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 Here is free money for anyone who is represented by Help-U-Sell Bay Beach Realty when you purchase your new home.
 

A CERTIFIED LETTER WAS SENT TO GOVERNOR CHRISTIE.

On January 30th I sent a letter to both the New Jersey State Legislature and our Real Estate Commission explaining why percentage commissions are anti-consumer (That letter is below).  Yesterday I sent the same letter to Governor Christie along with a cover sheet.  The cover stated that the Legislature and Real Estate Commission apparently do not care about New Jersey homeowners and tax payers and, hopefully, he would.  I'll keep you posted.

AS EXPECTED - THEY'RE SITTING ON THEIR BUTTS

It's been just over a month since I Express Mailed a letter to the New Jersey Legislature and the New Jersey Real Estate Commission about the gross unfairness of the percentage commission system with no response. So, by the end of this week I will Express Mail it to the Governor's office.  If I don't hear from him within 30 days, I'll start showing up at all of his Town Hall meetings until someone starts showing that they care about the  home sellers of New Jersey.

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

What to Pay Your Real Estate Broker - and How

(Once again, THIS is the single most popular post on the Set Fee Blog. Every day, dozens of people find their way onto this site searching for guidance on what to pay their REALTOR. I’ve freshened this up a bit – added a little more detail – and want to post it again. I only hope this helps some people hang on to more of their hard earned equity.)

I check my stats and other metrics for The Set Fee Blog fairly regularly. It helps me to know what’s drawing visitors and what’s not. It’s also helpful to see what search strings people are using to find me on the web.

Today, I had the following as a search string:

“What Percentage Do Real Estate Agents Charge?”

Ok, so it’s not that unusual. In fact I’ve seen it in the results for this blog before. But today it just jarred me:

What a sad, stupid and unfortunate question!
Seventy plus years of REALTOR double-talk has trained the public to expect to pay a percentage of the sale price of their house to an agent when it sells . . . and that makes no sense whatsoever.

What does a percentage of you home’s value have to do with getting it sold? Nothing!

Think about it:

Here you are in your $350,000 house. Thankfully, you are not upside down. You have roughly $60,000 in equity. So you decide to sell, and list with ABC Realty**, who charges you (and every seller with whom they work) 6%*. When your house sells (for full price), that’s a commission of $21,000!

I’ll give you a moment to catch your breath . . . before I point out that that may be 6% of the sales price, but it’s 35% of your equity!

Meanwhile, your neighbor down the street also wants to sell, but his home is smaller. It’s only worth $250,000. He also lists with ABC and agrees to pay their 6% Commission. When the house sells for full price, the homeowner is going to pay $15,000 — still high, but not nearly as high as your $21,000 commission.

Now, here’s the question of the day: What did YOU get for the extra $6,000 you paid to sell your house through ABC?

More Advertising?

More Open Houses?

A better Sign?

Oh, maybe your agent worked $6,000 harder! Yeah, right.

What you got for the extra $6,000 you paid is this:

Absolutely Nothing
In almost every case it takes no more time, effort, energy, money or marketing to sell a properly priced $350,000 house than it does a properly priced $250,000 house. There are some situations in some areas where a market niche, say, luxury homes, might take a little more time and might require additional or specialized marketing. But these situations are rare . . . and $6,000 extra dollars to sell your $350,000 house? That’s absurd.

It makes no sense today, made no sense yesterday, and will never make any sense at all.

Please don’t take this to mean that your percentage based real estate friend is a bad person.  The percentage model is so deeply ingrained in the ordinary real estate world that today’s practitioners don’t even question it.  It is all they know.  And the truth is, if they were to abandon it in favor of something that makes sense (i.e. Set Fee Pricing), their business model would collapse.  They operate in a world where so many people get a cut of the big commission you pay that changing direction in favor of something better would be impossible.

Smart Brokers – by the way, ‘Smart’ is a synonym for ‘Help-U-Sell’- Smart Brokers charge a set fee. Everyone pretty much pays the same thing no matter what the sale price is. It’s logical. The Broker works very hard to determine his or her hard costs of carrying a listing, then adds a reasonable profit to it, and . . . that’s it: the Set Fee the office charges everyone.

Here’s a little bit of scripting I actually heard in a REALTOR seminar some years ago. It’s what an agent is supposed to say when a potential seller is shocked by the high percentage based commission.

“I know it seems like a lot, Mr. & Mrs. Seller, but think about it for a moment. We’re getting 6%, yes, that’s true; but YOU’RE getting 94%! I think you’ll agree our commission is actually a bargain!”
I hope next time you need to sell, you’ll do the right thing and call a Help-U-Sell set fee broker. You’ll save a bundle (the set fee is usually thousands of dollars less than whatever percentage based commission you’re being quoted). And you’ll have the satisfaction of knowing that, finally, for the first time in your real estate life, you haven’t been taken to the cleaners!

*Commissions, whether set fee or percentage based, are always negotiable. They are not set by law or REALTOR rule. They are set individually by office Brokers. Price fixing occurs when different Brokers get together and agree to charge the same thing. That’s highly illegal. Different Help-U-Sell offices charge different Set Fees, because the carrying costs of marketing a listing vary from market to market, as do the number of days it takes a properly priced listing to sell.

**The “ÄBC Realty” referred to in this blog is fictitious and is used only for illustrative purposes. Any resemblance between it and any other “ABC Realty”, is purely coincidental.

Location, Location, Location - Nope, Try Again.

A few days ago Realty Times published an article that challenges the traditional  'ism" that location is the most important factor in real estate.  If you remember the Guns and Butter graph from Samualson's Econonics textbook, then think of this:  When PRICE meets EXPOSURE on the graph the house will sell!  But what about location??  Well, location  - along with condition, current market, uniqueness and other factors are COMPONENTS of price.  An overpriced home in a great location will not sell but if just a little over priced it should attract market offers.  If the price is too high the home will be ignored no matter where it is.  Once a fair PRICE is determined we have to address EXPOSURE.  Now get this - entering the property in the local MLS(s) is the ONLY exposure needed!  What you say!  How about print and internet ads?

Well, additional ads will not determine IF a home will sell (Price and Exposure will, remember) but they can help determine WHO will sell it.  A broker will spend additional ad dollars to 1.) "double-end" the deal (of course if it's sold in-house the broker makes the same but the listing agent splits with the selling agent).  They also advertise to 2.) keep the seller happy, 3.) attract new listings and 4.) to recruit.  And brokers love when agents advertise their own listings because the brokers information must be in the ads per regulation.  So as agents come and go the brokers brand continues to win.  Think of putting an item on E-bay.  It is exposed to a vast audience which determines if it has value.  If it does, it sells.  If not the item becomes like an expired listing.  However in real estate we want to sell our own listings so that's where the additional advertising come in.

With the Help-U-Sell system we advertise as a duty to the seller because the seller pays less.  Help-U-Sell is CONSUMER oriented.

In my next post I'll discuss a pricing strategy called a modified "Dutch Auction".

If you are buying or selling in Forked River, Lanoka Harbor (Lacey Township), Bayville, Manahawkin ofr anywhere is Ocean County give me a call.  609-242-0506