- Business Advocacy
Recently a new word has been introduced into real estate. The word is derived from the Old French word conservus. And in Old French, conservus means slave.
The term was first used in France around 1697 to mean doorkeeper and landlord's representative and later came to be regarded as a hotel staff member who handled luggage and mail, made reservations and arranged tours
As the hospitality industry evolved, so did the meaning of this word. Now a days, a concierge assists guests by performing various tasks such as making restaurant reservations, booking hotels, arranging for spa services, recommending night life hot spots, and transportation.
Real estate brokerages are now offering what they refer to as concierge services. Some of the services contained within this term are new and some really are not.
The general description of concierge service is a function that streamlines the complexities of selling a home. In theory, concierge service goes above and beyond the norm previously offered.
Great effort is made to match sellers with outstanding real estate agents and to offer a vast range of options that include house cleaning, architectural expertise, floor repair, house remodeling, and upgrades to HVAC systems and roof work.
In reality, experienced agents have always been able to connect sellers with proficient contractors. But the new twist to this is that when sellers do not have the funds or the time and expertise to remodel their homes prior to sale, the concierge service can guide these activities.
The financial angle of concierge service is appealing to sellers who do not have the liquidity to spruce up their homes prior for sale or to other sellers that feel daunted by paying for remodeling activities prior to consummating the sale of their homes. Performing some tender loving care to a house in need of repair can often produce significant increases to the ultimate sale price.
Along with the potential of significantly increasing the sale price of a home, there are certain drawbacks and concerns that sellers need to be aware of prior to engaging a concierge service.
Sellers need to understand how contractors are being assigned by the concierge service to do remodeling work and that they are licensed and bonded. An interesting question to ask a concierge service is whether the seller can name a licensed contractor of their choice to do some functions.
Since the cost of the remodeling work is temporarily being paid by either the concierge service or brokerage, the seller should understand what the cost of capital is. Also, if a general contractor is being assigned, the seller should clarify why and the cost associated with this.
Some concierge services compare the final sale price to the initial “as is” estimated value. From there, remodeling and transaction costs are subtracted, and the remaining gain in value is divided between the concierge service and the seller. Sellers need to clearly understand this calculation.
Wall Street has identified the potential of concierge service and in some cases is supporting concierge services through collateralizing the associated income stream by issuing bonds to investors.
The reduced inventory of homes for sale during COVID has led to heightened competition for homes, and in increasing numbers sellers are electing to sell homes “as is” and avoid remodeling activities altogether.
Concierge services are new to our world of real estate and in certain cases can prove to be appropriate. Major brokerages such as Dilbeck Real Estate offer concierge services. And established brokerages and experienced real estate agents can direct sellers to reputable concierge services for consideration.
Gary Frueholz is a realtor with Dilbeck Real Estate, a past member of the Alhambra Planning Commission, a Certified Senior Real Estate Specialist, and a Certified International Property Specialist. He can be reached at 626-318-9436. See his stories at www.garysstories.com.