Entry by Betty Byrnes

Bundling Services


After much agony and a long conversation with Mollie about the local market and whether "bundling" services could work here, I have come up with a couple of scenerios and need feedback. I am going to post the two packages I came up with, but before I do, a little about the market I am in.

This market never had the rapid price increases seen in much of the country - modest 3-5% gains. The average and median priced homes sold for around $120K. Then the bottom dropped out! A major employer declared bankruptcy, lots of people lost their job, at least 1/3 of the homes on the market are in some stage of foreclosure and now the average and median sale prices hover around $85-90K.

Mollie suggested focusing on a per hour model and I may well do that, especially with buyers; but since I am focusing on FSBOs right now, I decided to go ahead and look at some packages. I need some feed back on not only the packages, but payment options. I have figured out the price of each bundle, but am not sure about payments. (I blacked out the fees - but don't mind sharing them if anyone is interested.)

(available only for contracts between unrepresented buyers and sellers)

• obtain/review pre-approval
• write purchase offer
• provide/ensure completion of all disclosures
• explain closing costs
• negotiate offer
• accept/hold earnest money deposit
• coordinate inspections/appraisal
• negotiate inspection/appraisal issues
• troubleshoot transaction
• review closing documents
• attend closing

Package Price: $xxxx with $xxx non-refundable retainer due prior to writing contract. Second installment of $xxx due in 30 days, final installment of $xxx due in 60 days. (Should closing occur prior to full payment, balance will be due at closing.)

Should initial negotiations not result in an accepted contract; the $xxx retainer will fulfill the payment obligations of the package. This price applies to one accepted contract only. Subsequent offers/ contracts shall be on a per hour basis or at the stated package price.



We Do It:
• conduct seller needs analysis
• assess interior and exterior appeal of property
• research and prepare SMA
• prepare pricing analysis
• determine price range
• research competition in price range
• figure net sheets for price range
• prepare marketing plan
• prepare all required listing documents
• discuss selling process and procedures
• schedule office tour and initial open house
• implement marketing action plan
• provide feedback for showings/open houses
• provide weekly activity report
• provide bi-weekly market update
• monthly meeting to discuss pricing, terms, condition, market, etc.
• obtain/review pre-approval
• receive, review and evaluate purchase offer
• provide counsel relative to offer and if needed, prepare counter offer
• accept/hold earnest money deposit
• verify financial position of buyer
• coordinate inspections/appraisal and review results
• negotiate inspection/appraisal issues
• troubleshoot transaction
• review closing documents
• attend closing

You Do It:
• take digital pictures
• measure all rooms
• prepare hotline script
• duplicate flyers (after initial supply)
• open houses over two provide (additional open houses by agent $xxx)

Package Price: $xxxx with $xxx non-refundable retainer due prior to preparation of the SMA. (This is where I'm really having trouble with a payment plan.)

This price applies to one accepted offer only. Subsequent offers/ contracts shall be on a per hour basis.

Any feedback appreciated!

(I sure hope this posts correctly - I was a little surprised when I couldn't find the box at the bottom of the page for posting. I clicked a link on the left and a box popped up! If I'm not in the right place, sorry!)


It looks good Betty except for the million dollar question - have you set fees that pay you decently for your time yet would be more advantageous to the seller than a standard commission?

Let me underline what Betty said - when she described her market, I suggested hourly consulting because I couldn't figure out how she could get paid decently for her time, and still come in less than if the seller went with commissions. I don't know the pricing that you came up with Betty, but my hunch is that any fees that you come up with that pay you decently will only serve to send the seller to the commission option. Which isn't a bad thing if they didn't want to list by commission due to greed. But it sounds like these people are really hurting and you're trying to come up with an option that will get them the help they need at a reasonable price.

I'm not in favor of Betty working for minimum wage - does anyone else have ideas for her? Betty, we may need to look at your numbers in order to really help.


Gosh, this is tricky. With sales prices so low you have a challenge.

Let's look at it this way. If the avg. sales price is 90K and the commission you would charge would be 6%, can you reasonably afford to work an hourly rate that would be the equivalent of 3%? if so, this would be a win-win. You would earn an income you might not otherwise get and the seller would have less out of pocket.

So, let's say 6% x 90k = 5400. Half of that would be 2700. How many hours would you work on a transaction? Would it be 25 hours? If so, your hourly rate would be $108. Would that work for you?

The key would be the minimum hourly rate you can afford to earn, the number of hours you would work on the transaction, and exaclty what you can and cannot do for that fee.

Once you know what your bottom line is, then you can price your packages, or, work a la carte.

Just my 2 cents....


Okay - I didn't put numbers in there because of a previous discussion in another thread that made me hesitant to do so. In fact, that thread was what prompted me to set up a "chat" with Mollie.

For "Write it Up" the package price I came up with is $1495.

For "We Do It ~ You Do It" the price would be $4495. The catch with this package is it would be lucrative only to those in the upper tiers of my market. My normal commission is 3.5% so the "break even" point for a seller would be just under $130K. At a 3% commission that would be just under $150K.

Now, the how and why I came up with this package inspite of my market all revolves around the FSBO Game and what I discovered. At one point I was considering focusing on the $80-120K FSBOs; as FSBOs were responding to my initial mailings and raising their hands, I found the upper tier sellers were the ones calling me! ($170K - $250K, even one at $379K which is over the top here!)

Something that entered my mind with this package and how the market is for these higher priced properties, adding a fee for extra marketing ex: if they want a full page add in the homes magazine they pay the cost plus a design fee.

Now as far as the lower priced homes - I really liked Merv's "Share the Success" idea and could make that work in the $100K and up range.

The whole thing I'm having trouble with is the fact that based on what I am worth at an hourly rate is that my break-even point at a straight commission rate is around $130K. Does that mean I should only focus on properties above this price?

I really don't see how charging a per hour rate for lower priced properties is going to benefit either me or the seller. Maybe someone can clarify this for me.


Good Points, Greg,

I've not yet "taken the plunge", but one of the thoughts that had run through my mind was related to one of your questions....would I offer "straight packages" (the "one size fits all" approach, though offering varying levels of service). That makes little sense to me because we do have a very wide range of prices here...so a base consulting model would be different for a $100,000 condo versus a $300,000 single family home.

Then I was questioning whether it's the size of the property, the type of property, the price range of the property that would determine which package of services would be available at which price. Home inspections, Insurance premiums, etc., are priced based on square footage...so the public has a reasonable standard with which to compare using that parameter. I've not made up my mind. At this point, I'm leaning toward price range (perhaps 3 tiers...something like under $200k, $200,001-400,000k, and over $400k, for example)



The Write It Up is an "unbundled" service. I don't consider the "We Do It ~ You Do It" package as being unbundled. It is what I do for every commissioned listing and what I would do for the package deal, plus there is a whole lot more that is not in the posting.

As far as this not being consulting, I disagree - with the consulting model (and transferring risk), you need to offer options and that is what I'm laboring over - what options to offer?

Above I talked about break-even point for the seller. Actually that is based on what I am considering my break-even point of a package fee vs the commission fee. At the commission rate I charge, I would expect a seller to want to save at least a several thousand dollars to even consider taking some of the risk.

I'm also playing around with Merv's idea of a retainer and a success fee - which may make over all sense in this market, and it would/could be a "sliding fee" arrangement - cash up front with a contingency agreement for the balance.

I don't think there are any right or wrong answers here - if I were still in San Diego, I'd have a whole different set of questions.

Thanks for all the suggestions and comments - Still waiting for more comments about the hourly fee and how it could benefit me as far as actually listing a property and not take advantage of the seller in our "average" market.


My thinking is on this is simple. 1000 contingent dollars are only worth some number less in guaranteed dollars. To me, in a balanced to buyer's market, they can be worth as little as 500 guaranteed dollars.

If the consulting rates are not appreciably lower than the traditional rates, then I think consulting does not make sense. The market hourly rates in a lower-priced area are lower-- weather they're contingent-pay hours or guaranteed-pay hours.

The problem might be simply the market value of those hours vs. what you want be paid. My thought is: Lower the price, it's too high if a seller can get the same rates on a contingency basis.

And why wouln't you (generic "you"... rhetorical)? If you could work on two transactions a month with a guaranteed paycheck, or four transactions a month on a contingency basis with a 50% chance of closing, then why aren't you charging half the contingent rate?

This is why I think a sliding scale should also be considered. With the more expensive properties, their traditional contingent-hourly equivelant is higher, so the non-contingent hourly rate can also be higher. The packaged plans can include more marketing, but some of the cost is simply in consideration for protecting, monitoring, and handling a more expesive piece of property.

Betty, I struggled with the same questions when I started my consulting business. My approach to the market through trial and error resulted in this:

Sellers in the lower tier properties DO NOT save money. In fact, I set a minimum fee of $8,500. These are the basics whether it is a $250,000 property or $1,000,000 (Northern Virginia is a high priced market).

I give sellers three options: Hourly Rates, Fixed Fee (has two sub options) and straight commission.

1) Hourly rates: This is very lucrative to sellers in a sellers market. Homes move quickly and we don't have to do much work. Can save a seller lots of money. In a buyers market, hard to convince a seller from a financial perspective that this is a good idea (puts all the risk on the seller). On the other hand, there may be some services that can be provided without a full fledged listing agreement. For instance: consultation on what needs to be done to a property before listing it.

2a) Fixed Fee option a: my fee schedule is setup so that the total fee somewhat approximates a normal commission on the averaged price home. The fixed fee is paid at closing (hence I take all the risk). I also offer a 10% discount off the fee and I call it the "time is money" option. I take a 25% retainer up front, 25% month two, 25% month three and the remaining 25% at closing. All fees using this method are earned when paid and non-refundable (Important! I had a client burn me once without that specific language in our contract).

2b) Fixed fee option b: The retainer plus success fee that I recently posted.

3) Straight Commission: I still use my fee schedule to arrive at a cost then equate it to a percent of sales price and add 10% of the fixed fee equivalent as a risk factor.

My experience using the fee schedule as the central focus of any fee discussion is important. I call it detail transparency. No matter how they choose to pay, they know exactly what they get for how much. My clients are very pleased to now understand what they are paying for. It is also my experience that they don't quibble about specific fees for a given service. Also good.

For higher end properties, I add value added expensive services. For example, For $2,400 in the marketing area I create a classy, custom, property specific website. Examples at Renowned Properties (I'm with RE/MAX and use the Renowned Properties market distinction). It is very effective.

Like you are thinking, I will do all the print advertising a client wants for my cost plus 20% to cover setup and my overhead. I put these costs in my fees for the higher end properties automatically.

Hope this helps prompt some creativity.


Help me understand what you're doing with the straight commission. If you're using a commission rate of x%, then why are fees involved and if they are, what is it you are doing with the 10% of the fixed fee equivalent as a risk factor? It's hurting my head trying to follow this. It's probably VERY simple but I'm not getting it.

Merv -

I'm with Deb. Before reading her post, I was going to ask you if you would give us a "dollars and cents" example of 2a & b and 3. I think that would help me follow what you are doing. (I know your figures will be vastly different than mine, but at least I might be able to follow the logic involved.



Betty, Deb: I'll try to explain this better. Go to SmartSeller Plans. Here you will see a very simple overview of my fee schedule without prices for individual services. The real way I choose to present this is we (the seller and I) walk through the schedule and custom design a selling plan. I have a much more comprehensive model including individual prices for each activity. This is the central focus on all listing appointments.

Lets say the total price for "Preparing to sell is $1,200" based on the sum of the individual fees for services to be performed.

Next is the selection of the "Marketing activities. Lets assume the subtotal here is $2,500.

Finally, contract to close adds up to $5,300.

So, the total of all activities would be $9,000.

Now we look at the probable selling price of the property. Assume it is $300,000 (low end in Loudoun County, VA). My $9,000 equates to a 3% list side commission.

Here are the payment options:

1) Hourly rates: I use the $9,000 as the estimated project cost based on my time and expense. End the end it could be more...could be less. Seller takes all the risk. I bill time and expense monthly.

2a) Fixed Fee: Pay my out of pocket cost as a retainer and balance at closing. Out of pocket means real expense at my rates, not my time. Usually about $1,000 or less with no print ads. If the seller elects to pay the "time is money" way, then I discount the $9,000 by 10% to $8,100 with the 25/25/25/25% payment method explained in my previous comment.

2b) Fixed Plus Success Fee: the seller pays the total of "preparing to Sell" and Marketing" up front. In the example, $3,700. I would charge a 1.5% of the selling price as a "success fee" or $4,500 at closing. Total list side fee to the seller is $8,200.

3) Straight Commission: $9,000 plus a 10% risk premium would be $9,900. On a $300,000 sale price it equates to a 3.3% commission.

So, when I say the fee schedule is always the focal point, it is what we go through before ever discussing how a client wants to pay. We design the plan together (me leading, of course), add up the costs and then figure out how to get paid.

Here's the other thing: numbers are just numbers. Figure out what you need to be paid and then design your rates and schedules accordingly. After the first year, I adjusted all my fees significantly because I wasn't adequately paying for my time and cost.

One more thing. Don't make the fee schedule to detailed. The level I use is generally what is on the web page I pointed you to. I've tweaked the real one but, not significantly.

Again, clients love to be able to see what they are paying for. That's why I refer to this approach as "transparent." Consulting is the way you conduct yourself with a client supported by flexible a arrangement for payments that are economic based. Time is money. Risk has a premium.


Good explanation - clarifies most of it.

But I'm still confused about #3. What is the 10% risk premium? And why?

Do the fees fluctuate with the anticipated sale price of the property? In your earlier post you said $8500 is your minimum fee. So, if the anticipated sale price was $400K would your base or estimated project cost remain $9000 or would it raise to $12,000?

Slowly I'm getting it, I think.


I want to give clients an incentive for paying some up front costs and a disincentive for having me take all the risk. That's why I put a risk premium on the equivalent commission. I would rather have money in my pocket sooner than later. Especially if they are stubborn on price and cancel my agreement because they are not selling. That's the risk.

At $400,000 for the same set of services the base price would be the same, $9,000. Of course I may add necessary services to raise it.

The more expensive the property, the more marketing might be required. Lets face it, the high end properties get the most significant cost benefit. That's what has been wrong with the "one size fits all" percent of sales price model. Does it really cost $18,000 to list and sell a $600,000 property vs. $9,000 for a $300,000 property? I don't think so. That's what consumers are asking. They just want to understand what they are paying for. Some would justify the $18,000 for print ads. In this day and age, print ads are becoming less and less effective. Consumers are on the Internet. I stay away from print advertising unless it is to promote myself, my Website and/or my Blog. If I do a print ad I will include properties and those are freebies to my clients because of the personal objective. And, I tell them so.

That's why I tell clients I have minimum fee of $8,500 if I am taking all the risk. That's my basic time and expense no matter what the value of the property.

Yahoo! I finally pinned my broker to the floor and made her talk with me about my consultant options and... It's a go!! I have 4 tenative options. I say tenative, because I'm still polishing a little. And I am going to practice on the upper price range FSBOs I have contacted. In fact, I talked with an out of town seller this evening and she is intriqued by the "share the risk" option. (Thanks, Merv) She and her husband will be in town next week and we are meeting!

Thanks everyone for all your help and I will keep you posted!


Paula -

I actually thought I was going to have to move. Today was do or die day.

As she had requested, I put pen to paper (so to speak), sent her possible options almost two weeks ago. I didn't hear a word! After a week, I resent the original email with a simple note -"Have you decided this is not an option?"

Two or three days later she responded that it looked good and she would take it home to review it and bounce it off her husband. Then she called me Sunday wanting me to do something at one of her listings and she mentioned it again. So, we set an appointment for Monday morning. I went into the office, called her to see if she was ready for me. NO - TOO BUSY TODAY, yahdah, yahdah, yahdah! So we set an appointment for 1:30 today. She called last night and changed it to 2:15. Today, I just went over to her office with "Ripping the Roof Off" in hand (figuring she wouldn't even be in) intending to sit there and read until 2:30. My plan, if she didn't show, was to get in the car and drive down the street to another office and talk to the broker.

Well, doesn't look like I have to go that far, yet. Keep your fingers crossed for me. And I am sure I will be asking for support along the way!

I'm so excited, I probably won't be able to get to sleep!


This page contains a single entry by Betty Byrnes published on March 18, 2007 10:03 PM.

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