Home inspection findings by Frank Schulte-Ladbeck, Professional Real Estate Inspector TREC# 9073

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The Full Service One Stop Houston Real Estate Shop

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This is one of those “I wish that I had acted upon that idea” moments. I am trying to remember the commercial where it shows people saying that they invented something, but they never did anything about it, so they could have been a millionaire. Two years ago when I was considering the real estate business model and how it operates in Houston, I began dreaming up ways to make it more efficient. I floated the idea of a place which incorporated all of the needs that should be met for a home buyer or a home seller. I imagined a relaxed environment where people did not mind.

When, during the course of doing home inspections around Houston, I floated the idea to some Realtors, I generally obtained the response that this was against the law in Texas. I knew of no such law. I did know that some real estate firms had a rule against it though due to possible liability issues. I was also aware that there is a belief among some Realtors that Texas law states that they cannot suggest one home inspector alone to a client, which is actually a false rumor. When typing in a list of keywords to see what would show up on the results page, I was surprised to see that my idea has been carried out in one form or another. There are several firms which will take you through the process, so you do to have to worry about arranging any of the details. Of course these firms developed the idea on their own, so I will make no claims to be the inventor.

Is this a benefit for the consumer? This really boils down to how much service is provided at what cost. Navigating the real estate market can be tricky, but sites like mine or even better a Trulia or Zillow are providing the education that a consumer needs to be a more informed consumer. This aspect of the internet will only continue to grow as communication between the real estate industry and the consumer expands on the web. Although many consumers may have the knowledge to take steps by themselves, quite a few simply will not want to research facts, so they would be willing to pay someone to guide them through the transaction.

On one site, I saw the word free being used a lot. If the consumer accepted the idea that many services were free, they could believe that they were getting a great deal. However, do you think that all of those service people from inspectors to surveyors to appraisers will work for free? The cost is being placed in the percentage of the sale that the broker obtains from a transaction. Let us consider a breakdown of what the broker earns. If two Realtors are involved in the sale of the home, they will be splitting around 6% commission. Alright, so the one stop shop broker now has 3% of the value of the home. If he is part of a national firm, 1% could go to the corporate offices, .5% to his offices, another .5% to cover office paperwork and marketing, and then 1% to the agent working on commission. I am going by rough estimates here for ease.

Looking at those numbers, a firm could exist outside of a national business (many do). That leaves 1% up in the air. The average sales price in Houston is around $160,000 (I am rounding this off for the math again). The one percent is $1600. This amount is more than enough to cover the home inspector, an appraiser (with a desk appraisal), and the surveyor (possibly even a few more service contractors). In fact, those fees could be reduced.

What if I did not need to spend money to maintain an office or any other costs associated with operating my business? If this brokerage has worked out a deal with me that all of the home inspections required by his agents went through me to the extent that I would not need to find other customers, I could reduce my costs, and thereby lower my price. Other contractors could do the same. Here is where a clever one stop real estate shop could be a benefit to the consumer: if the certain office/marketing costs are taken out of the equation, the cost to the consumer could be lowered by the broker taking a lower commission. In a way, this plays on the idea of economies of scale which internet brokerages are already using to reduce the expense to their clients.

Not bad if it works out that way. Currently, internet users have an advantage which they need to leverage more, and that is using the web to find the best service for the best price. Studies show that most buyers and sellers are heading to the web for information, but they also show that many of these people still only contact one Realtor, who guides them to a specific contractor, so savings are not obtainable, because they are not acting upon the information which they now posses. It will be intriguing to watch this development in Houston real estate, where it may do well, since we are fairing better than many markets.

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2 Responses to “The Full Service One Stop Houston Real Estate Shop”

  1. Evelyn Randle Says:

    Unfortunately, the Real Estate Agents that told you that the concept was a slight bit illegal was right I am currently in school for a Real Estate Degree and trying to become a Texas Broker and Respa does not allow any type of gifts or service being paid out to vendors unles you are advertisting. The concept sound great !!!!! But you will have to figure out how to get pass RESPA and all of the other laws that congress is about to throw at us.

  2. Thank you for dropping by. There is no law in Texas that forbids a Realtor from suggesting only one service provider; it is just considered wise business practice by firms to cover themselves if there is a concern. As for gifts, I was not discussing it in this post, but yes you are right about that practice. As for the laws from congress, it is Texas that is placing more laws on us as to how we do our business.

© Frank Schulte-Ladbeck Professional Home Inspector Houston, Texas
Frank Theodor Schulte-Ladbeck
home inspector, TREC# 9073
Houston , Texas , 77063 United States

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