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.
$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.
“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 paywithin 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.
Home equity is money you earned and saved. To accumulate equity in your home you made choices to sacrifice one thing or another. It’s money you invested in your home. That’s personal. You’re going to one day want these funds to use for another life experience such as buying another home, or settling an estate.
When access to home equity require you sell your home, sales fees and transaction costs will all be paid from your Gross Home Equity. If your equity is $100,000.00 and your expenses to sell are $20,000.00, you just paid 20% of your earned equity to other people. If you’re like typical Americans your equity might be closer to $50,000.00 and in that case 40% of your equity is destined to become other people’s money. Here’s a brief video to explain what we’er saying.
Paying 20% – 40% or more of your savings might be a wise choice, but if it’s not I believe you should have a choice to keep more of your savings in your hands. Anytime we pay more than necessary to receive less than expected there are consequences; having less than we could have is certainly one. We all face this problem when selling our homes.
To be part of the solution I designed and created Essential Real Estate, LLC intentionally to increase the amount of home equity that stays with you after the sale by at least 33%. Depending on fees charged by other firms that 33% could be $6,000.00, $8,000.00, $10,000.00 or more. Like you, I believe hard earned money should remain with the person who earned it.
Home equity is your money. You earned it. Essential Real Estate ensures you have a choice to keep more or your money. And we do this through fair fees, guarding your confidentiality, providing better negotiating alternatives, customized contract analysis and explanation, and clear transparency into the real estate transaction. Total compliance with Wisconsin Real Estate law is guaranteed.
If saving your equity is an advantage to you let’s talk. Email: Tom@TomMeyer.com. Text or Call 608-332-8331.