YOUR 6% PARTNER.....OR YOUR 25% PARTNER

In my varied life as a business-person, I have had partners from time to time.  The form of business might vary –  sole proprietorship, limited partnership, even corporation – but in our guts we knew what we were:  partners.
As partners we had a division of labor:  I’d do things I was good at and my partner(s) would focus on areas in which they had expertise. And, as partners, we shared expenses and split profits.
My own partnerships were pretty simple and the split was usually equal among the parties.  Working with other businesses, however, I’ve often seen splits that were weighted one way or another 60/40 or 51/49 and so on.
Has it ever occurred to you that when you hire an ordinary real estate agent, you are taking them on as a partner in your property?  Really:  if you are agreeing to split with the agent on a 94/6 basis, you’re taking them on as a partner in your property.  Maybe you’ve been in it, improving it, investing in it for five years.  This agent is coming in during the final 3 or 4 months of your ownership,  and somehow is entitled to 6%* of what you’ve built!
And here’s the big kicker:  we’re not talking about splitting your profit 94/6 with the agent.  You’re going to pay them 6%* of the gross!  Of the Sale Price.
Let’s assume the house sells for $400,000 and that you have a $300,000 mortgage that must be paid off at closing.  The agent’s 6%* commission is $24,000.  Ouch!  That’s 6%* of the Sale Price.  But after you pay off your mortgage, you won’t have $400,000, you’ll only have $100,000 and it’s from that that you must pay the agent.  That $24,000 commission is almost 25% of your proceeds, your net!
Are you really going to give away 25% of your net to an agent who will put the property on the Internet, fill in the blanks of the contract, manage the inspections and keep things moving to closing?  Really??
I’m not.  No way.  There is not that much value in the relationship.  Don’t get me wrong:  Realtors are incredibly valuable in the equation, but 25% of your net valuable?  Hardly.  I”m going to pay a Set Fee to sell my house.  You know a Set Fee, like what my dentist charges to fill a tooth, like my doctor charges for an office visit, like my mechanic charges for an oil change. I’m going to pay a flat $3950* to sell my $400,000 house – the same $3950 my neighbor with the $350,000 house will pay.  And for that, I’m going to get full service, great marketing, agent representation and hand holding every step of the way.   I’ll be saving almost $20,000 over what that ordinary agent was going to charge me!
So how about you?  Do you want to save thousands?  Are you tired of having a new partner swoop in at the 11th hour of  your home ownership to claim a big chunk of your equity?  If so, here’s what you do:
Call Help-U-Sell Bay Beach Realty at 609-242-0506.

*Real estate commissions, whether percentage based or set fee, are always negotiable between the consumer and the broker.  They are not set by law or Realtor rule and there is no ‘going rate.’  The $3950 I used to illustrate a Help-U-Sell set fee is just an example.  Help-U-Sell fees vary by office because different marketplaces behave differently and require more or less effort and marketing expense.  Having said that, there is one great truth here:  you will almost always save big on real estate commissions when you work with Help-U-Sell.  Savings is what we are all about!

A LETTER TO THE NJ REAL ESTATE COMMISSION AND NJ LEGISLATURE.

January 30, 2014

New Jersey Real Estate Commission     
20 West State Street
Trenton, New Jersey 08625

New Jersey State Legislature
P.O. Box 068
Trenton, New Jersey 08625-0068                                                                                                                         

First let me say that although this letter is on company stationery for compliance purposes the opinions stated are mine and not those of Help-U-Sell or its parent, Infinium Realty.

I have long recognized the unfairness of the percentage real estate commission system and the damage it does to New Jersey families.  I’m asking you to take action and here is why:  Under this system, sellers pay more as the value of a home increases but received no added service.  I have asked over and over on social media what a $400,000 seller gets EXTRA for the many thousands of dollars EXTRA they pay vs a $200,000 seller and no one can answer.  So why is it being charged?

The simple answer is that over the past several decades the real estate industry has shifted away from caring for the consumer to being totally agent oriented.  The industry is focused on hiring agents as a means of attracting business instead of giving the consumer value.  Here is the effect on NJ homeowners:

In 2013 just under 100,000 single family homes and condos sold and closed through the various MLS systems and were reported to the New Jersey Association of Realtors.  Sales outside NJAR are not included because they did not generate commissions.  If 30% of these sellers were to save an average of $3500.00 – both very conservative numbers – it would amount to over $100,000,000.  That’s ONE HUNDRED MILLION dollars taken from tax payers PER YEAR with no explanation.

I am proposing a simple solution be put in effect as soon as possible – a PRE-LISTING DISCLOSURE advising sellers:

How much of their commissions will be used to market other homes that do NOT sell?How much of their commission is paying for office administration and how much for commissions?

How many licensed agents will be paid from that commission and are they all necessary?  (It used to be 3-4 and is now up to 8 including brokers, agents, team leaders, referral agents and recruiting bonuses.)

If my home sells “in-house” and no outside broker is involved do I still pay the full amount and if not what is my savings.

If a recruiting bonus is paid to an agent, how much of my equity is going to someone who may live outside New Jersey and never even see my house?

How much of my commission will be spent on recruiting and training agents and what are the chances that someone now being recruited and trained will participate in my sale?

These questions and others need to be disclosed AT or BEFORE the listing is signed.  Disclosures like this are common from home and auto repair to medical procedures.  Why are our sellers not protected?

Please, DON’T PUT THIS LETTER DOWN.  Based on the conservative 30% participation figure each working day approximately 80 sellers are being taken advantage of without disclosure - about 10 each hour.  Act now!  New Jersey homeowners deserve your help.

Most Sincerely,

Daniel J. Desmond
Broker, Owner

Each Office Individually Owned and Operated