Marketing message for buyer's agents
Some people like to haggle with car salesmen. Linda Lee Goldberg of San Rafael is one. She likes it so much you can hire her to do your haggling for you, at CarQ.com.
"I went to work in car dealerships so I could learn sales management and financing. After I stepped out of the industry, that very day I became a buyer's agent and created a whole new concept in the way people could buy cars.
A client contacts CarQ and creates the ideal profile for the vehicle they want. There is a process so we can obtain pricing information. That information is translated into a written preliminary pricing report. The client will then receive this report, which includes all the standard equipment, dealer costs and retail pricing on all the options, and a review of the leasing or financing they want set up for themselves.
$390 is our full service. We have a $100 surcharge to handle leasing or financing. We also handle factory orders and address the issue of trade-ins. If they just want pricing consultation - they don't want a written report, they just want us to tell them what the price of the vehicle should be - that's $290.
Once I've decided that we've hit the lowest price point and we've got the best dealer to work with in the area, then that dealer will be given the client's ideal profile. We get the deal consummated in writing with the dealer and then the paperwork is issued to the client. The only thing they do is go into the dealership, have their final test drive and contract the car. They don't negotiate. They don't talk price with the dealer at all. The client pays the seller. CarQ does not receive compensation on any level from anyone other than the client. So as an agent I have no conflict of interest.
I have access to proprietary information, meaning I have access to dealer costs and retail pricing. A salesperson makes somewhere between 20 and 30 percent of the profit that they generate. The finance manager makes 30 or 35 percent of the profit that they generate and the sales manager gets 10 to 20 percent override of everything that everyone else earns. No one at the dealership is motivated to want to save consumers money.
When we bring a client to a dealer, we've done the research. We know the deal is good. The dealer benefits from that in customer satisfaction. They like working with us because they don't have to sit and haggle. They want to make deals move quickly even though they won't get the best price.
Over the last two years we've developed a new service called 'the deal review.' That's for the buyer that likes to go negotiate. They bring us a written quote. We review the deal and tell them how to improve upon it and then they go back and renegotiate with their dealer based on our recommendation. If the written quote is already the best deal, the fee of $190 is waived.
I don't like cars, but I do like saving people money. I never see a dealer. When I walk into a dealership just to see what they're up to, they don't know who I am. I find that as a negotiator it is better to keep the emotions and the judgmental attitudes out of the equation. This eliminates all of that time and stress that a consumer goes through when they approach a car dealer.
I like to negotiate. I like to know that I'm sharing my expertise and I like consumers not being ripped off."
The Lightbulb: I had been in the automobile industry. This was a group in Beverly Hills, and after I'd been there several months I realized that they were manipulating the truth and consumers were being outright lied to. At that moment I decided that I was going to level the playing field and represent solely the consumer.
What makes this marketing message interesting is its applicability to real estate properties that have been commoditized, for example, distressed developments and condo projects. With the pressure by builders to sell inventory, companies like Redfin or agents who will accept the fixed fee model might try positioning themselves using a similar marketing take. The pitch is:
- I know the market for these motivated seller developments in our city.
- Bring me your specs, and I'll work with you to develop a negotiation strategy to purchase a new home or condo.
- When I bring you to the bank, builder or owner of the property, I've done the research.
BTW, although I admire CarQ's marketing message, I have some reservations about its business model, which is in fact another middleman model. The internet already does a decent job disclosing the best prices by car model.
"This is a reproduction of the Redfin buyer agent model"
Not it isn't. This is a divorced commission, the only appropriate way for buyers to achieve true representation. Redfin's buyer's agents are paid by the listing agent, just like all other buyer's agents in residential real estate. Contrast that with this quote from the article:
"CarQ does not receive compensation on any level from anyone other than the client. So as an agent I have no conflict of interest."
Almost everything that is wrong with residential real estate brokerage would be fixed if buyers paid for their own representation.
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I do agree with Greg on his point. With regard to new communities (from the builder), most builders in my area (Reno-Tahoe, Nevada) will not participate (pay a commission) with a buyer's broker IF the buyer has visited the sales office (first visit - a must) without their agent present.
IF the buyer visits (1st time) without an agent, the buyer essentially waives their right to representation (without knowing it) which is another problem in and of itself.
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I appreciate the interpretation Greg and Mitch... I also support Greg's divorced commission model as a logical and impartial solution.
I'm not sure whether working as buyer's agents with builders is attractive to agents based on the walls they erect to keep from paying commissions... is there a way of educating consumers about this problem so they can work with an agent to analyze and bid on properties? It would seem ideal to provide this kind of CMA and representation in this kind of model where the consumer is assured that the agent and builder aren't colluding on the pricing.
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I have initiated a dialog with the Nevada Association of Realtor president on this matter. The ideal solution would be for the consumer to be required to sign the same contractual documents regarding "dual representation" or "waiving representation" as a prerequisite to declining the opportunity for representation. Currently, "signing up in the guestbook" waives the consumer rights to representation which, I believe, is far less than full disclosure.
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