A real estate agent called complaining that he spoke with one of his buyers who wanted to see a property he found online. When the agent went to check the listing out, he was shocked. The commission stated was for $1.00. Being the professional that he was, he went to show the condo. He sent me a copy of the MLS sheet and lo and behold it was true. Then I contacted the listing agent thinking perhaps they were new and had made an error. Nope, she said, it was correct. The commission was one dollar.
Was this an isolated incident? No, the stories came pouring in from other agents. Another real estate agent showing buyers in a community where home prices start at $500,000 experienced something similar. The commission for the transaction broker was 3%. If you were a buyer’s agent, then the commission was only $1.
Now my curiosity was triggered to find out how many homes were for sale offering 1% or $1 commission. I searched multiple counties in one MLS in Florida, the results found 256 properties offering 1% commission with prices ranging from $25,000 to 12 million. Two were offering $1.
As more and more real estate agents build teams with agents that specialize in working with buyers, this concept can be hurtful. The 1% is often split multiple ways. The commission could be split with the head of the team along with the brokerage. That coupled with franchise fees, transaction fees, errors and omissions insurance along with business expenses could have your commission end up being less than 50% of the 1%. Then when you subtract taxes, the net income gets even lower. For many, this may not a profitable business model depending on the price of the home for sale. 1% of $50,000 is a lot different than 1% of 10M.
What Would You Do in This Situation?
We hear this over and over as professionals. The first offer is the best offer – especially when there are no other offers on the table. This viewpoint has withheld the test of time. What remains to be proven is whether this perception is the truth or a tale that we have all accepted as true.
Not Taking The First Offer Cost The Seller $10,000
Your listing becomes active in your market and a few days later, an offer is received. You, as the agent, are excited about presenting it to the seller after thoroughly reviewing it. “Wow, that was fast,” says the seller, “Why don’t we wait, since this came so quickly, and see if we get a higher offer from another buyer. Someone else will also want my home and be willing to pay more.” But does another offer come? Nope. When this property finally did sell, it was 3 months later. The offer was less, and the seller accepted it. She ended up netting $10,000 less than had she accepted the first offer. Ouch!
Sound familiar? Many sellers think that the Realtor just wants to sell the property fast and make their commission. But while that may be true of some, most Realtors have the sellers’ best interests at heart.
When buyers are searching for properties online, photos and property descriptions are vital to gaining exposure and showings. The same is true when agents are searching for properties to show their clients. But should the descriptions for both audiences be the same?
The answer is no, because you are appealing to two different needs, with different perspectives when viewing the information. Let’s review the best way to communicate with each audience.
When speaking with a seller about a pre-listing home inspection, many times you get push-back: “Why,” they ask, “doesn’t the buyer pay for it?” Yes, the buyer does pay for the home inspection after their offer is accepted. However, by then, it may be too late. When problems with the home remain unknown until the buyer’s inspection, it puts the seller at risk of losing the sale or having to accept a much lower price.
Whether it is a new or older home, having a pre-home inspection should be a MUST, not a maybe. Does this mean the seller has to fix everything found on the inspection report? No, it only puts the seller in the position of choosing those items they are willing to fix, or not fix; the seller may choose to credit the buyer some repairs at closing as part of the negotiation. The main goal of the pre-listing home inspection is for the seller to be aware of the actual state of the home, and not get caught by surprise.
Here are four inspection items that could potentially put your sale at risk.
Halloween is right around the corner and ghoulish conversations regarding real estate are bound to come up. Here are some common questions and helpful advice for dealing with Haunted Houses and the like.
Did you hear what happened?
A real estate agent was telling us the shocking story that happened after a closing. Finally, following months of searching, his buyer fell in love with a home, placed an offer, and the condo closed with no problem. Shortly after closing, keys in hand, the new owner stopped by to take measurements for her new furniture, which was expected to arrive in a few days. As she was walking out, a neighbor showed up and said, “Are you sure you want to move in? The previous owner slit her throat in the bathroom and bled to death.” The new owner freaked out and called her agent right away. The agent said he was aware that the previous owner had died. No details were asked beyond that as there appeared to be no cause for concern. However, now the new owner feels very uncomfortable moving in and places the property back on the market that week with the same agent.
This once-hot property that sold in less than 30 days, now sat without any offers. Why? Every time an agent brought a buyer, the neighbor stopped by and told them what happened. The potential buyers got spooked and ran. This home sat vacant and lonely until finally someone said yes….a year later. Continue reading
One of the many skills real estate agents bring to the table is the ability to see a home through the eyes of a buyer. When you take a listing and tour the home with the seller, many times they are enthusiastic about the upgrades and beauty of their home and are completely unaware about how some things spell ‘no way’ to a potential buyer. It is with great tact that we can show them step-by-step those areas that can potentially result in more money in their pocket at closing and a quicker sale.
Here are 6 recommendations, which apply to both, a highly competitive and a slow market.