Price is a one-time thing; security lasts longer
Two lines is all it takes to include a price in an Offer. The remaining 579 are dedicated to the rules of the transaction, and the promises made with exceptions. On price alone an Offer might be judged good or bad. It’s the easiest condition to see and when it’s good, it shines like a bright star. So bright in fact that a person may overlook the essential aspects of the Offer. Rules and caveats are ignored at great peril. Price is a one-time thing; security lasts longer.
Getting the most money in the shortest amount of time is said to be the goal of home sellers, and maybe it is until we have more information. When we take the time to look at the ‘more information’ we discover that security, not price is the overriding factor in negotiations. Price being objective ($100 is greater than $50) is simple to see. Security is subjective. (A $100 bill today that I can never spend is not as appealing as a $50 bill I can spend in a week.) It’s harder to see but becomes clear when we know what the rest of the words mean.
Real estate transaction drafting is primarily a trained practice. When working with a practitioner trained to insert this here, that word there, and cross this off but not that, the client is left looking just as unprepared and insecure as the next person. A wise seller will not get tied up in an uncertain contract. A big price won’t distract them from the clutter of the Offer.
On the other hand, the person working with the professional who understands that the contract is filled with qualifiers, exceptions, caveats, and cautions will have more to offer to appeal to the desires of the seller. Price will always be a factor, but it’s not the only factor. It is in the lack of conditions where buyers are given a chance in highly competitive markets. Knowing how to structure Offers is a skill under developed in the world of fill in the blank and check the box, one-size-fits-all, standardization. At Essential Real Estate we made it our business to know the conditions of the contracts so our clients can make informed decisions about what goes into their contracts, and what is left out.
Expediency, convenience, desire to get an accepted offer before someone else does, aren’t permitted exceptions.
Prior to acceptance is never interpreted to mean “or within X days after acceptance”. In the case of the Federal Lead Paint Hazard disclosure rules, there is no work-around. Prior to acceptance is not, “…within (any time or days) after acceptance”. Expediency, convenience, or a desire to get an offer accepted before someone else does, aren’t exceptions to the rule. If your firm has a work-around, your participation is ill-advised.
A policy does not need to be in writing to be a policy. Evidence of practice repeated, known, and unaddressed might be enough to determine a firm has a policy of violating LBP disclosure law. Penalties levied by HUD for lead hazard disclosure failures are significant and increase when children are involved. When the failure to properly disclose is a standard practice permitted by the firm in special circumstances, the consequences could be dire. Your broker’s willingness to bypass the law doesn’t grant you a free pass to participate risk-free.
For some people skipping the “prior to” and risking the penalty may be less painful than the reward of a statistic and a few dollars more is gratifying. For the rest of us doing the right thing because it’s good for the client, and in compliance with the law is always the better choice. Even if the pay-off is just a better night’s sleep.
We believe 4.0% is a fair real estate broker fee when the median time on the market is 9 days.
Acquisition. The question is never, What don’t you want for Christmas? This is the season of receiving. It’s an important season in American culture. The American is an acquisitive creature.
To live in a material acquisitive world Americans become adept at trading as little as possible for as much as possible. And we expect it. A tried and true method to acquire more for less is sell the sizzle. A handy example of selling the sizzle is an appealing ad for the incredible shrinking fast food hamburger. When you buy the burger that looked so good in the advertisement the burger you are handed has less meat, smaller buns, 1 pickle not 2. Less substance. More price will continue until one day we hand over $10.00 and the person at the counter will show us a picture of a burger with everything on it. And we’ll be satisfied.
Why would we expect anything more? To fund a lifestyle at a level one has become accustomed to, there needs to be more revenue and less cost. Selling sizzle instead of steak when you can get the same price for sizzle is going to keep happening until the consumer quits buying less for more. Or a business flips the script and provides more for less, and stays in business.
The new generation is more inquisitive than acquisitive. Maybe because they have more choices at their finger tips and more information they are more likely to ask why where we and our parents were quick to ask how much.
Patrick and I designed our company, Essential Real Estate to be a healthy choice for people who want all of the service at a fair and reasonable price. People who want substance. Essential Real Estate set fees at 33% of the price the market will bear. And we did that because we believe this is true, “Help enough other people get what they want in life, and you’ll get everything you want in life.” Simply put, you can make a profit charging a fair price and leaving more for the customer. We don’t need to acquire more of your home-equity.
Real estate transactions are governed by transaction law. The service a real estate firm is paid to provide is the service they’re licensed to practice at a high standard. The transaction is substance. Our expertise is in the essential real estate service our license expects us to provide expertly. When knowing nuances of the real estate transaction is not your thing, the smoke from the sizzle might cover your substance deficiencies…until someone gets burned.
The six percent, more, or less broker fee is a choice businesses are free to charge. In the next decade the consumer will demand and receive more choices. They businesses that deliver those choices will be built less on the acquisitive model and more on solution at a fair price for expert service model. Essential Real Estate is that choice today.
We believe 4.0% or less is a fair fee when the median time on the market is 9 days.
Let’s keep it simple. In 1963 residential real estate commissions were typically 7.0% of the purchase price. Today, Zillow says they’re about 6.0%.
Commission down 14%. Zillow says the Median Home Value is up to $285,000. Census.gov shows the median value was $17,000. Is it possible the broker fee was about $1,200 in the summer of ’63? It’s $17,100 today.
We pay 100% of our broker fees from our Home Equity. Home Equity is savings earned. If the median home seller has a typical home equity of $50,000, broker commission is going to consume 34.0% of their equity.
And that’s just the cost of fees. We haven’t looked at the costs of under representation and negotiating flaws.
Essential Real Estate is created with an aim to increase your home equity savings by 33%. They surpass that with real estate contract law knowledge and skills.
Realtors are on the side opposed to Zillow. The peculiar thing is, most have no idea why they fear Zillow.
The public embraced Zillow and Zillow gave the public liberty. Is that a pure example of a free-market success story? If you’re the consumer you know it is. The consumer is on Zillow’s side.
REALTORS were brought up in the cyber world to resent Zillow. The REALTORS had the first opportunity to be Zillow but they couldn’t comprehend a world where the public had access to information and where 1975 was no longer the future. They did what large associations are best at doing. They walked away and went home.
If the public wants something, you’re the biggest controller of that something and you don’t find a way to make money off of your stuff, you have no one to blame but yourself. Zillow knew what the Realtors must have known, if the Realtors were sharing their data with members, join them. Zillow aligned itself with Realtors, walked in, took what was free to them, gave it to the consumer and turned around and sold data to the Realtors…this is the data the realtors had but never mined.
I love Zillow. I love informed consumers. I love the fact that a potential client has access to the same information as me so they can do their research and maybe come to the same conclusion as me. Even more than that, I love Zillow for the opportunity they created for independent contractors to provide their brand of service to the consumer who wants what they have. More individuals are free to leave corporate ownership with their arcane rules and hefty fees. Zillow has given the independent REALTOR the liberty they desired. I’m on Zillow’s side right next to the consumer. Realtors are on the side opposed to Zillow. The peculiar thing is, most Realtors don’t know why they fear Zillow.