This was a good example of how the comps may not mean much.
The seller and I were happy to hang our hat on this comp which seemed similar enough, but as it turned out our hurdles proved to be more substantial on today’s market. Nothing I can’t handle though!
Don’t realtors all look the same? Everybody does flashy photos and big spreads – what could be different?
It’s the attention to the fine details that makes the difference – and determines your fate on whether your sale will close smoothly. Here’s an example:
Thinking of moving? Contact me today to find out what I can do for you!
My general rule-of-thumb is that if two people send me the same article, then I should blog it.
Not only did two people send this in, but Henry Fung also mentioned to the article’s author on twitter that she should read my blog, and as a result, she followed me.
Now I really need to comment!
Here is Lydia’s article, which is more coverage of the latest lawsuit that intends to bust up the realtor cartel:
https://www.cnn.com/2019/05/15/economy/real-estate-commissions/index.html
The lawsuit alleges collusion between brokerages to make sellers pay 2.5% or more to the buyer’s agent.
The National Association of Realtors shrugged it off, and by the time the case gets to court, the current way we sell houses could be long gone anyway.
But let’s discuss being paid by commission.
The reason commissions are high is because of the home-selling process, and the amount of work involved just to have a shot of earning an actual paycheck.
Though I have a written listing contract with every seller, I can’t force you to sell your house.
I don’t do buyer-broker contracts with buyers, but if I did, you still don’t have to buy a house.
Whether I have a contract or not, there is no assurance that I will ever get paid, regardless of how much time I invest, and though I have a commission agreement with a seller, I have no control of the outcome – only the sellers decide if they can live with the resulting offers.
If an agent does get paid, it’s at the end – there’s no pay received along the way. Plus, the commission gets treated like a slush fund with many people trying to nibble away at it throughout the process. Then the brokerage and other parties take their cut, and the agent gets what’s left.
Given those conditions, shouldn’t there be a bonus, or reward attached?
Would you work for your current pay today if you knew you might not get paid anything? Or would you expect an additional bonus to live with that risk?
Just because buyers look at houses online doesn’t change the problem with being paid on commission. We’ve had these same issues before and after the internet.
Should we devise new pay structures for realtors?
The problem with a pay-as-you-go system is that you don’t know how long it could take. Consumers (both buyers and sellers) aren’t really sure what to expect in the beginning, and aren’t going to start writing checks unless, and until they get a good feeling that it would pay off. Flat-fee and salaried companies only provide transaction-processing services – which is only a small part of what I do.
There are two solutions:
A. Burn the business to the ground. This is the path we’re on, and the one-percenters will impose the systems they decide are good for you. They will also offer you their houses at prices they tell you are fair.
B. We convert to a free-market auction system.
The reason agents deserve big commissions is because of the all-encompassing nature of the service we provide. I handle every one of your real estate wants and needs all day, every day. I have skillfully navigate every possible issue/event that happens, because any one thing can kill the sale – and then you don’t get what you want, and I don’t get paid.
If the business was more predictable, less time-intensive, and had guaranteed pay, would I work for less? Absolutely, and the auction solution is the best answer.
It would take a major player like Google or Amazon to bring enough brand and reputation so consumers would consider the auction format. But if that were to happen, here are the benefits for everyone involved:
The hardest part? Convincing sellers that there aren’t two in the bush who will pay more.
P.S. If the current business does crash and burn, I’m thinking of being an artist:
The disrupters can tinker around with whatever gadget they can think up next, but if sellers believe that selling their home off-market is the way to go, there won’t be any MLS/traditions to disrupt.
Check out https://aaltohomes.com/
The private listing clubs are evolving as a natural defense mechanism and give agents a new advantage. Everyone is in it for themselves now as the industry gets picked apart by the one-percenters.
A combination of mine and Leonard’s lists of sweeteners:
In an increasingly competitive environment – especially on the high end – it may be wise to sweeten the package you are selling by including some value or time-savings item.
Some mega-homes include expensive fancy cars or artwork and other gimmicks, but of course those items are factored into the purchase price and often appear as somewhat desperate. Some may want to increase the commission incentive for the buyer’s agent.
It may be wiser to include certain items that are more focused on time-savings…..and something that may have practical value to make a buyer feel there is less to be spent after closing. Here are 10 ideas:
1. A buydown of the mortgage rate probably has the best financial impact – it can last for 30 years!
2. Pre-paid real estate taxes for the first year could be appealing, or paying HOA/Mello-Roos fees.
3. How about $5-10,000 worth of new landscaping, or window coverings?
4. One year’s worth of weekly yard maintenance would be appreciated.
5. $1,000 worth of Home Depot, Amazon, or UBER dollars could be appealing.
6. If a home has gorgeous views and big windows, include a year’s worth of window cleaning.
7. Offer to have the interior painted to colors of the buyer’s choice at closing.
8. Pay for a maid service to come weekly for a year.
9. If the house is staged, offer a price list of all the furnishings that could be bought. The buyer may see great time-savings value in not having to furnish themselves.
10. Lower the price!
These are just some simple ideas that may make your listing more memorable and more appealing to some buyers…..and possibly sweeten the deal enough to make them choose your listing over another one!
What can a home seller do to help make a sale?
I wrote this article two years ago, with the following tip:
Respond to an offer in less than 24 hours.
I offered a couple of examples in the original article, and I just had another one happen.
The listing agent, who is new in the business, didn’t like my offer that was 9% under his list price, but told me that the sellers said they would take a specific price that was 5% under list. I asked if he was going to counter with that price, and he said no, because they didn’t want to go back and forth. But if I wrote a new offer with that price, they’d sign it.
I discussed it with my buyer, and then submitted a new offer with the sellers’ price with a 24-hour expiration. The listing agent acknowledged receipt, and said he’d get back to me first thing the next day.
When noon rolled around with no response, I sent him a text. He said he presented the offer and the sellers would be getting back to him.
The expiration time came and went.
My buyer said, ‘Screw them, there are plenty of other houses out there’.
GET GOOD HELP!
We have random off-market sales and ibuyer-manipulated sales.
Are those legitimate comps? How will we know the true values?
The most beneficial system is to expose all properties to the open-market, and let every ready, willing, and able buyer take their shot – with proper representation helping them along the way.
I’m open to other agent compensations, but buyers deserve to get good help.
P.S. If you stuff six keys in a lockbox, don’t be surprised if it doesn’t open.
I’ve been saying that single agency is coming, where buyers don’t get any representation and are left to figure out pesky details like proper home valuations and investigations on their own.
Redfin has been the leader in dumbing down the business. It’s insulting that they pay trainees $50 to open a door for showings, but aren’t capable of offering any advice while on site – the time when buyers need it the most. Buyers should be insulted – you are contemplating a major purchase of your lifetime during Housing Bubble 2 which could change your life forever (good or bad), and this is all the help they offer?
It’s bad enough that Redfin is constantly pushing lies and deceit (“We sell for $2,800 more on average compared to other brokerages.”). But their latest pitch exposes who they really are – a transaction conveyor belt:
I haven’t seen their Direct Offers package in California yet – this house is in the MA.
But it’s probably coming our way.
What this means:
Redfin, a real estate brokerage, is pushing the home buyer to not use an agent.
This is the first large-scale cinematic movie I’ve seen done by a San Diego realtor, and it’s inevitable that all the high-end listings will have to step it up. Hat tip to Richard for sending this in!
Our first experience with the Compass for-sale sign (that costs $700):
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
CA DRE #01527365, CA DRE #00873197
