Register | Recover Password

Feeding the Middleman (or not)

On a trip to Costa Rica a number of years ago, I was fascinated by the referral economy that seemed ever present. Basically every local appeared to be able to sell just about every good or service available and somehow get a cut of the action. The referral fees paid were all handled behind the scenes and all the local people seemed to participate. For many of the goods and services we bought while there, this worked out very well for everyone involved. The convenience of being able to get what we wanted when we wanted it with a minimum of time and hassle involved was well worth the few extra dollars most transactions cost over going straight to the source.

Some big ticket items, though, seemed worth the extra time needed to cut out the middleman. Instead of booking a chartered fishing trip through an intermediary, a trip to the dock proved to be both a money saver and an opportunity to be able to choose the captain and boat we used. The money savings amounted to a couple of hundred dollars over what the same trip would have cost through a middleman and the captain, mate and boat we chose ended up being a great fit. The time invested amounted to a couple of hours spent along the waterfront talking fishing with a variety of interesting people and was almost as much fun as the fishing trip itself.

The Internet has evolved into a similar referral economy in many ways. Type in a good or service into a search engine and you will be presented with web sites that don’t really sell what you are looking for, but will happily refer to the actual providers. To make sure the referral web site receives their cut, you will likely have to register before getting passed along to the actual provider. This can work well for many items where the extra costs involved are small, but often digging just little deeper into the search results will allow you to bypass the middleman who bought the prime search spots on the first page and deal directly with the actual provider who can give you both a better price and more accurate information about what you are buying. And for big ticket items, cutting out the middleman can save you thousands of dollars as well as better information and service.

Real estate is a prime example where cutting out the middleman can result in tremendous savings, but it is also one of the harder businesses for consumers to figure out. Real estate commissions can be big numbers, 5 digits in many cases, giving web site operators tremendous incentive to capture and sell leads. Large search site like Zillow and Realtor.com sell agents placement beside the homes in search results or contact with consumers who ask for more information about a property. The agent getting the ad placement or search inquiry typically has nothing to do with the property concerned and may not even know much at all about real estate, but the consumer has no way to know that.

Real estate brokers also get in on the referral act, seeking to attract contacts by offering their own customized search sites that require registration to use or by offering free home valuations or some other “free” product. These brokers will typically cherry pick the best prospects for themselves and work with them to collect full commissions and sell less productive leads to other agents who may pay a per lead price or agree to pay large (35% is typical) referral fees on any sales they can successfully close.

Goddin Real Estate chooses not to feed the middleman, but to reward our clients with superior service at lower prices. Refer your self to Goddin Real Estate by contacting John Goddin at 919-968-2100 or John @GoddinRealEstate.com and learn how our services can save you thousands of dollars and provide you the best real estate services available.