Lately I have heard about a lot of people asking for 1% commissions. They think the market is "hot" and the listing agent isn't doing any work to move the house.
With all of the new laws since the 2006 bust, agents work harder than ever. What surprises me though is how sellers think the system works.
If you want to get the most for your property, the first thing to do is clean it up and stage it. If I do this as your agent, that costs money. Real money, and I don't get it back unless your house sells.
There are two basic methods for getting the highest price for your property. Right now the method I see is slap a high price on it and hope you find a sucker or the market catches up. When you see a home that has been on the market for 180 days, 360 days or even longer, you know what is going on as a buyer. Buyers agents skip those homes.
The second model is to use the auction format. Price it low or at $0, and then accept bids for a very short period. Many auction houses charge as much as 10% and tack on another 10% buyers fee! That is a 20% commission for an auction. Why are they so expensive? The marketing costs for running a proper auction are astronomical. Hiring bands and catering are not unheard of.
The idea is to build a frenzy among qualified buyers. You did only want offers from qualified buyers didn't you? Another service the agent has to perform.
My approach is simple. If you are willing to sell your house at a low enough price, I'll sell it for a low commission and either buy it myself or quickly find an investor to do it. The below market price means less work for me, quicker sale for you, so I can get buy with a lower commission. If you want at market pricing, and I need to spend money on four color flyers, and direct mail cards, and spend hours on the phone spreading the word about your house, I am going to ask for a market priced commission.
Finally if you are asking an above market price, then my commission will go up accordingly. This is where people get is wrong and end up advertising for their agent.
Real Estate is a simple game of numbers. If your house is priced on market, there will be many qualified buyers, so finding one or two isn't that hard. If you price above market, there may only be a few qualified buyers willing to pay your price in the world. Right now most buyers are still "deal shopping". The economy isn't strong enough for them to just go out and buy at any price.
Finding that magic buyer who has the ability and desire to pay above market pricing takes a lot of work on the agents part. That is why the auction houses charge the fees that they do, and prefer to only feature unique high end properties which are difficult to compare on a market basis. The price is simply opinion and willingness of the buyer.
When you meet with an agent about listing your property for sale, make sure you understand where you home is priced on the market and make sure the agent has the resources and skills to sell your house, not just use your front yard as a billboard.
What you pay for commission is your choice. Choose wisely.
Friday, February 21, 2014
Wednesday, February 19, 2014
Are You Advertising For Your Agent?
How long has that sign been in your yard? Are you advertising for your agent or are you selling your home? The January sales figures are out and they are not good if you look at them for raw numbers. If you dig a little deeper you see three different stories developing.
The first story line is aggressive agents promising low commissions and high prices to get signs up. This makes them look busy and makes them look like they "own" part of an area. At the end of the day though, most of those "sellers" are simply advertising for the agent whether they realize it or not.
During a recent meeting with a potential seller, he asked "How come {Agent X} has so many more listings than your whole office?". My answer was simple. "How many days have those signs been up and when was the last time you saw one of our signs go over a couple of months?" We sell homes, the other agent lists homes. The more agents I talk to around the country, the more we are seeing this phenomenon. It might be partially the sellers fault though.
The second story line is about the sellers. The average listing price per square foot took a big leap at the end of the year, and the number of new listings dropped. Some sellers saw a market rise last year and simply said "Hey if I can get $XXX for my home, I'll sell it." so some agent slapped up a sign and there it sits. Other sellers decided that it was a good time to sit and wait a bit longer while prices keep rising. Fewer listings and fewer sales equals a stalled market.
The third story line is about the buyers and their banks. New rules limit how much a house can go up in value when an investor buys it to sell it in less than six months. The quick clean and flip is essentially gone. Also the FHA changed the minimum down payment to 5% but does allow a "gift". Some banks are using seller points to offer some similar programs that help with closing costs and down payments.
The real problem here is a combination of cash and credit. Even with rates hovering in the 4% range, banks are still quite cautious about a buyers real income, and many buyers simply don't qualify. More simply don't have the spare cash for closing fees and a downpayment making it an excellent investment market for those who do. Rents in many areas are very close to PITI payments on the day of closing. Normally it takes 5 years or more to get positive cash flow out of a rental. Now If you buy right you can have positive cash flow day one.
If you want to sell your house, the NAR statistics show a couple of interesting trends. The homes that are priced right sell within 10 days or 10 showings. If they don't, they are overpriced. If you want a top of the market price, you are likely going to pay top of the market commissions for a very aggressive marketing campaign by your agent or you are going to end up being a billboard for them.
Another option is to price low and take the high offer. The risk here is not paying enough commission for great marketing to get the best price. The MLS alone won't do it.
At the end of the day as a seller, it is your choice.
For more information about buying or selling a home feel free to call, email or post a question on my Facebook page.
The first story line is aggressive agents promising low commissions and high prices to get signs up. This makes them look busy and makes them look like they "own" part of an area. At the end of the day though, most of those "sellers" are simply advertising for the agent whether they realize it or not.
During a recent meeting with a potential seller, he asked "How come {Agent X} has so many more listings than your whole office?". My answer was simple. "How many days have those signs been up and when was the last time you saw one of our signs go over a couple of months?" We sell homes, the other agent lists homes. The more agents I talk to around the country, the more we are seeing this phenomenon. It might be partially the sellers fault though.
The second story line is about the sellers. The average listing price per square foot took a big leap at the end of the year, and the number of new listings dropped. Some sellers saw a market rise last year and simply said "Hey if I can get $XXX for my home, I'll sell it." so some agent slapped up a sign and there it sits. Other sellers decided that it was a good time to sit and wait a bit longer while prices keep rising. Fewer listings and fewer sales equals a stalled market.
The third story line is about the buyers and their banks. New rules limit how much a house can go up in value when an investor buys it to sell it in less than six months. The quick clean and flip is essentially gone. Also the FHA changed the minimum down payment to 5% but does allow a "gift". Some banks are using seller points to offer some similar programs that help with closing costs and down payments.
The real problem here is a combination of cash and credit. Even with rates hovering in the 4% range, banks are still quite cautious about a buyers real income, and many buyers simply don't qualify. More simply don't have the spare cash for closing fees and a downpayment making it an excellent investment market for those who do. Rents in many areas are very close to PITI payments on the day of closing. Normally it takes 5 years or more to get positive cash flow out of a rental. Now If you buy right you can have positive cash flow day one.
If you want to sell your house, the NAR statistics show a couple of interesting trends. The homes that are priced right sell within 10 days or 10 showings. If they don't, they are overpriced. If you want a top of the market price, you are likely going to pay top of the market commissions for a very aggressive marketing campaign by your agent or you are going to end up being a billboard for them.
Another option is to price low and take the high offer. The risk here is not paying enough commission for great marketing to get the best price. The MLS alone won't do it.
At the end of the day as a seller, it is your choice.
For more information about buying or selling a home feel free to call, email or post a question on my Facebook page.
Tuesday, February 4, 2014
Interest Rates Fall A Bit But.....
This past week interest rates dropped a little bit. Also several banks have changed the rules on 10% down loans. So the big question I heard is "Do I buy now or wait?"
I have been saying for over two years "Buy Now". Why? In simple terms straight line 3% inflation tells us that homes are still slightly underpriced in many areas. Across the country with 20% down you can buy a home and rent it for more than the mortgage payment.
If you are thinking of selling and moving, now is a great time so you can lock in lower tax rates. If you wait for your house to sell for a higher price, You will be buying at a higher price and locking in higher taxes for as long as you live in your new house. Higher taxes are never good.
Looking at the buying situation you see a few things. One aspect is that most people can't save enough money to buy a home. Our National practice of "keeping up with the Joneses" has made it difficult to save. This is creating an opportunity for those you have the money and credit to grab some real estate bargains.
So how can I keep saying this for two years straight? Simply put the prices still haven't caught up and even though two years ago was a better time to buy, this is still a great time to buy real estate. Am I biased because I am a real estate agent? No, I am also buying myself. There are just too many deals for me to grab so I'm trying to help as many of my friends as I can.
Even if you can't afford to buy investment properties in Southern California, I have programs available to pick up turnkey investment properties with 20% down and positive cash flow at the close of escrow across the country. These properties have already been cleaned up, rented out and property management placed. We are trying to make it as easy as buying stock. Just like people want Coca-Cola they want a clean safe house to live in and as an investor you can provide that.
If you want to buy or sell in Southern California give me a call and I'll be glad to help or find someone in your area who can. If you want to invest and have positive cash flow today give me a call.
I have been saying for over two years "Buy Now". Why? In simple terms straight line 3% inflation tells us that homes are still slightly underpriced in many areas. Across the country with 20% down you can buy a home and rent it for more than the mortgage payment.
If you are thinking of selling and moving, now is a great time so you can lock in lower tax rates. If you wait for your house to sell for a higher price, You will be buying at a higher price and locking in higher taxes for as long as you live in your new house. Higher taxes are never good.
Looking at the buying situation you see a few things. One aspect is that most people can't save enough money to buy a home. Our National practice of "keeping up with the Joneses" has made it difficult to save. This is creating an opportunity for those you have the money and credit to grab some real estate bargains.
So how can I keep saying this for two years straight? Simply put the prices still haven't caught up and even though two years ago was a better time to buy, this is still a great time to buy real estate. Am I biased because I am a real estate agent? No, I am also buying myself. There are just too many deals for me to grab so I'm trying to help as many of my friends as I can.
Even if you can't afford to buy investment properties in Southern California, I have programs available to pick up turnkey investment properties with 20% down and positive cash flow at the close of escrow across the country. These properties have already been cleaned up, rented out and property management placed. We are trying to make it as easy as buying stock. Just like people want Coca-Cola they want a clean safe house to live in and as an investor you can provide that.
If you want to buy or sell in Southern California give me a call and I'll be glad to help or find someone in your area who can. If you want to invest and have positive cash flow today give me a call.
Scott Bourquin
BRE# 01911988
714-594-SELL (7355)
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