Tuesday, March 22, 2011

Is the current Real Estate Market HOT?

Some current statistics for the Pensacola, FL area real estate market:

286 sold in February with 149 average days on Market at 93% list price ~ median Price $128,250

209 sold to date in March with 379 Pending 580 Contingent. 161 average days on market at 94% list price ~ with a median price $131,500

Our team has personally seen a tremendous pick-up in activity in our real estate market! It seems many are sensing the urgency to buy while the prices are low as well as the interest rates!

Wednesday, March 9, 2011

Spending Your Commission Money...

Where We Stand On Commission Issues and How it Affects YOU

This is designed to inform those interested in selling their home how to best use the commission they pay to their advantage and to accomplish their main purpose—to sell their home! Where do you want your commission money to go? We have seen, what we consider, a great lack of ethics when it comes to the purpose and use of the commission money that sellers pay in order to get their home sold. This is a growing problem in the real estate sector, as agents are tired of being “burned” by other agents and are jumping on the bandwagon in using commissions solely for their own gain—instead of the intended, and fair, purpose. As Realtors, we have sworn to uphold our clients’ best interest above our own, and we feel that we have a great responsibility to our clients in order to best use the money entrusted to us in the form of a sales commission. We are committed to doing what is best and most fair to all involved when it comes to commission.

Following are a couple of questions you should ask any Real Estate Agent before listing your home with them:

1. What percentage split do you offer the buyer’s agent?

If the answer is anything less than 50%, you should consider using another agent. The percentage going to the buyer’s agent is designed to get them excited about your home. You must insist that they split the amount equally in order to have the best chance to sell your home. The chances of them selling your home, even the experienced agent is, at best, just above 5%. That means there is a 95% chance that another agent would be bringing the buyer to your home; therefore, you need the buyer’s agents on your side and excited about your home. That money shouldn’t be designed so the listing agent will make more than the buyer’s agent. The listing agent will try to tell you that they have expenses, be they advertising, sign, lockbox, additional marketing, etc. However, on the other side of the issue, the buyer’s agents statistically spend four times more time with the buyers as the listing agents spend with the sellers. The time issue alone should show that the time spent by the buyer’s agent is worth half of the percentage. These are expenses that should be budgeted in their half of the commission not taking away from the saleability of your property. If you are going to list for any certain percentage, insist that it be spent wisely to try to draw the buyer’s agents, not overpay the listing agent. We have seen several agents lately who will, for instance, list for 7.5% and offer 2.5% to the buyer’s agent--keeping 5% for themselves! You decide whether that is greed, ego problems, or the best use of your commission dollars! Another will list for 6% and offer 2.25%, and still others will list for 6% and offer 2.5%. Our stand on this issue is that we will NOT do this to our clients! In order to be the best stewards of your money, we will use the commission for its intent—to bring a buyer and get your house SOLD, and therefore use it to entice the buyer’s agents. As a seller, it is difficult to see the amount of money that is given to agents to sell their home, so our advice is to be sure you don’t overpay your listing agent—you are in control of the commission and the sale of your home. Don’t allow the ego-driven agent to run over you when it comes to how to spend your money. Put yourself in a buyer’s agents’ shoes. You are showing two homes, one is offering 2.25%, and the other is offering 3.5%. You show both because you know you should, ethically, but which home would you be more excited about selling? The obvious answer for anyone would be the home that would pay you more handsomely for your time.

Some agents will tell you that they keep the larger part of the percentage to themselves because of their experience, but what they are not telling you is that they will only price your home at the best price for it to sell—if you don’t list at their price, they won’t list it; and the price is what sells the home, not their “experience”. You could price it as aggressively with another Realtor, and quite possibly sell it more quickly had you listed it to offer more to the buyer’s agent, because then you had two factors on your side—price and agents.

2. Are there any other fees involved in your services?

Specifically, be sure they do not charge any transaction fee to the buyer. The commission that you pay is how they get paid. Real Estate Agents are paid handsomely for their expertise and services, so to think that anything additional is necessary from the buyers is to your disadvantage and counters the methods used to sell your home. The buyer should not have to pay any fees for writing a contract on a home, whether it is a short sale or not. The reason that a fee should not be charged is that chances are extremely great that you will lose buyers to your agent insisting on a fee for their services. The buyer can go find another home on the market and not be charged the additional fee by the listing agent. We, personally, have had clients who have withdrawn their offer on a home because they were not willing to pay the additional fee charged by the listing agent.

The Bottom Line: Make sure you are educated on how the commission and splits work. The best option for you when choosing an agent to effectively market your home is to offer a fair percentage, but insist that it be split equally with the buyer’s agent.