How many Real Estate Agents, would take a 40% cut in their commission to get a listing? How about 20%?
There is an old joke about a famous person (who shall remain nameless) who asks an incredibly beautiful woman he has gotten to know casually at the grocery store, where she works, if she will sleep with him for a million bucks (yes, even famous people do their own shopping). She already knows she likes this guy (and probably would have slept with him for free). Intrigued, she thinks long and hard about his offer. She thinks about how much this money would solve so many of her problems—including getting her out of her dead end job at the grocery—-and paying for her to go back to school. She asks if it would only be for the one time. The famous person said, “Yes—-just once.” So the woman consents and asks where they should meet. The famous person then asks her, “Would you sleep with me for a hundred bucks?” The woman looks at the man with shock and disgust and asks him, “What kind of person do you think I am?” The man replied, “We have already established what kind of person you are—we are merely haggling over the price.”
One of the important things home inspectors do is to set expectations about what a home inspection is and is not. I suspect that agents do the same thing in their own way. Perhaps, by telling the buyer what the inspection “should” cost, they think they are helping control that aspect of the big picture—-as the inspection is but one of many aspects they have to incorporate into the whole transaction. While I can appreciate all the things that have to get juggled for the transaction to happen, telling the buyer what the inspection is going to cost should not be one of them.
On more than one occasion I have had to deal with the following scenario. The call from the agent comes in to find out my availability and what the cost of the inspection will be. I proceed to list the criteria that I need to know in order to arrive at a price: age, square footage, number of bathrooms, garages, crawl spaces, attics, detached structures, number of kitchens, number of stories, location, rental property, etc. So I get the information and do some quick calculations and say, “$620.00.”
This is where the agent goes into a story about how this is too much money because the agent already told the buyer that it would be $350.00, that the buyer is really strapped for cash and will I do it for $350.00?
Now I know there are agents that see it as their job to get the best deals for their buyers and it is hard to fault them for that, but when I am asked to discount what I charge (knowing what I know about what goes into the inspection and producing the report) it kind of gets under my skin. Now I don’t ever get this scenario from agents that recommend me all the time—-they know that I am going to take care of our buyer and that I am worth every penny.
I know that I should just say, “Forget it—that is my price—take it or leave it.” It is my Tragic Flaw (one of them) that I sometimes compromise and ultimately agree to a price somewhere in-between. While it would probably be entertaining to know why I do this, the point is that I do—-there are prostitutes in all professions—-not just the oldest one. What ends up happening is that a tiny but annoying seed of anger gets planted and festers just below the surface—-like a bed bug in a “by-the-hour” motel. Pretty soon one of the Little Voices in the back of my head says, “YOU IDIOT—-why did you agree to do the inspection for less than you deserve?” The Tragic Flaw retorts back, “Shut up—-it is too late—-I didn’t have to agree to the price—but I did—-and now I am making the best of it.” At which time the Other Little Voice repeats, “YOU IDIOT—-why did you agree to do the inspection for less than you deserve?” And of course the Other Little Voice does not stop—-he just sits there arguing with Tragic Flaw—with neither side willing to check out of the room.
Ultimately I have to just let them duke it out while I go about doing the inspection and inspection report—-only stepping in to referee when things start to get bloody.
My recommendation to agents is to give some sort of “range” for the cost of the inspection—-if they are not comfortable with simply saying that they don’t know—-and recommend that the buyer ask the inspector, because prices can fluctuate wildly depending on the list of criteria mentioned earlier. Agents should also prepare the buyer for the reality that prices vary widely from inspector to inspector—-for lots of good reasons and bad reasons.
I really am looking forward to kicking Tragic Flaw to the curb.
The moral of this story is:
“When we are not starving, we don’t have to do what we would do if we were.”
By Charles Buell, Real Estate Inspections in Seattle
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Charles,
Wright Arm! my man. I’ve been fighting this rel estate attitude for years with no headway.
It’s as if the agent is footing the bill, not the client.
Mike Conley
It is a hard concept to get my brain around 🙂
Charles,
That is a great scenario that I come across as well. I don’t know why, but realtors seem to think all inspections should be the same price no matter what size house it is. Although many of us rely on brokers for a certain amount of business, we do need to educate them on how our fee structure works.
Barry, it is all about education for sure—I don’t think there is any malice on the part of most agents.
Wow, It must be complicated to be you. All those voices are making my head hurt. Don’t de-value yourself Charles by discounting your fee’s too much. You know what you’re worth. Offer them a small courtesy discount that you should have built into your price structure. Never rely on any agents for any work for asny reason. The good ones will value your service to their clients and refer you anyway. The ones who nickle and dime on the price will be narrow minded and problematic during the inspection. That goes for any agent/customer. Always sell the value, never the price. I tell them I would not insult them with a cheap price but I will promise them the “best inspection for the best price”. If they don’t understand the value and appreciate the depth of your inspection then maybe they are not a customer worthy of sticking your neck out for. Cheap minded people can be the most exspensive for your business. If they are just looking for the lowest quote you can save both them and you a lot of time by letting them know they have the wrong number.
Daniel, yes, it has always been complicated being me 🙂 I don’t mean to make it sound like this happens a lot or is a real problem for me. In fact I very rarely discount my fees. I agree to that the ones that are most interested in the cost are usually the ones that find another inspector.
When someone is calling us to get a price and they are shocked at how high it is (we are not the cheapest in our area, but neither are we the most expensive), I always tell them that “Not one customer has come back to us and said, ‘Well, that was a waste of money’!”
I have not had that response either 🙂
Thanks, Charles, If I end up in a discussion about cutting my fee, I inquire as to which part of the inspection they don’t want me to do?……….
If I end up reducing my fee (due to Realtor influence) I am Especially vigilant to point out to the Customer every flaw or issue no matter the size, just to “make sure” they got their money’s worth…. If that transaction survives the inspection, then I guess it was meant to be……
Charlie,
Well you know where I am at with this one. Great post.
As a Realtor, about a million red flags go up when I have a home buyer tell me they can’t afford an inspection. I would recommend they first speak with their mortgage professional about the viability to make the financial commitment of buying a home. I wouldn’t do that to be mean, rather I would feel horrible if a client of mine was put in a compromising position. That being said, I had a colleague of mine who told me she was paying for the inspection for the buyer. I about had a heart attack. While on the surface it seems like a nice thing to do I just cringe at the thought of something going wrong later on and how this nice gesture would appear to a judge. The road to hell is paved with good intentions. Buying a home is expensive and while none of us enjoy paying for inspections, insurance and all the other fees involved, it’s part of the deal and if someone can’t afford it, than there are bigger issues to come to terms with than the inspection fee. After all, that’s one of the least expensive aspects of the purchase and arguably one of the most important.
YOU ARE RIGHT–IF THEY CAN’T AFFORD THE FEE FOR AN INSPECTION–PERHAPS THEY CANNOT AFFORD THE PROPERTY
BY THE WAY, AS WAS POSTED THE OTHER DAY– IT’S A NEW YEAR–INCREASE YOUR INSPECTION FEES–YOUR COST OF DOING BUSINESS GOES UP AS WELL– THE CHEAP GUY WILL BE GONE-BACKGROUND, EXPERIENCE DOES MAKE A DIFFERENCE IN THE BUSINESS
Jana, bravo! That is the way I see it as well. Thanks for your comment.
Thanks Charles for a great article, I too like you sometimes lower my price, but not by much. I loved Jana’s response. Sometimes my clients that haggle are the ones that have the most money and are buying the biggest houses! Next time I am asked to lower my price I will think of you and stand firm, what I do for my clients is worth much more than what they pay me.
Charles, I love you posts ! Like you, I resented the people who got a discount, which was made worse because almost always after they got a discount, they believed they could go for more…and get it by complaining…. …That happened because they were taught that you will give them more if they demand it. ( I hated that dynamic) I believe that if you teach a Realtor that you can/will reduce the price….they will come back “to the well” to reduce the price ….and let other Realtors know you will reduce price. People treat you the way you teach them to treat you. Though for 1/2 of my 32 years as an inspector, I sometimes caved on price when asked …or did inspections evenings and Saturdays….I stopped…which made more valuable and respected as a professional. I would rather be the guy that is “good if you can get him” rather than the “best bargain inspector for the money”…and ..like you .I hated that conversation with myself “why did I take this job”
I love Jana’s post… she is right on… I sometimes lower my price a bit if it’s for one of my steady agents… and I’ve educated my regulars enough to look for things WE look for and that saves brain-damage and funds in the long run… I agree with Joe time to raise prices in the new year
William, I think you can see why Jana is one of my favorite agents—truly a pleasure to work with.
Thanks for all the nice compliments. This sounds like it comes up frequently. Just a thought to all the inspectors out there, get acquainted with how your fee compares to that of Title Insurance Fees. As I explain to my buyer clients, you won’t bat an eye at the fee of Title Insurance because most folks know that only a crazy person would buy a home without Title Insurance and I doubt most real estate offices would even allow a transaction without Title Insurance. That being said, how often does anyone make a claim on Title Insurance, and I don’t believe the Title guy will even spend 15 minutes explaining what the heck half that stuff means, let alone walk around with you for hours pointing out all the things that matter. An inspection, even an expensive inspection is the cheapest most dependable insurance you can buy. This link will show you the title fees for educational purposes only. http://www.ticorblog.com/wp-content/uploads/2011/01/Residential-Title-Insurance-Rates-ticor-wa.pdf
Jana, thanks for posting that—unbelievable!
Jana: I wish you were in my area! As a former builder, REALTOR, appraiser and now almost 34-year professional home inspector (www.dominionrisk-west.com), I can tell you that cutting fees demeans the professions and damages the relationship between the buyer and the inspector. Charge what you are worth and deliver the goods. REALTORS like Jana will respect you for it and the others really don’t count.
Good comments. I will occasionally discount repeat Clients. I have a built in aversion to haggling, so bargaining with Real Estate Agents doesn’t happen.
May I add that I think many times we pause at our prices because we have not honestly evaluated our reports against our competitors so there remains some little inkling of doubt regarding justifications for major price differences. Read other reports whenever possible. You can learn a lot about your own by doing so. Get as much education as you can. I generally try to double the State’s requirements yearly. Sometimes I make it sometimes I don’t. Give as much information as you can, but make it worthwhile information. There is no added value to the Client for 19 pages of “general comments.”
Talk to your Client before and after the job. If they don’t call you you call them. Make sure that the issues that struck you as significant are clear to them. (I am not one of the inspectors who likes the Client dogging me during the inspection; it is too distracting, but that is another topic. I like them present at the end for a walk through.)
Go back through prior reports. Are you getting better? Is your price keeping pace with your ability and service? Are your service, quality, and ability keeping pace with your price? If so, take that little voice in the back of your head behind the woodshed and show him who is boss.
The best concept I ever finally grasped was one given me when I was new at this and struggling for volume. “You don’t get the jobs you are not supposed to have. Stop worrying about them.”
AND DON’T FORGET TO LEAVE YOUR CLIENT WITH SOME CARDS AND ASK FOR THEIR REFERRALS.
Good read Charles! I think we all encounter this more than we like. All I can say is I’m glad my competitors know what their services are worth. I know what mine are worth as well, and more than once I have won the bid at my higher fees. Good clients are savvy these days. Don’t doubt their ability to make a good judgement when it comes to quality and accuracy of services, even if their agent claims it should “only cost…”
I love that there are so many folks that this resonates with. I, too, fight this battle constantly. But my problem, is that I get terribly indignant. When our company is ‘nickel-and-dimed’ by agents or client, I work overtime to re-orient the conversation to value (we add dis-proportionate value to our inspections), and if they aren’t picking that up, I mention that we’ll have to respectfully disagree on the value of my station and that they should call me when they’re interested in adding value to their own brand and offering excellence to their clients.
the fight continues. i have better days, and low days.
good to know that there are others crusading against all the low-end, country bumpkin, zero-value inspectors out there at the agents that just don’t get it.
thanks Charles!