Finally, An Article That Tells the Truth About Real Estate Agents

Leave it to MSN to finally pull back the curtain—at least a little—and tell the truth about real estate agents in their article 25 secrets real estate agents won’t tell you.

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Some highlights of the article include…

True: They’ll lie to you about what they think your home is worth just so you’ll choose them.

True: They WILL negotiate their fees.

True: They don’t always put you first.

True: They sometimes make up prospective buyers.

True: They make extra money from their recommended contractors.

True: You can do the same research they do online for free.

True: They won’t really suffer if you sell your home for less.

True: They use selling techniques on you.

True: You can sell it yourself online.

All of these are true, but the real tragedy is why they’re true: lazy, uninformed and fearful consumers enable bad real estate agent behavior.

Real estate agents only do what they know they can get away with. And not much will change until buyers and sellers get themselves an education (and a backbone) and stop tolerating this behavior. Until then, we’ll just have to settle for more articles from MSN.

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.

Will 2016 Bring Meaningful Change to the Real Estate Industry?

Every year at year’s end I ask the same question: Will next year be any different?

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Will 2016 be the year that home sellers are no longer expected to pay for their buyer’s agent in the US? Will it be the year home sellers grow up and set realistic pricing expectations for their home, and more importantly, stop expecting their agents to work on contingency? And will 2016 be the year NAR grows up and stops caring less about the quantity of dues-paying agents and more about the quality of those agents?

I would like to tell you that I am hopeful, but I’m not. There is just too much money to be made enabling the status quo.

So, in 2016 we will still have conflicts of interest, buyer steering, an abundance of poor agents and unprepared home buyers and sellers. And we will have one other thing; The Intelligent Home Seller course on Udemy.

For the price of a cheap pair of sneakers, home sellers will be able to educate themselves on the home selling process. They’ll be able to rise about the industry’s outdated customs, the conflicts of interest, the incompetence, the powerlessness and the frustration. They’ll learn to tell a good agent from a bad one before they hire one. And most important, they will learn to pay a commission that is fair for everyone.

Stay tuned. The Intelligent Home Seller course will be available right after the new year. And maybe next year at this time the answer to my yearly question above will be yes. This is the year all the BS in the real estate industry comes to an end. Here here.

Happy holidays to 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.

How Much Would a Buyer’s Agent Cost if the Buyer Had to Pay?

$950 according to a new web service called SoloPro, who connects home buyers with buyer’s agents. You think about that the next time you are told you MUST pay a buyer’s agent $15,000 to help a buyer buy your $500,000 home.

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To use their service, SoloPro attracts home buyers by promising to give them a 3% rebate on the purchase of their home. And where does that 3% rebate come from? The home seller of course. So, the home seller puts aside thousands of dollars of their hard earned equity to pay for the buyer’s agent and instead the money goes directly to the buyer, effectively lowering the selling price of their home by 3%. At a time when most sellers overprice their home in the hope of selling it for top dollar, why would they voluntarily lower their selling price by 3%?

SoloPro is just the latest in a line of new companies that promise to give some or all of the buyer’s agent’s commission to the buyer, proving once and for all there is no need to offer 3% commission to the buyer’s agent. They don’t need it; they don’t keep it; they’re willing to do it for less. Why would any seller offer 3%?

It is time to put an end to the outdated custom of having the seller pay for the buyer’s agent. It is economically wasteful and leads to needless conflicts of interest. Every other country on the planet, besides the US and Canada, does not ask the seller to pay for a service that benefits someone else, and they manage to buy and sell homes just fine. Let’s join with the rest of the world and subscribe to the crazy notion that the person receiving the service should pay for the service. Of course if that happens, companies like SoloPro will cease to exist. Oh well.

 

 

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 The Intelligent Home Seller Movement Change the Real Estate Industry?

Home sellers, who are fed up with the outdated customs of the residential real estate industry in the United States, are starting to band together in a movement called The Intelligent Home Seller movement.

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These intelligent home sellers are not advocates of For Sale By Owner and are not anti-real estate agent. In fact, they see real estate agents just as much of victims as home sellers in the way the real estate industry currently functions.

They do not believe that some new “ap” or legislation will fix the problem. They understand the only thing that will change the industry is changing buyer and seller behavior, and they are leading the charge to do so. How are they doing that? By refusing to follow the industry’s outdated customs.

In simplest terms, The Intelligent Home Seller movement believes the real estate industry should start behaving like every other home service industry. In this regard, they advocate the industry adopt the following three fundamental changes.

Do away with percentage-based commissions. It does not cost twice as much or take twice the effort to sell a home for twice price, so why should home sellers pay twice as much? It is a custom that is unfair for all but a small number of home sellers and intelligent home sellers are putting down their collective feet by refusing to compensate agents in that manner. What do they suggest replace the percentage-based commission? Fee-for-service or flat fee, both of which are more in line with compensating agents based on their expertise and level of effort.

Those receiving the service should pay for the service. The US and Canada are the only countries where, by custom, the seller is expected to pay for the buyer’s agent. This not only results in commission rates up to five times higher than in other countries, but creates needless conflicts of interest between agents, buyers and sellers. These intelligent home sellers would like to see buyers start to pay for the real estate services they use because they understand the only way buyers will ever receive expertise they can truly trust is by paying for it themselves.

Stop working for free. Of all the customs that create conflicts of interest between seller and agent, perhaps the worst is that of the commission which is contingent on the sale of the home. Intelligent home sellers believe that real estate agents should never be put in a position where they can render their valuable services for free. And whether that means putting up a small, non-refundable deposit, or paying them as they go, intelligent home sellers see this as benefiting everyone. Agents will never have to risk working for free and home sellers will get better advice from their agent who is not put in an all-or-nothing situation.

The real estate industry may have adopted some unfair customs, but that does not mean home sellers have to follow them. And that is exactly what these intelligent home sellers have come to understand. And if enough home sellers become intelligent home sellers, the industry will change. It will have no other choice.

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.

It’s Not the First Home I Would Show

That one statement tells you everything you need to know about what is wrong with the real estate industry.

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When I went to sell my home in Southern California last year, I decided to offer less than the customary commission to the buyer’s agent. I had several reasons for doing so. First, unlike most home sellers, I understand that you do not have to offer the customary commission (2.5% in this case). Just like everything else in real estate, what you offer to a cooperating agent is negotiable.

Second, it was an extreme seller’s market when I went to sell, which means there would be a lot of buyers interested in buying my home (over 40 families came to the Open House). I was simply taking advantage of market conditions, as any intelligent home seller would do.

My final reason for doing so was the amount of money. The customary commission to the buyer’s agent would have been in excess of $18,000, and there was no way in hell I was paying two months of my salary to someone for about 20 hours of work unless they were curing me of cancer.

Before I offered such a commission to the buyer’s agent though, I wanted to make sure my listing agent and his broker were okay with it. Why would they care? Because when a home seller offers less-than-customary commission, it tends to tick off all the other agents and brokers in the area who can retaliate against them for taking such a listing. I just wanted to make sure my agent and his broker were prepared for the blowback. My agent was fine with it, but his broker’s reaction is what floored me. What did his broker say?

Re-read the title of this blog post. Those are the exact words my agent’s broker said to my agent when told of the less-than-customary commission. She was referring to the fact that were she representing a buyer, my home is not the first one she would show because other homes offered more commission.

She confirmed in those few words every reason why 67% of consumers do not trust real estate agents. By saying what she said she admitted that what is most important to her is her commission and what is least important to her are her clients. You cannot really trust what she says because she puts her own self-interest—in direct violation of her code of ethics—above yours.

You depend on a real estate agent for their expertise and you cannot trust it because of misguided incentives. What is the bottom line? When it comes time to buy or sell, if you want real estate expertise you can trust, get yourself an education.

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.

How to Pay Nothing and Still Get Ripped Off

It is hard to imagine that you could pay nothing for something and still get ripped off. Unless, of course, you are buying a home.

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In the US, by custom, the seller of a home is expected to pay for a real estate agent to help a buyer buy the home. Naturally most home buyers jump on the deal. After all, you can’t do much better than free, or can you?

While buyer’s agents may do many things for buyers, buyers really only work with agents for one reason: expertise. In particular, they seek the answers to two very important questions from their agent:

1. Should I buy this home?
2. How much should I offer?

In the US there is another custom when it comes to compensating real estate agents: most of them work for lottery tickets. And as result, the buyer becomes the agent’s lottery ticket. A ticket they hope will pay off some day.

One of the consequences of this lottery-like compensation is that the agent’s true allegiance is NOT to the buyer, but rather to the deal itself. Regardless of how hard they work, to get paid, their buyer has to actually buy a home. And to make sure that happens, the agent may have to talk the buyer into buying a home they probably shouldn’t. Or, worse yet, talk the buyer into paying more than they should for a home, just to ensure the deal gets done and they get paid.

So, buyers work with “free” agents primarily for their advice and ultimately cannot trust it because of the way they are compensated. Nice.

In this circumstance, the rip off comes from taking the advice of an expert who cannot be trusted. An expert offering misguided advice that could easily cost the buyer more money than if they simply paid for their own agent by the hour. An agent who would be loyal to them because they were not working for lottery tickets.

So, why do buyers subject themselves to this potential rip off? Because it is invisible. Paying a real estate agent by the hour, which could cost a couple thousand dollars, is highly visible. It is “real” money the buyer has to pay out. On the other hand, paying ten thousand dollars too much for a home because they took compromised advice is invisible. They may have overpaid for the home, but they will never know it, so all is good.

When it comes to infrequent, big-dollar transactions like buying a home, nothing is more valuable than expert advice. But it only has value if it can be trusted. Advice that cannot be trusted is not worth the price, even when the price is free.

 

 

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.

Will 2015 Bring Meaningful Change to the Real Estate Industry?

2014 saw a lot of new technologies and “aps” hit the residential real estate market with much excitement and fanfare. Some of them were even purported to help buyers and sellers. But when all was said and done, not much has changed.

problemHere is a list of problems in the real estate industry that all that technology did not do a damn thing to solve last year:

• We still have pocket listings
• We still have dual agency
• Lousy agents still expect the same compensation as good agents
• Commissions are still tied to the price of the home
• Sellers are still expected to pay for buyer’s agents
• There are still too many real estate agents
• It is still too easy to become a real estate agent
• There are still too many conflicts of interest between buyer/sellers and agents
• Sellers are still asked to pay for the buyer’s home warranty
• There is still buyer steering
• Agents still push their affiliated service providers onto their clients
• Contracts are still too difficult for the average consumer to understand
• Some MLSs still delay listings to the portals, limit the information, or do not send it all
• We still have minimum service laws

So, the question I want an answer to is this: will anything change in 2015? Probably not. All those problems cited above result in some pretty well-off operators in the industry, and none of them want to see anything change.

No, 2015 will be the same as 2014 and every year before that. Nothing meaningful will change in the residential real estate industry until the one group that can actually affect change does something about it. When buyers and sellers decide to stop being uninformed, lazy and fearful about the home buying and selling process, then we will see meaningful change. Until then, meet the new year. Same as the old year.

If you are a home seller and you are ready to sell your home a more intelligent way, that leaves more of your hard-earned equity in your bank account, visit ReaListing and help change the industry one informed consumer at a time.

 

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.