This is part of Craig’s blog series on Rain City Guide (see Part 1 and Part 2) exploring why and how most realtors don’t talk openly and frankly about the fees they charge. The third and final installment (posted here as well) on Faira:
Startup Firm Faira Promises More than it Delivers
Seattle is Ground Zero for innovation in the real estate industry. WaLaw Realty, Redfin, and of course Added Equity all offer consumers an improvement on the traditional experience (whether cost, or service, or both). And many other alternative models have come and gone over the last decade or two (such as Quill Realty and Rebls).
The most promising model today seems to be Faira. With ads on buses and in the media, Faira is getting some traction. It is also getting news coverage, most recently this piece from KIRO 7 last month. And why not? Faira’s marketing pitch is remarkable:
Yep. Free. F-R-E-E. Nada. Zilch. Nothin’. You pay them zero and Faira helps you sell your home. Wow. That is a really good deal. Honestly, it sounds like a deal too good to be true.
Which is exactly right. There is no such thing as a free lunch. Sellers pay for Faira’s services, and they aren’t “free.” Faira doesn’t give away its “secret sauce recipe” easily, though. The Faira Listing Agreement is convoluted and confusing, but two parts really stand out.
Faira Services are FREE to the Seller
OK, simple enough. Not too wordy, gets the message across nicely.
Except They Aren’t. Seller Pays .5%
“List Price of the Property: There can be two separate list prices on the Faira platform, one for the buyers who are not represented by the agents, therefore saving the Sellers from paying the buyer’s agent fees, and the other for the buyers who utilize the buyer’s agents. Sellers understand that this can be perceived that the buyers are effectively paying for their own agent. Further, Sellers agree to include Faira fees in both the list prices. The actual purchase price of the property is 99.5% of the agreed offer between the Buyers and the Sellers.”
Whoa. Wait. What was that last part again???
“The actual purchase price of the property is 99.5% of the agreed offer between the Buyers and the Sellers.”
So the buyer and the seller agree on the price, and then .5% of that amount is paid to Faira. That isn’t “free” to the seller. Obviously Faira charges the seller a half percent. A fact that isn’t changed by a poorly written paragraph of “legalese.”
Or more accurately, if this is free, then EVERY SINGLE REAL ESTATE BROKER is free to the seller. Hire Windermere? It’s FREE – you get 94% of the sale price. Redfin? Yup, it’s free too, you get 96% of the sale price. Amazing what can be achieved with rhetorical gymnastics. Something is reduced to nothing….
Added Equity was built on the notion that real estate could be much, much simpler. Are we concerned about Faira’s success as a competitor? Not in the least. Quite simply, it takes a very different approach towards being successful in real estate – ultimately an approach that doesn’t differ much from the traditional model. And we have that beat hands down.