Sellers Just Don’t Care

That’s what the broker told me when I asked him what his clients think about paying him $100,000 plus commissions to sell their swanky Manhattan apartments. And when I asked him why he said, “that as long as they got their money they didn’t care how much I make.”

Since these apartments are in great demand, not only do they sell for over a million dollars, but they tend to sell very quickly and without much effort from the real estate agent. On an hourly basis, I’d imagine some New York real estate agents make a couple thousand dollars an hour. That’s more than the finest surgeons in the world. And all without the need for a college degree.

It’s called the Pay Day Effect and it’s the driving force behind the $60 billion residential real estate industry in the United States. Home sellers sell their home with some equity and as long as they get to keep most of it, they don’t care how much their real estate agent makes.

For the past three years I have been trying my hardest to educate home sellers how to intelligently sell their homes and pay a fair commission, which is far less than the customary commission. In this way they get to keep more of their equity. It’s not hard to do today, you just need a little education.

Well guess what? They don’t want that education, because home sellers just don’t care. As long as they get theirs, they don’t care if they’re getting ripped off.

I learned a hard less these last three years: You can’t educate people to want something. And by and large, home sellers don’t want to keep more of their home equity. It’s just not that important to them.

So, I’m retiring from the home seller education business. Oh, my book and ecourse are still available and any home seller wanting an education can certainly find them. But I’m done trying to educate people into wanting something they clearly don’t care about. I’m done trying to fix a broken industry. I’ll leave that to the millennials and gen xers who put more faith in technology than they do in human beings.

Goodbye and good luck.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

The Simple Secret Any Realtor Can Use to Get More Business

You want more business? Charge a fair price. You’ll have no competition. Word of mouth will spread like wildfire. All the Zillow ads and open houses in the world will not be able to touch you. Tom Ferry will not be able to coach your competition past you. You will be the rulers of your neighborhood and you will be the envy of your competitors. Of course you will have to deal with buyer steering, but hey, you chose to be in an industry that espouses ethics but may not actually have any.

You see, home sellers no longer believe the “you get what you pay for” crap when you’re charging 30 or 40 grand for 20 hours’ worth of work. And it’s only going to get worse when the millennials start selling homes.

Your problem is that you view charging anything less than 6% as a discount, like somehow discounting is a bad thing. Don’t knock it—it’s made Walmart one of the biggest companies in the world.

But what it is a discount of? A made up number from a 100 years ago that means absolutely nothing today. Twenty years ago it would have been a discount. Today’s it’s simply known as market pricing.

I don’t have to tell you the reality. There are dozens (or hundreds) or realtors in your neighborhood all trying for the same few listings AND all of you are top performers. So, how will you distinguish yourself? Become the bargain. Under price and over deliver. Or just keep slugging it out with your fellow realtors, indistinguishable from one another. The choice is yours…for now.

 

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

Can a Realtor Fix the Broken Real Estate Industry in the US?

“Real Estate, by far, is the most screwed-up industry in America.”
-Glenn Kelman, CEO of Redfin

Here’s a list of things that are broken with the real estate industry in the US:

  1. Commission is proportional to the price of the home, not the effort to sell it
  2. Realtors have to risk working for free
  3. Inexperienced agents charge the same fee as long-term super-stars
  4. Home buyers don’t pay for the person serving them
  5. Buyers get to see how long a home has been on the market
  6. Real estate agencies spend 90% of their time recruiting new agents and 10% helping their customers

The remarkable thing about this list is that it was complied by a real estate agent: Greg Hauge (the Muhammad Ali of real estate). Greg, among other things, is a realtor. And Greg gets it.

The only question I have is, if one realtor can see it, why can’t they all?

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

The One Real Estate Broker in America Who Gets It

Good news: There’s a real estate broker in America who gets it. They actually have the courage to talk about the “elephant in the room” right on their website. They have the courage to pose the most uncomfortable of questions: Why does it cost so damn much money to sell a home in 2016?

trelora

Who is this broker? Trelora. And they are the future of real estate brokerages. Here’s their crazy idea: one flat fee of $2,500 for both the listing agent AND the buyer’s agent. And while these low fees will undoubtedly incur the wrath of the real estate community and incite serious buyer steering, in hot real estate markets like we have today, it may not matter.

Bad news: Trelora is only available in Colorado right now.

Are they courageous or just plain smart?

As home sellers become comfortable with the newly-available technology and information, they will ask the same question posed above, and more and more of them will find themselves hiring the Treloras of the world.

You see Trelora isn’t so much courageous as they are smart. There is a land grab for highly intelligent and motivated home sellers who refuse to play by the old rules and Trelora intends on getting their unfair share.

Soon, there will only be two kinds of real estate brokerages in America: the Treloras and the out-of-business.

You go Trelora.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

The Great American Real Estate Ripoff

If you sell your $300,000 home in the US or Canada today, you can expect to pay real estate commission of around $18,000 (i.e., 6%). However, if you’re fortunate enough to sell that same home in say the UK or Australia, you will only pay about $4,500 in commission. Have you ever wondered what the American home seller gets for that extra $14,000? After all, homes seem to sell just as easily in other countries as they do here.

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The answer to the question, what does the American home seller get for that extra money is simple. Nothing. It’s con, a fraud, a ripoff. Chang-Tai Hsieh of the University of Chicago has another name for it: social waste. Whatever.

Economists are generally at a loss to explain why this ripoff persists in the Internet age with unrestricted access to home information, but I think the explanation is pretty simple. A long time ago someone got the idea that American home buyers are so clueless and scared about buying a home, that they should have a real estate agent help them AND the seller should pay for that hand-holding. Brilliant.

How much would a buyer’s agent make if the buyer had to pay? Nothing. We know that because in countries where the buyer is expect to pay for their own agent, there are almost no buyer’s agents. Hey, if a buyer has an extra grand in their pocket, it’s going to a bigger down payment on a nicer home, not to some real estate agent. If they have to pay for an agent themselves, somehow buyers figure out how to buy a home on their own.

To make matters worse, what’s become abundantly clear in this age of high tech home buying and selling, is that buyer’s agents don’t even need the commission that the sellers pay. Buyer rebates, where the buyer’s agent gives half or all of their commission to the buyer, are all the rage today.

Never give a sucker an even break

So, why do home sellers continue to pay for buyer’s agents who clearly don’t need the money? For the same reason Bob the baker pays Vito protection money: extortion. You see, the buyer’s agent may not need the money, but if you don’t offer it, they’ll work like hell to keep their buyer from buying your home. They call this little move buyer steering and according to some Yale economists, it’s very real.

Of course this is not a real estate industry problem, it’s a home seller problem. If I’m a buyer’s agent and a home seller voluntarily offers me money, I’m keeping it. So, what can a seller do to extricate them self from this decades-long ripoff? Alone? Nothing. If you put your home up for sale and request the buyer pay for their own agent, your home will likely sit on the market forever.

But, working in concert, home sellers together can put an end to it today. If all home sellers refuse to pay for the buyer’s agent, homes are still going to get bought and sold, just like they do in every other country where sellers don’t pay. Buyers still want homes, and whether they pay for their own agent or do it themselves, they’ll find a way to buy a home. And then the buyer’s agent’s commission will end up where it rightfully belongs: in the home seller’s bank account.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

Another Realtor Spewing BS

Back in the 70s Robert Ringer wrote a book titled Looking Out For Number One. My favorite part of the book is where he talks about the Tend-To Theory. The theory postulates that people who BS a lot eventually tend to believe their own bull as if it were the truth. I think the Tend-To Theory applies to a lot of people in the real estate industry. Perhaps it’s a survival mechanism.

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Case in point. My newest least favorite real estate agent is someone named Sam. He posted an article on Real Estate How titled Why You Should Hire a Home Buyer’s Agent? Yes, yes, I know the title is not actually a question which makes him look like a dope for having a question mark. That’s not the point.

In the article Sam points out three reasons why home buyers should use a buyer’s agent. And what’s the very first one? Because it’s free, of course. He goes on to say, “As the buyer, you will not have to pay your agent’s commission. It is the seller’s responsibility.”

That makes for great copy and I’m sure most buyers (and sellers) believe it, but it’s a lie. It is NOT the seller’s responsibility to pay for the buyer’s agent.

It would be far more honest (and accurate) to say that sellers in the US have been conned into believing they should pay for the buyer’s agent and like lambs being led to the slaughter, most home sellers have neither the wherewithal nor the backbone to question it, so they just pay it. Plenty of homes change hands without the seller paying for a buyer’s agent.

This little custom that’s been adopted in the US and Canada needlessly costs home sellers thousands while leaving buyer’s with compromised representation. When are sellers going to stand up and refuse to pay for buyer’s agents? No other home sellers in the world do, and homes seem to sell just fine everywhere else. I’m waiting.

 

 

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

The Surprising Reason Why Real Estate Commission is So High in the US

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Selling a $300,000 home in the US costs about $18,000 while selling that same home in the UK costs about $4,500. Did you ever ask yourself what the American home seller gets for that extra $14,000? After all, homes seem to sell just as easily there as here.

Why are commissions so high in the US? Because home sellers pay it.

 

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.