Saturday, August 17, 2013

Why I share 20% of my commissions to (most) buyers and why it makes sense

When the New Jersey Real Estate Commission  authorized the "rebate" of commissions, as many other states do, I immediately recognized what a great bonus it is to home buyers -- and to savvy brokers.

Although they will swear otherwise, brokers and agents do less for their huge commissions than they did in the past.  This is because most consumers begin their search on the internet and most of the information they need such as taxes, schools and home characteristics  are right there for them.  In an astounding number of cases buyers contact a broker about a property AFTER they have done most of the leg work.  Well, if consumers are doing a lot of the work, shouldn't they be compensated?  I think so although most brokers do not allow their agents to rebate saying it's a sign of weakness.  I think it's a sign of consumerism!  You know the old saying "Time is Money" -  so if a buyer is saving me time it's only right that they be paid.  That's consumerism!

Now, I don't just gift away 20% of my compensation.  Buyers have to EARN it. and here is how and why they can IF THEY CHOOSE.

1.)  They must be pre-approved by a reputable lender BEFORE looking at houses

2.)  They must come into the office for a consultation on the process.   Most buyers have no idea what is happening as they view houses or write out an earnest money deposit and are unaware of the many protections a sales contract gives them, the mortgage process, etc.  At the end of this consultation they have a tremendous understanding of the how and why of what they are doing.  And they feel much more comfortable and confidant.

3.)  They must  register for the Help-U-Sell "First to Know" program which alerts them as homes come on the market or are reduced into their range.  Buyers LOVE this.

4.)  They must have some knowledge of the area and know what town they desire, what type of home and we also develop a "Must Have, Would Like to Have, and Can Not Have" list.  This is usually developed during the office consultation and winds up saving everyone a lot of time.

5.)  They must drive by the property before a showing.  Many houses look great in pictures but what about the neighborhood.  Are the houses around it well kept?  Is there a fire house or water tower near it.  Is it near a busy road.  These may not bother many buyers but if it does let's know before viewing it.

6.)  Two days before the closing they must give me a written or video testimonial.  Self explanatory.

Most buyers opt in since the above "tasks" are easy and enjoyable.  So now they receive anywhere from about $700 to a couple of thousand dollars at the closing.  And they can use this "found money" for anything from furniture, carpets, appliances, patio sets or WHAT EVER THEIR HEARTS DESIRE.

The vast majority of agencies, especially large ones, will not offer this important benefit but some small brokers do and can.  For the agent, there is less time wasted and more spent with their families and other activities.  And for the broker, it's simple math.  20% to the buyer is much more efficient than paying 50% - 70% and more to agents.  That's Help-U-Sell.  Smaller, more efficient operations while netting more per transaction.  Win - Win!     Win - Win!     Win - Win

Tuesday, August 13, 2013

TO MLS OR NOT TO MLS

There is a little controversy right now about the concept of a ‘Pocket Listing.’  There have been a number of recent news and opinion pieces, mostly from Realtor groups, condemning the practice of keeping a salable listing out of MLS. (Multiple Listing Service)   Before I tell you what I think, let’s examine the Realtor point-of-view.
Since the advent of the MLS, the residential real estate business has operated on a cooperative basis.  Because most MLSs require that every home listed by a member broker be offered for sale through the MLS (unless the sellers signs an op-out waiver), every Realtor has an opportunity to sell any property listed with a competitor and earn a portion of the commission.
This is marketed as being in the best interest of the seller because it maximizes the opportunities for exposure of the home, getting it in front of more and more potential buyers through their individual agents. And after all, whether another Realtor comes in with the buyer or the listing agent finds the buyer him or herself, the cost to the seller will be the same; it won’t cost any more.
And that’s where the problem lies.
In general, when a seller lists with an ordinary broker, s/he agrees to pay a percentage based commission.  The actual percent varies, but will often be in the 5% – 7% range.  Consider something right in the middle, say, 6% on a $500,000 home. That’s a $30,000 commission!  Huge, right!?  But one of the reasons it is so high is the listing office has to be prepared for the likely event that an outside broker and agent will bring the buyer – and they’ll have to be paid half of that commission.  Of course, if there is no outside broker, if the listing brokers finds the buyer his or herself, the seller still pays $30,000 because . . . well because that’s just the way it’s done!
At Help-U-Sell Bay Beach Realty, we don’t charge a percentage based commission, we charge a Low Set Fee.  AND we unbundle commissions.  If there is no outside broker involved, you don’t pay one.  Now that’s a real benefit to a seller, one you can put a dollar sign on!
There are situations – locations and marketplaces – where we recommend most sellers go into the MLS.  These are the situations where we need all the exposure we can get.  But in a good location, with a properly priced house, sometimes it makes sense to stay out of the MLS – especially if that means saving the seller a lot of money.
Right now, in various locations around Central Jersey homes are selling in 60 days or less and sellers are getting 99% of their Listing Price in a Sale.  Clearly demand is high.  In a market like this it might make sense to market the home for a time – say, 30 – 45 days without the MLS, without offering it for sale through outside brokers.  If a buyer can be found without the MLS, the seller of the $500,000 home mentioned above would a TON!
At Help-U-Sell Bay Beach Realty, we are about two things:
  • Getting your house sold for top dollar
  • Saving you the most money in commission expense
We will consult with your at the time of listing and continuously thereafter about how best to market the home, whether the MLS makes sense or not, and how to maximize your savings while selling for the greatest possible price.

Sunday, August 4, 2013

Where do brokers advertise and WHY?

Sellers love to see their home advertised because, of course, exposure - along with proper pricing - is how houses are sold.  But modern technology has changed the importance of WHERE a property is promoted. When you get right down to it, the Multiple Listing Service is all the advertising any home needs.  That's because the real estate community - the members of the MLS - ARE the market place and because sellers usually pay the same commission regardless of WHO sells the property.  (But not at Help-U-Sell)

Now once the home is entered into the Multiple Listing Service, the MLS syndicates it out to up to 75 websites like Realtor.com, Trullia, Zillow, etc.  This is automatic by the MLS and NOT by the broker.  And if they property is sold by another broker the listing broker has to split the commission.  Darn!

Even if the listing broker NEVER uses print ads a properly price home will sell.  So why do brokers still use print ads?  There are 4 prominent reasons:

1.)  To keep the seller happy.  As stated above, sellers love to see print ads although they play a minuscule role in the sale.

2.)  To make the phone ring.  When a potential buyer calls in a great contact is made and brokers skillfully train agents on desk duty to tell the buyer about all similar houses.  When advertising a seller's house, the broker is essentially advertising all similar houses.  So that phone ringing is music to their ears.

3.)  To attract listings.  All ads must have the brokers contact information in them so even if an agent pays for the ad themselves, they are still promoting the brokerage.  Brokers LOVE that!

4.)  And the grand daddy of them all ----- TO RECRUIT!   Bringing in new fresh blood is the life line of most real estate offices (other than Help-U-Sell) since over 80% will be gone in a year or two.  (More later.  This will be a whole new post)

So, as mentioned above, print ads do very little for the seller but plenty for the broker.   And guess who pays?  Yup - the seller.  Think about this.  Successful sellers not only pay for their own marketing expenses but for the unsuccessful sellers too.  Kind of like welfare!  We all love welfare, right?

Ok, we do some advertising too - for the same reasons stated above.  But not nearly as much because the Help-U-Sell system is designed to maximize efficiency and pass the savings on to the seller.  That's what we deliver -  EFFICIENCY, EFFECTIVENESS and VALUE!!