Will Your Home Equity Buy a Tesla For a REALTOR and a Fiat For Their Kids?

Home equity is the buried treasure of most homeowners. Other than borrowing, we uncover the gold coins by selling the home it’s buried beneath. Regardless of what we will do after we exchange the deed for cash, you and I, and all of our friends, sell for the same reason- free the equity to do the next thing.    Other people get their hands on our home equity treasure by selling our houses.

At the time of sale, our opportunities to increase our equity are over. What’s there is there, and the money owed reduces the balance we have to do whatever we have planned for our investment. The way to increase our net equity is to decrease our costs to sell. Your most expensive selling cost might be the real estate broker fee. Like a regressive sales tax, a broker fee (commission) based on a percentage of the sale price consumes an unfair share of home equity for people who can least afford it. 

 How 6.0% becomes 24.0%

You and I sell our homes for $400,000. We sell with the same real estate broker; she charges you 6.0% of the sale price, and she collects the same 6.0% from me. On our closing statements, you and I see the same real estate commission of $24,000.00. Everything is equal. Or is it? Probably not. You have a mortgage of ZERO. Your gross home equity is $400,000. I, on the other hand, have a mortgage with a balance due of $300,000. My home equity is $100,000. Your $24,000 broker fee is only 6.0% of your home equity. For me, I will need 24% of my capital to pay the broker.

You pay for lifestyles that are not your own.

BMW. Volvo. Audi. Range Rover. Tesla. You may not own one of these luxury automobiles, but if a REALTOR is driving one, someone’s paying for it. In a driveway sits a Suburban, a Jeep Wrangler, a Tesla, a Fiat. Upon parking the Fiat and exiting the car, the REALTOR-owner announced, “The last person out of the house in the morning gets stuck with the Fiat. It’s the kid’s car.” To people who want you to believe the car they drive are an indicator of their success, getting stuck with a $30,000 Fiat is as bad as it gets. I can point to a few incidents that opened my eyes to why the public needs alternative real estate solutions, and this was one. There is something wrong with taking large chunks of equity homeowners could use for the well being of their families and spending it on luxuries for our families. The real estate market runs at a pace where the least capable licensee can collect expensive cars to appear successful, and take 24% of your earned savings, doing nothing more than signing a listing contract. 

Know where your money goes

Cars, trips, real estate, luxury goods, self-promotion, lead generation, client appreciation parties, pre-game tailgates, fundraising for clean water for wealthy lake property owners become business expense write offs for some brokers. Your home equity is the revenue they use to pay the bills. Fortunately, as more brokers create alternative real estate business models, the homeowners and buyers will have a choice to keep more of their money for themselves and pay less for the lifestyles of other people. It’s essential to know the fee the broker charges and where he/she will spend your money. When your dollars are spent on luxury cars that you don’t drive and vacations you don’t take, you have the right to know where the money will go. 

Essential Real Estate’s $499 and 1.0% broker fee means more equity for you.

Buying things you don’t use is never a good idea. Buying those things for other people is charity you can choose to be part of of or not. Essential Real Estate was created to give home sellers a choice to keep more of their home equity and pay less in real estate broker fees. It’s not just the listing side of the commission where our clients save. We busted the myth of the 3.0% buyer broker commission. Our home selling clients are paying an average of 2.4% commission to buyer agents. For the person selling a $400,000 house, that little .6% is a big $2,400. Financial security is achieved by saving and paying fair prices for quality service. As long as real estate broker fees are negotiable, expect to negotiate. And if negotiating isn’t your thing, call us. We negotiated a lower broker fee and better selling terms for all of our clients. $499 plus 1.0% of the sales price is our fee. You decide how much you want to offer to a buyer broker. More of our clients offer no more than 2.0%.

Author: Tom Meyer, Owner-Broker, Essential Real Estate, LLC Madison, WI

The real estate transaction, disclosure, and confidentiality are the business of a Wisconsin licensee. It's in the transaction where the skill of the licensee, and their commitment to the law where the public is protected or placed at risk. What you see REALTORS do to brand themselves and their firms, promote their service, advertise, and process paper do not require a license. I believe negotiations to create and honor a real estate purchase agreement is where the agent has the greatest value in a transaction. Paying professional fee rates for the administrative services is a choice consumers deserve. Old business model driven commission rates are taxing the home equity of American home sellers. Essential Real Estate was created to put more money in the hands of the consumer by eliminating expenses for the firm and charging a fair price for the real real estate service.

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