing a law that prohibits that service does not help the consumer, it hurts the consumer and the quality of service they deserve.

Bring on the discount model. Bring on the banks. We need them as competitors to make us get better. The customer tells us every year that we are just not good enough. Our quality is not representative of our price. Until the full-service brokerage maps their quality to price, discount brokers will have a place in our industry. And they should.

Published: August 17, 2004

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Rich Casto is the founder of The Real Estate Coaches, a recruiting and management solutions company that supports brokers, owners and managers in the management and recruiting solutions arena. He can be reached at 702 240-0908 or coach@therealestatecoaches.com. Visit his website at TheRealEstateCoaches.com.