Four Elements Give The Full Advantage of a Seller’s Market To Our Seller Clients.

When combined, there are four elements in our control, giving our clients more advantages in this seller-favorable market. As far as I know, Essential Real Estate, LLC, is the only firm designed to use the resources of real estate agency rules and liberties to allow homeowners the full advantages of this Seller-Favorable-Market. 

There is a formula we believe to be effective in satisfying our seller clients well beyond the good feeling of a quick sale. The four factors of our method are (1) Net Equity. (2) Smart Pricing – Fair Fees. (3) Safe Terms. (4) Confidentiality. 

Net Equity

What would you rather have, the price that you think your home is worth, or more equity after paying fees and costs? It’s the equity you want. We achieve the equity goal by controlling price and expenses. 

Smart Pricing – Fair Fees

The right price for any property is open for debate. There is always someone who will offer more money. Whether or not that person can meet you at closing with the money in hand is essential. High prices and weak commitments are easy to spot when you’ve seen it all before and ask the right questions. Our home valuation process will show you if the price is likely to be verified by an appraisal or if we need to take precautions to avoid renegotiations later in the process. 

Fair Fees When time on the market is measured in hours, not days, and multiple offers are most likely regardless of who represents you; the real value is in the skill of the person representing you. We charge $499 plus 1.0% of the purchase price and our emphasis is negotiating the transaction. You don’t pay us to “market” your property. Homebuyers find homes listed on the MLS on the internet, Zillow.com, Realtor.com, etc.com. There is no real cost to be seen where people are looking for homes.  

Buyer Broker Compensation I looked at 53 recent sales. Fifty-two of the owners paid a brokerage fee of 3.0% of the sale price to the buyer’s agent. Owners of high demand homes can choose to negotiate the buyer broker fee that they will pay when they see the Offer. An offer with favorable prices and terms might we worth 3.0% to the seller if there are no better options. But in this market, we see buyer agents are happy to accept less than 3.0% to help their client get the accepted Offer in competition. Why our clients pay an average of 3.4% in total broker fees is your business. Ask us about our WHY.

Safe Terms

Contingencies exist to protect the buyer more often than the seller. In simple terms they say, Maybe I will buy your house. Maybe I won’t. When I know this or that, I’ll let you know.  Any contingency that puts the buyer in a position to renegotiate or walk away is dangerous for home sellers–and all contingencies give someone leverage. There is a provision written for everything that could arise regardless of how inconsequential it may be to the parties. Offers loaded with contingencies get that way because the buyer wants escape alleys, or because the agent who drafted the Offer didn’t give the buyer an informed choice.  

Confidentiality

Real estate disputes have a common element. Somewhere along the way, one licensee said something to another licensee, and that something was flawed or restated incorrectly. When agents take it upon themselves to work out details without the principals signing off, someone is likely to be disadvantaged. We don’t speak for our clients, and we don’t pass along requests. All communication in a transaction should be between the buyer and seller, and the proper communication methods are Amendments and Notices. Conversations between our clients and us are confidential, the same as conversations with real estate customers. 

Conclusion

A favorable seller market has a lot more opportunities for home sellers to profit and be safe. The Offer documents designed to balance the playing field or tip the buyer’s advantage can be crafted to be more advantageous to the seller when the agent knows what we know.

The diminishing value of real estate advertising.

In 1989 a prospective homeowner started their home search by scanning their local newspaper’s real estate section. A large real estate firm with multiple hundreds of listings presented maybe 20% of all listings in their newspaper ad. Achieving name awareness and making the phone ring was the purpose of the Sunday ad. Firms monitored the results by keeping track of incoming calls generated by the advertisement, appointments made from those calls, homes showed, offers written, and listings procured.  

Advertise to Sell Any House

The Sunday real estate page had a ready audience of home sellers looking to find their home in the limited ad space. New listings had priority. After week one, a home fell into the rotation schedule. Selling a particular house was not the objective of the firm. Making the phone ring was. Real estate advertising was more likely to attract buyers who might buy any house or a seller who might have a similar home to sell. The homebuyer had a slim chance of finding the home they would own in the newspaper. Connecting with a real estate agent with access to the secret Multiple Listing Service inventory of homes was necessary to get into the actual pool of homes for sale. And then you still might be force-fed the firm’s listings before you got to look at properties listed by other firms. 

Zillow.com – Realtor.com. – Homes.com – etc.com

As the World Wide Web grew, REALTORS had the opportunity to solidify their place as the first or early point of contact in the home buying and selling process. Associations and committees don’t move as quickly or deliberately as private businesses. If changing long-held beliefs is required to take advantage of an opportunity, the opportunity will go to someone else. The dot-coms were someone else. Hellow Zillow. 

Online Is The Go-to Place To Find a House

The National Association of REALTORS released its 2019 study of home buying trends. Fortyfour percent of homebuyers told the association that they started their search online. (Some other statistics put the number at 88-90%.)  Zillow has a study that might contradict or support the NAR results. 

The Cost Of Advertising/Marketing and Real Estate Commissions

Associations, slow to change, are likely to apply old ideas to new methods. Mass marketing was and is the type of marketing real estate firms are most familiar with. Marketing to make the phone ring is now purchased to find leads. Revenue minus expenses = profit. When a firm spend money on internet marketing or newspaper advertising they have an expense. To make a profit revenue has to exceed expenses by a considerable margin. The cost or real estate service is in the commission charged by the firm. A more efficient way to connect buyers and sellers could result in lower selling fees for home sellers and lower acquisition costs for the buyer.

It’s possible to match specific homes to people who are the best candidates to be the next owner. Consider this: a dozen REALTORS will know a dozen people who might like a home new to the market. Those 12 will be alerted to see the house. Maybe 4 of those folks will arrange a showing. The technology exists for a computer to identify those 12 and more, and then cut the pool of prospects down to the one or two people most motivated to buy that house right now. Analytics uncovering the buyer before the person knows they are the buyer is creepy. But it’s possible. Now.

If it’s true that home owners want to sell homes in the least amount of time, for the most amount of money, and least inconvenience, analytics are the means to the end. I believe Zillow has all the information they need to identify from their pool of registered home buyers, the next owner of your home. Is that worth paying for?

The New WB-11 Offer to Purchase

Publish with flaws or stop the presses? 

Admitting we errored and getting it right before releasing flawed work would be easy if making excuses wasn’t easier. Consequences compounded is the unpleasant outcome of choosing easy.  The Wisconsin Residential Offer to Purchase, WB-11 released in the fall of 2019 and made mandatory effective January 1, 2020, was known to be flawed before it was released. Resistance to requests to delay the release surprised me. Resistance to suggested changes frustrated me. I’m grateful that the people in charge came around and made the necessary changes. 

 Professionals who participated in the writing and review process caught the problems created by a solution to a problem that didn’t exist. The committees in charge of developing the forms received unsolicited suggestions for corrections. Requests to hold implementation until changes could be made found no support in the WRA legal department. I saved the email replies I received from WRA staff legal folks. I use them as examples to remind me of what condescension feels to the recipient. 

Garbage in, garbage out is as accurate as it is simple. When a committee’s purpose is to generate a product, the level of quality and precision is secondary. Standardization is the primary intent of the State produced real estate transaction forms. Around the committee tables, we hear people talk about adding provisions that could eliminate the need for individual companies crafting their version of ideas that look good at the moment. Some contingencies were explicitly added to reduce a variety of company authored contingencies. The FIRPTA contingency inserted into the January 1, 2020 version of the WB-11 required each company to make their unique modification to fix the committee’s problem. If the public was better served by leaving them exposed to the unnecessary risks that the brokers may or may not fix, it’s a mystery to me.

Problem solved

The new WB-11 we began using on August 1, 2020, corrects the errors. Because there are a variety of solutions still floating around that introduced into the offer process to fix the problem, we now have a compounded problem that will take time and expense to fix. By leaving the solution to the firms who each solved the problem in their unique ways, we will live with the stray voltage of so many addenda that do not match the terms of the Offer. And when addenda conditions don’t match the current version of the State approved offer documents, validity issues arise.   

Home sellers and buyers who prefer to have enforceable contracts will be wise to work with lawyers and licensees who know where the problems lurk and how to make them go away. You can find out what the agent who wants your business knows about the Offer documents by asking them to explain the different sections and quizzing them on their own company addenda. If the agent knows where the flaws are and have solutions, they probably know how to make the Offer work for you. If they don’t, they’re just checking boxes and filling in blanks.  

We Own The Means For You To Keep Home Equity

We own the method to increase the home equity our clients attain and retain.  Patrick Meyer, Owner. Essential Real Estate, LLC. 

A quick count shows our home selling clients retained more than $80,000 of home equity using our method. Estimating the amount of capital our buyer clients attained is not as precise. Although we do know some of our buyer clients succeeded in negotiating accepted offers even when they were not the highest price offer the seller had to consider. 

This year our home selling clients leveraged our equity saving method into an average of over $9,000.00 each.  

Home equity is serious money. Nine thousand dollars invested for ten years at an annual return of 6.0% becomes $16,117, a beautiful college fund gift. 

We intend to change how home sellers keep their home equity and how home buyers avoid spending equity by overpaying when they negotiate.  

There is always another house and another buyer.

Real estate negotiations are ordinary in that they are not complicated. With exceptions, a typical transaction includes someone trying to pressure someone into fearing a loss. Either the buyer agent tells the seller the buyer has another property to consider. Or, the seller has other interested buyers. For this strategy to have any effect, the other side needs to participate. And by participate, I mean they have to be afraid of losing.   

Don’t participate, and the other side will stress.  Fear of loss is a great motivator. Being unafraid is a great equalizer. To be fearless, have a plan, and trust your knowledge. Overcoming the threat of loss is as simple as ignoring the suggestion of an impending loss. Trust what you see in the Offer. Buyers rarely write offers first on their second choice homes. They seldom walk away from one house at the sight of the first counter offer. And when they do, it’s reasonable to conclude that their commitment was weak. Getting into a contract with an uncommitted person is less desirable than no offer at all. If you’ve been there, you know. 

You have a plan, and you know what you know. You know what you want to accomplish, and you know what will or won’t work for you. As long as you have an offer in your hands, you are in control. The other party that made the Offer you are considering countering isn’t as committed to getting to closing as you are. If the only way they will get into a contract with you is if you accept their terms, they may be an inch away from dissolution.  

A secure contract with your preferred closing date and terms you can live with is worth trying to get. The Offer in your hand that comes with implications of not-so-committed is nothing to fear. Be committed to yourself. Say thank you for the Offer and let the agent know you appreciate the opportunity. Show no fear. Display no displeasure. You’re in control. Keep it that way. There is always the next buyer. 

You are the product or the client; sold or served. Which one do you want to be?

Businesses exist for a reason. If I asked 100 owners why their company exists, the most common response would be to make a profit.   All companies sell widgets or services. Customers or clients pay the money a firm uses to pay the bills to keep the remainder as profit. When the purpose is profit, the problem is too. Solving the problem requires a product to be sold. Customers must pay more or buy more when a profit-driven business has a problem. The customer is now the product.

What might happen if profit was not the reason-to-be, but only an outcome to expect? A business built to solve a problem for consumers remains in business as long as they are a solution to the problem. And as long as your solving problems, you generate revenue. Your profit is not dependent on the consumer; it depends on how well you manage your income and expenses. If you exist to make a profit, you are out of business when you don’t make a profit. 

Ask The Most Important Question

The price of a widget or a service is the business of the business owner. Why the price is what it is, well, that’s your business. If you are the product necessary to be sold for the company to achieve their reason for being, you should know. It’s OK to be in business to make a profit, and it’s perfectly fine to be the product the business needs to meet its objective. Your only choice should not be to concede to be the product instead of the customer or client. When you discuss the WHY behind a firm’s reason to exist and the reason their fee or price is what it is, you’ll know if you are the customer/client or the product. All firms see you as one or the other. What do you want to be?

Our fee is $499 and 1.0%. We charge that to be sure you keep more of your money.

The reason you went into business selling services to customers was to make a profit. Elizabeth Wasserman, Editor Inc. Technology.   I respectfully disagree. tom meyer, essential real estate.

Making a profit is one possible outcome of being in business. Solving a problem that other people experience is the reason we started Essential Real Estate, LLC. The firm is profitable because it solves the problem of losing home equity on broker fees and negotiating flaws. The problem is simple: You pay real estate broker fees and selling concessions from your Home Equity. If your equity is $100,000 when you sell your home at full price, and $95,000 if you accept $5,000 less, and your broker charges a 6.0% commission on the sale price, a $400,000 sale will cost you 25% of your equity.   

Two Ways To Reduce Your Losses

Home sellers who don’t know more than their agent about how the real estate business work will lose money by making unnecessary concessions, believing myths, and giving away their negotiating strategy. Home sellers who have no choice but to pay the going rate will spend more than they might want on real estate commissions. The two ways to cut your expenses and keep more of your home equity dollars begins and ends with the ability of your agent and your agent’s reason for being. Homeowners ask real estate brokers, “What’s your commission?” They should ask the critical question, “Why is your commission X%?”

We Set Our Fee to Make Sure You Keep More of Your Money

I don’t know what fees each company charges. I also don’t know why anyone charges the fee they charge, but I assume the price was set to generate enough revenues to exceed expenses by enough to end the day with a profit for the owner. Maybe the cost of the service is set to match the level the market will bear. Perhaps it’s a combination of factors. From my 31 or so years of experience in real estate, I believe the market pretty much accepts a six percent broker commission to sell homes. From the same experience, I know firms set their revenue projections relative to the profit they intend to make. Before there is profit, expenses have to be covered, or costs reduced. We chose to limit our expenses by excluding wasteful spending on non-essential services and gimmicks. By doing this, our clients pay about 56% in fees. By being exceptionally good at structuring transactions to our clients’ favor, home sellers who hire Essential Real Estate make more money by avoiding traps and contract deficiencies. 

Matching Intentions Will Get Your Offer Accepted

For at least three years running the market has favored home sellers in the Madison, Wisconsin area market. With too few homes for sale and a deep pool of able buyers, it’s common to see 5-20 people bidding on homes just listed. The odds of getting your Offer accepted, even at 1 in 5, appear precarious. At Essential Real Estate, we believe the odds are not as daunting as they appear when you eliminate the offers from people who have intentions that don’t match those of the seller. I contend the unintentional buyers account for at least 3 out of 5. If I’m right, your odds of outbidding (without overpaying) competitors are pretty darn good.

Set My Equity Free

Different motivators cause a person to put their home on the market, but the reason the house is for sale is always this: The homeowner wants their home equity to do use for some other purpose than own this property.  Some people decide to sell and put their homes on the market before committing to doing the next thing, but when they commit to whatever comes next, their intent becomes clear; set their equity free.  

The Accepted Offer Goes To The Intentional 

Our buyer clients who are sincere about their intentions are more likely to accept ideas on how to structure their Offers to match what we know of the seller’s intent. The intentional buyer can show by the terms of their Offer that they are committed to getting to closing on time with no risk to the seller. Reservations, (conditions that allow for a buyer to change direction before closing) threaten the seller’s security of achieving their reason for selling. 

Unintended Consequences  

We can’t blame home buyers for submitting wishy-washy Offers. The typical person drafting an Offer sees the purchase agreement as a standard-fill-in-the-blank form. Common contingencies make their way into Offers because the buyer was not aware of their opportunity to make an informed decision on the merits of everything stated in their Offer. The unintended consequence is a rejected Offer or a counteroffer for more money in exchange for the risk the buyer’s Offer expects the seller to carry. 

You Want Your Equity. I want you to have it. 

Showing the seller that you want to own their house is not the same as showing the seller that you wish to satisfy their want. Put yourself in a better position with this perspective: If I’m selling, I want my equity. I also desire certainty. Every seller might say this: The buyer I am willing to enter into a contract with is the person who wants me to have their money to become my capital and wants me to get it without stress. 

Letters, texts, emails do not tell the seller that you want them to have your money as their equity. They say a lot about you wanting something they have. They say something about what you want the seller to do for you. In a seller favorable market, the seller might be interested in your wants, hopes, dreams, but they’re more interested in your money and what you can do for them to make the process a sure thing for them. Your Offer can be structured to match the intentions of the seller. Those are the Offers most likely to be accepted. Know your intentions. 

Real Estate Information. The Business of Status Quo.

As an industry leader, NAR’s role is to continue to promote and enhance the REALTOR® value proposition and ensure that consumers continue to receive the best, most accurate and comprehensive real property information directly from the professionals who create it, REALTORS®. https://www.nar.realtor/2020-nar-strategic-priorities

Accurate information is valuable to the user regardless of the provider. Owning and sharing accurate information is necessary for the provider to remain relevant. Sharing information is not something the REALTOR Associations have do well. Is being the first point of contact essential to the REALTOR’s place in the transaction? Probably not unless keeping the status quo is the objective of the Association.

Maintaining the status quo is dependent upon the leadership’s ability to be the enforcer. The trouble with the enforcement of standards that protect a business’s position in a consumer transaction is the pesky fair trade laws. Whether the consumer is best off with the REALTORS being the first point of contact in a real estate transaction is determined by the consumer. If demand is a driving force behind business development and businesses are competing for the point position in real estate information, we might conclude the public is not satisfied with the status quo.

If REALTORS want the public to see them as essential to the real estate transaction the REALTORS will have to find ways to be exceptional. Data has value. So does intelligence and creativity. If data is your intelligence, you’re not very creative. Or, essential.

I don’t want to buy if or unless…the extreme cost of contingencies.

Stop right here. Let’s rethink this. Opportunities to reconsider a promise are necessary for uncommitted people. Every contingency in a residential offer to purchase says,  I don’t want to buy your house if this or that happens or doesn’t happen. Does it seem reasonable that home sellers will expect more money to exchange for more opportunities for a buyer to decide not to buy?  

Twenty pages to say MAYBE

The offer to purchase from a ready, willing and committed person could read, I will buy your house on this date, for this amount of money, which I will bring to (this place of closing). To complete the sale, you will transfer the property by a warranty deed and provide insurance of a clear title. 

A Wisconsin Residential Offer to Purchase includes at least 17 statements of I’m not going to buy your house if, or unless _________.  A typical four-page addendum of optional contingencies has 20 additional exit opportunities. Compared to the two-sentence promise of commitment, the contingency laden offer typically drafted by real estate professionals is one giant Maybe, maybe not. There is nothing safe in a maybe. 

The Price of Maybe

Security is valuable to home sellers. When a person writing an offer doesn’t know how to structure the offer to show the buyer’s abilities and commitment to close, all they have left to appeal to the seller is money. And the money they use belongs to their client. When homebuyers overpay, they’re spending equity they haven’t made yet. When real estate firms put more effort into customizing purchase agreements and less energy to capture leads, their buyer clients will reap the rewards. Until then, you’re going to pay for the right to walk away in cash or rejection.