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Why Comparison Shopping for an Agent May Cost You More

by Matt Difanis
June 15, 2004

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One of the greatest benefits of Internet shopping is the ability for savvy consumers to do comparison shopping without leaving their chairs or picking up the phone. For years now, I have been taking advantage of Web sites, such as www.MySimon.com and www.CNet.com to quickly find the best prices for consumer electronics. There are now sites that claim to offer similar benefits to consumers wishing to quickly and efficiently comparison shop for a real estate agent online. Such sites claim that consumers win by making a multitude of agents compete against each other for your business. Other sites offer consumers incentives, such as gift cards, for choosing an agent certified by that site.

While the ads and promises of lavish gifts may sound appealing, these sites typically share a major hidden drawback: They make it virtually impossible for agents to offer true bottom-dollar pricing because they soak participating agents for as much as a third of the agents' revenue from the transactions that originate from the agent shopping Web sites. How can consumers possibly benefit when the pricing offered by competing agents must include a sufficient markup such that the agents can make a profit after forking over a huge chunk of their commissions from the transaction?

Ultimately consumers lose for two reasons. First, the supposedly rock-bottom competitive pricing will not be discounted nearly as much as it could be if the referring site were not taking a huge cut of the agents’ income. Second, agents who are not hurting for business simply will not bother trying to compete for clients on such sites. Both factors ultimately influenced my decision to stop participating in such sites in recent years. While I believe that I leave the competition in the dust when it comes to my zealous representation of my clients and my fee structure, users of agent comparison shopping sites will never know it, unless they find me some other way.

I consider myself extraordinarily blessed to have cultivated a remarkably loyal clientele that generates the vast majority of my business from personal referrals. Not only do personal referrals mean that many of my incoming clients already have received an enthusiastic recommendation from a trusted acquaintance, but since I don’t spend huge advertising dollars or oppressive referral fees, I can offer truly competitive pricing.

So what does this all mean for you? If you want to shop around by comparing different agents, do it the old fashioned way: Seek out personal recommendations from people you trust, and personally interview the agents to whom you are recommended to determine which one is best suited to meet your needs at a reasonable fee structure.

Why Comparison Shopping for an Agent May Cost You More

by Matt Difanis June 15, 2004

Matt's Article Archive

by Matt Difanis
June 15, 2004