Archive for February, 2013

BREAKING NEWS “REALTOR’S ANNOUNCE 10% COMMISSION RATE”

February 3, 2013

Knot 10 is celebrating its five year anniversary Feb 1st and I want to take a moment to thank all of you for giving us the chance to sell your boat, choosing our company and participating in our growth. When we first started as a company in Maryland our competitors simply patted us on the head and said nice try but you will fail within a year. They took us as nothing but a discount (my most hated term) operation that won’t have any legs and will be here today and gone tomorrow. What they failed to realize was how comprehensive our approach was for the seller yet how simplified the message was for us to get across. As we grew in listings, sales, employees and location the market realized oops they are not only here to stay but leapfrogging every company out there.

We anticipated what our competitors would say about our concept and the myths they would try and propagate to customers. A few of my favorites that played out exactly as expected were:

Knot 10 does not show the boats

Knot 10 is just on the internet and does not have an office or staff

Knot 10 does not have anybody with experience (funny)

They can’t survive charging 7% (last time I checked 7% of $25million is more then 10% of $7 million?)

Other brokers won’t show their boats since they don’t co-broker (news flash we pay industry rate on co-brokerage and alert all brokerages in direct email to this fact. In the last 30 days we have been the selling broker for transactions with the 2 biggest brokers in the US. Seems other brokers have no problems selling or showing our boats)

Our concept was to simply charge 7% instead of 10% commissions to sellers yet do it with 100% full service. There is nothing discount about what we do, the only discount is that we charge less then what brokers considered their industry standard set in stone rate. Other brokers cut rates on a sexy listing, or to make a deal happen after the fact all the time. We just decided make our message clear to customers that you can get all of what we offer and pay 7% not 10 (hey Knot 10 that sounds like a good name).

Fast forward five years and we are growing every year with big plans for 2013 and the future. As we enter new markets the difference is people know we are here to stay. Competitors now like to tell us directly and to industry groups my new favorite “Knot 10 is ruining the industry”. Imagine if you would the following.

BREAKING NEWS FLASH

“REAL ESTATE INDUSTRY MANDATES A 10% COMMISSION ON REAL ESTATE SALES”

If the real estate industry tomorrow moved all rates from 6-6.5% up to 10% what would the effect on that industry be?

-Sellers would immediately be further under water on their mortgages and would raise prices to offset the increased commissions on the property.

Buyers would see less attractively priced homes to pick from

The end result is realtors would sell fewer houses as buyers would all of a sudden see houses that where not priced attractively as sellers would price in the 3% commissions to the sales price, have shrinking equity or have to write bigger checks if they are underwater on their mortgages.

The real point to make with this statement is that the old guard says “we are ruining the industry and bad for the market” when in fact we are the direct opposite. Ask yourself what would happen to the health of our industry if all brokers charged 7%? Sellers would be in a better price position and more aggressive, buyers would see more attractive deals and the net effect would be brokers sell more boats not less. Are 10% brokers for a healthy industry or part of the problem holding it back? Knot 10 is not ruining the industry but simply providing a disruption that long term will be proven to have improved it.