Why Essential Real Estate Exists.

Massive improvement of service by resolving a tiny fraction of a problem.

There are a thousand things a real estate firm can do and call themselves full service. The more sizzle they add the better to justify their fee. A broker who charges 6.0% commission (Same fee as has been common since at least 1989) has a budget and they pay those expenses with the money you pay to the broker…where does your commission paying money come from?

You Pay Commission and Costs From Your Home Equity

A 6.0% commission charged on a $400,000 sale is always $24,000. But you don’t pay that commission from the sale price; you pay it from your home equity. The typical American may have 50% of the sale price in home equity…but most will have less. If that’s you, the 6.0% commission is 12-24% of your home equity. And to us, that’s an excessive amount to pay for the typical real estate transaction service.

Ask to see the budget of any real estate firm or licensee. You will discover that the home equity you pay to the firm is spent on technology for Lead Generation, and lead capture services. (Getting more customers like you is the business of lead management.) Your equity also pays for Branding. Name recognition. Promotions. Entertainment. Rent. And paying redundant staff expenses.

Essential Services are License Law Compliant

By directing a high percentage of effort and attention toward excelling at the essential aspects of real estate license law, transactions, and negotiations our client receive a higher level of skilled client representation; they pay only for that skill and knowledge. Essential Real Estate excels at providing the truly vital services necessary to present your home to the home shoppers. (Staging consultation. Professional Photography. Matterport 3D images and floor plans. Multi Dimensional, fast loading virtual tours. We’re not going to do a thousand different things that really won’t contribute much to the end result we are trying to achieve…and you certainly don’t want to pay for those things.

Where Do You Find Homes For Sale?

Research shows 80% of people who bought homes recently used the internet to find the home they bought. They mostly do this searching 24/7 from the comfort of their home on their smart phone or tablet. Massive corporations like Zillow.com, Realtor.com, Homesnap.com, Facebook, Instagram, spend billions of dollars developing their technology to match homes with prospective buyers. There is not one real estate agent or firm that can compete with attracting qualified buyers to you your home through their web site or social media. That’s good news for you! Every single home for sale on a multiple listing service in America can be included in the feed to these gigantic home buying portals loved by home buyers all across the globe.

Marketing?

For 6.0% commission paid from your home equity you will buy a lot of sizzle. There may be a day when your home for sale is lost in the forest of other homes for sale again. But that’s not the present market. Look around your neighborhood. How many homes similar to your home (or just number of homes) are on the market in your neighborhood? If your home is for sale you’re like that lone tree in the middle of the farmer’s field; you’re see from anywhere and you can’t be hidden. At any time you are the market for homes for sale in your neighborhood. Spending money on random advertising and promotion on social media to a few people who have no interest in real estate much less owning your home is a terrific waste of money.

Color glossy handouts. More and more double sided color glossy handouts are printed, paid for, and delivered to the broker from the printer AFTER the owner accepts an offer. These handouts look sharp and it’s stunning how home owners light up when they see their home on an 8 x 10 color glossy. And why is this a necessary expense to the home seller? It’s not. Home buyers are more environmentally conscious and they don’t take these flyers—they have more information on their smart phone than anyone can put on a paper flyer.

There Is No Waiting To See Your Home

The consumer is not waiting to hear about homes for sale from a Realtor. They’re actively looking and being looked for by home buyer matching algorithms; and these systems are constantly improved at no cost to you…or your Realtor.

Flat Fee? It’s All Flat Fee…and limited service.

Real estate licensees are turned out in great numbers. For a minimal fee and extremely limited education requirements a person can hold a Wisconsin Real Estate Sales or Broker license. This license is no indication of a person’s skill, knowledge, or commitment to real estate license law. Experience is a misnomer. A license and experience could be an indication of a higher level of ability. When you consider that real estate is a Training intensive business, not a Learning business, the chances are the licensed experienced person and the licensed limited experienced person know the same thing about filling in the blanks and checking the boxes of an offer form. The training method works well for brokers. If they can get a person to memorize what goes in this line and we check this box but not that box, very little time and resources are invested in getting the agents to the minimum level of competence. If that’s fine for a broker it should not be fine for the public.

We hear the term flat fee and wonder what isn’t a flat fee. $4000.00, 3.0%, 6.0%, $500.00 are all flat fees.

You Get What You Pay For

And we believe you should pay only for the things that matter. When a company sets their fees to make a profit after expenses you the consumer are paying for those expenses whether you want them or not. To add services to justify a 6.0% commission it makes sense to expect there will be a lot of low cost-no impact services tacked on. (That’s what brokers call sizzle)

We Exist So You May Keep Your Equity

You worked smart to build the equity you have in your home. We believe you should keep more of your equity and spend less on real estate services and costs to sell. If you’re willing to spend more of your money on nonessential services we’d like you to make an informed decision. Our clients make informed decisions; they get the inside information on how the business works and where they can improve their outcome and save their money. We created Essential Real Estate to be the preferred choice real estate firm for people who value their home equity and desire to have skilled real estate representation.

Our Clients are People Who…

Prefer to pay fair prices. Value highly skilled professional service. Know the difference between sizzle and steak. Have better use for their home equity than paying broker fees. Understand that it is the agent’s ability to negotiate the terms of an agreement that matter most in the outcome of their transaction. And finally, some but not all of our clients believe the home equity they save matters to them.

Essential Real Estate $499.00 plus 1.0%

Total and complete real estate service for $499.00 at the time of the listing and 1.0% of the sale price paid at closing is our fee. Most of our clients intend to pay an additional fee to a buyer’s agent and that fee might range from 1.0% of the purchase price to 3.0%. (We suggest moving up and down the scale using increments of .25%) The amount you commit to pay is up to you. We’re going to make sure you know how to decide on an amount to commit yourself to paying without promising to pay a higher fee than necessary. This little insight alone has saved our clients $1,000 to $8,000 in commissions.

Essential Real Estate is the only firm built to identify the essential real estate services, invest in mastering the contract and negotiating skills, while providing total real estate service. We do this by eliminating the junk service and focusing our attention where you have your attention, On Your Home Equity.

Vision and Mission. Why Essential Real Estate exists.

“To matter” means means, to me, creating choices where none or too few exist for people who want to keep, or get back, what they need to live their purpose.

The ability to matter is open to just about anyone. * That merits inclusion in a future edition of The Words I Wish I Wrote. The purpose of Essential Real estate is not “make a profit of X dollars”. Profit or loss is an outcome of living a purpose. Our purpose is the Why we exist. Home equity is a treasure under constant threat. From the day your offer is accepted to own a home until the day you sell that home to use what remains for the next significant thing you do somebody wants a chunk of your treasure.

“To matter” means means, to me, creating choices where none or too few exist for people who want to keep, or get back, what they need to live their purpose.**

In the field of real estate, where we live, the problem we set out to be a solution to is the constant demands made on home owners to spend their home equity treasure on services they don’t understand or don’t need.

It is our Vision to be the real estate broker of choice for people who believe they have more important uses for their hard earned equity than paying fees and costs to sell their homes. We see a future where our results inspire others to start their own endeavors strengthening a field of healthy competition for the benefit of the public

Mission: Thrive to master transaction skills to be a wise choice for consumers who prefer to have a transaction skilled real estate agent on their side, and pay only for what they need.

The effort to fulfill a mission that matters will be met with resistance. One result of our existence may be that other services are created to improve on our model and bring more choices to the market for people who desire to keep more of their home equity in their hands. Resistance is natural; it may even be an invitation to dialogue.

*Quote from Seth Godin.

**The Aaron Meyer Foundation is one effective choice we brought to life for improving the lives of families who have young people in substance use recovery.

Essential Real Estate. A Free Market Choice by the Numbers.

Compared to 4.0% a home seller who pays a 6.0% commission will pay 50% more money from their equity. Saving that equity is now a choice.

For a market to be free there must be a choice on both sides of the transaction. Do we have a free market real estate service economy?
Maybe.

Real estate representation is a licensed service. The standard of performance is the same for every real estate licensee. There is no choice as to which legal obligations a licensee will perform. There is a minimum standard though, and we expect some licensees to rise above the minimum to be a choice of higher-skilled service for the consumer.

What about the price? As long as the consumer is willing to pay *6.0% broker fees the market will be dominated by firms that choose to offer the same real estate licensed service for the same 6.0% price. Eventually either the consumer will demand a range of prices for the legally obligated services or licensees will choose to structure their business model to be profitable and sustainable at an alternative fee.

Essential Real Estate, LLC was created in 2019 in Madison to be a free market choice for home sellers who want to keep more of their home equity by spending less on broker fees. These are the numbers.

When the fee of choice tends to be 6.0% of the sale price the regressive nature of the “tax on value” hits those who can least afford the fee the hardest.

$400,000 Value. $300,000 mortgage. $100,000 equity
$400,000 x 6.0% = $24,000.
$24,000 is 24% of the equity.

OR

$400,000 x 4% = $16,000
$16,000 is 16% of equity.

To pay a 6.0% commission the home seller will pay 50% more money compared to a 4.0% commission.

50% more, in this scenario, is $8,000. By moving that $8,000 back into the hands of the seller the difference is impressive:

The $8,000 is a 33.3% reduction in the price of the commission.
The $8,000 is a 10.5% increase in retained equity.
The $8,000 applied to the next down payment will reduce a monthly payment on a 30-year mortgage at 4.1% by $39.
$39 per month is $468 per year
$468 per year for 30 years is $14,040.00

Finally, home owners have a choice to pay less in selling commission and keep more of their home equity. Essential Real Estate has set the market free.

Listing fee: $499 at signing. Commission of 4.0% or less due at closing. We will show you how to make that 4.0% less.

* The Internet Didn’t Shrink the 6.0% commission

Less Acquisitive. Why 4.0% is a fair and reasonable broker fee for when the median days on market is 9.

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.

Is Your Fee Negotiable? The answer to the next question is decisive.

“What;s your fee?” That’s the easy question to answer. “Have you ever charged less?” That’s the critical question home sellers must ask to know if the answer to the first question is sincered.

Real estate broker commissions are not all the same. Rates vary even among agents in the same firm. Even if the agent makes a convincing defense against a commission concession you can still negotiate a lower fee. Agents are confident in their answer to questions like “Is your fee negotiable?” It’s such a common question Google will give you about 127,000,000 connections about answering. It’s the next question that Google has no answer for. The truth is in the pause.

The topic of a recent company meeting at a local firm was the book Never Split the Difference. Negotiating is the skill the book aims at improving. Nothing of the strategy the author proposed came close to misrepresentation. Honesty. Trust. A sincere commitment to see the other person as deserving of your consideration are clearly part of the strategy presented. Here’s how well the book impressed this firm.

A dozen or so agents around the table, including the owners and leaders, were confident to the point of enthusiastic as they shared their prepared responses to the question, Is your fee negotiable? The quick quips were right out of 1970 sales training. “NO. Nope. Can’t do it. Company policy.” To a person, everyone knows there is no such company policy. Based on every agent’s past history any version of NO is not the truth. And yet the seasoned agents were proud of their answer and the unseasoned agents were impressed. I was not.

I asked this next question and their silence told me the answer I just heard was bullshit. The decisive question was simply, “Have you or your firm ever charged less?”

This conversation turned out to be a defining moment in my career. When deception is encouraged by the owners the culture is poisoned and the future is determined. Building something better is easier when the status quo can’t honestly answer a simple question about their fees. So I did.

There is no question, broker commission fees have not been reduced by the presence of the internet even though the buying habits and methods of consumers has changed substantially. Apparently the broker fee is immune to market pressures or the market pressures are to not pressures at all.

It’s not collusion that keeps fees as they are. I believe inflexible fees are the norm because real estate business owners are committed to doing today what worked in the past. Few leaders get to the top when most members want to be followers of leaders who are taking them right where they are and no where near their discomfort zone. The obvious choice in this environment is to be the change. As I see the world, it’s not important to be a leader. It is essential to see wrong and try to right it. Leadership is overrated. Look around. There are effective leaders behind every crime against humanity. The bigger challenge is to be a wise follower and a committed instrument of change.

I started looking at the broker fee problem from the point of view of the home owner. This is what I saw: The conversation about commission tends to be related to a percentage of the purchase price. It occurred to me that this focus on purchase price minimizes the problem and distracts attention from the real problem, which is, real estate fees are paid by the seller from their home equity, not from the purchase price. As a percentage of purchase price the cost is a single digit. As a percentage of the only real money in the transaction, the equity, this cost becomes a double digit problem. A typical American with $70,000 in home equity is probably going to pay 20, 30, 40, and even 50% of their equity in real estate commissions.

Go ahead, ask Essential Real Estate the questions you want to ask. “What’s your fee.” Answer. $499.00 at the time we sign the contract, plus one percent of the purchase price as our Success Fee at the time of closing. We suggest you offer at least another one percent to cooperating broker who procures the buyer. More than that is up to you. ”

Be sure to ask us the second question. Have you or your firm ever charged less? The answer is, Of course. Our clients set the fee they’re prepared to pay within the range of fees we’re offering.

When starting a business relationship on honesty and keeping more of your home equity in your hands is your thing call me. 608-332-8331.

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The incredible shrink proof commission.

Real estate companies are fueled by real estate commissions. Those commissions are paid from other people’s money, specifically their home-equity. Where does that money go?

Texas Instruments calculators. If you had one in 1988 you were on the cutting edge of real estate technology. If you could operate it for anything more than multiplying a number by 7.0% you were likely trying to pre-qualify people. Eventually, you turned them over to a mortgage lender who knew how to use the machine.

Thirty years ago we booked air travel, rental cars, and hotels through a travel agent. We got our messages on pink paper notes, folded lengthwise and inserted into a lazy Susan-type message holder with slots for everyone. There they would remain until we returned to the office…which we did most every day.

The travel agents are real estate agents now, and they get their messages in an instant without needing to set foot in an office. Do we book our trips ourselves because the agents left, or did the agents leave because we book ourselves? Either way, when we miss our connection we have no one to blame but ourselves.

The end of this first decade of the 21st Century is near. This black electronic apple on my desk is a calculator, computer, cordless phone, radio, and television. Oh, yes. It’s also a movie production studio. I pay $100 a month for this gadget. And with it, I can spend more money and every store in the world is open 24/7.

Real estate commissions are no bargain. Despite the fact that the typical buyer spends three to six months researching and discovering the market without intentionally contacting a realtor, according to Zillow, the typical broker commission is 6.0% of the purchase price. How is it that a travel agent, who’s service was required far more often, is out of business while real estate agents are everywhere and their fee has gone down 14% while the average house price grew 108%. If you have the TI-68 please tell me if 6% of $383,000 is more money today than 7% of $135,000 adjusted for inflation.

Real estate companies are fueled by real estate commissions. Those commissions are paid from other people’s money, specifically their home-equity. I haven’t seen an ad for a house for sale in any media forever. Online sure. I’m a REALTOR and when I search for real estate outside of the home I use Zillow.com. I like the Zestimate. Last time I looked, the cost of placing a property on Zillow and a thousand other websites is between zero and zero.

Where does the money go? Billions and billions of home equity dollars are paid as real estate commissions. Some of it is absolutely earned. Maybe someone could analyze the cash flow to see what is spent on essential service and what is misspent on the lifestyle enhancements of other people?

Essential real estate services are listed in Chapter 452 of the Wisconsin Statutes. Nothing in the law obligates the licensee to spend money on more than annual fees. Extravagant expenses are not required to be a highly-skilled, effective real estate agent.

Do you think a real estate company can be profitable and sustained by investing in delivering essential services and charging unselfish fees?