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Why Real Estate Agents Are So Expensive?

Happy real estate agent about to get paid. — Expensive real estate agent about to get paid

You have to wonder why real estate agents are so expensive. Why it cost you so much money when you hire one. Why do people still hire real estate agents to sell a house when there are so many other less expensive ways. The real estate industry says it’s relationships. Many people people don’t realize there are options. Some sellers just don’t want to deal with the “hassle”.

Let’s take a look at why real estate agents are so expensive.

Listing Agent

First let’s break down what an agent does on the listing side, that is, when they sell your house for you. A listing agent.

A real estate agent helps you determine the right price for your house. The most important factor in selling your house. If a house doesn’t sell it’s overpriced and everything is relative to price including location, condition and features.
An agent will most of the time show you what can be done to your home to get it ready for market. Good agents will wait until your home is ready before they list it. Desperate agents want to get a sign in the yard ASAP because they need money. Hire a good agent. Get more money.
When a house is ready the listing agent puts it on the market. The agent lists the house in the multiple listing service. This is where other real estate agents can see it. That also means putting the property on the internet where everyone else can see it. Smart agents feature your property on sites like Zillow and Trulia which you can easily do yourself.
When you get an offer on your house the agent is there to act as the middleman. They’ll pass information back and forth between you and your buyer or what they call “negotiating”. Having an agent to help you negotiate is handy. Especially if you don’t want to meet your buyer or talk to them directly…for whatever reason.
Where agents are most useful is facilitating all of the transnational details such as inspections, appraisals and paperwork.
At closing your agent will sometimes give you a cheap gift to show their appreciation for all the money you just gave them.

The advice new agents always get is to concentrate on being a “listing agent”. Being a listing agent involves a lot less actual work than a buyers, or selling, agent. The listing agent has a 1-2 hour meeting with a client then puts the house on the market and waits for an offer.

Selling Agent

The selling agent, often referred to as the buyers agent, helps buyers find a home. Let’s go over what a buyers agent does.

The buyers agent helps a buyer find a home. Considering most buyers find their home themselves online buyers agents mostly just open doors. Sometimes that can be a lot of doors. The average buyer looks at 10 homes according to realtor.com. Sometimes it’s less and sometimes it’s considerably more.
When a buyer finds a home the agent helps formulate an offer. By looking at past sales the agent can determine fair value. An offer takes into consideration the condition of the property and any updating that’s been done to the house..
The buyers agent submits the offer. The sellers agent then shows the offer to their client.
When the offer finally gets accepted the agent then guides the client through the remainder of the process. That includes any inspections the buyer wants to do. There are transactional details and paperwork on the buyers side too.

Where Does All The Money Go?

The money or commission in a real estate transaction all goes to the listing agents broker. The listing broker then pays the listing agent and the selling agents broker who then pays the selling agent. You are actually paying for your buyers agent. It would be like paying for your opponents lawyer in court. It’s done this way because this is the way it’s always been done. A buyer would likely not pay for an agent on their own.

But it’s not just the real estate brokerages and their agents anymore.

With the internet a crop of entrepreneurs have sprung that have figured out a way to put themselves between the broker/agent and the client. They do this by running ads on the internet offering real estate services. When a consumer responds to an ad the company puts them in touch with an agent. That agent then gets charged a referral fee of 25% – 40% of the commission.

So that’s a middle man to the middleman and yet another expense.

It’s not just the middlemen either. Competition in real estate is fierce. For instance in my area of close to 600,000 inhabitants there are about 2500 real estate agents and only 1800 homes for sale. All those agents have to hunt up business. There are a multitude of companies, some reputable but not many, that offer real estate agents easy ways to get business…for a substantial fee.

As I can attest to real estate association fees have risen dramatically over the past several years. Association fees are paid at the local level, the state level and the national level.

Real estate is a huge business with a lot of hands being held out that need to be paid.

That’s one reason why real estate agents are so expensive. While the job of selling real estate may have become easier the money involved is spread around more than ever. Many people and organizations want, and get, a piece of that action.

Selling Real Estate Got Easier

A long time ago, in an age before the internet, if you wanted to sell or buy a house you had to have a real estate agent. The real estate industry owned all the information about the housing markets. They held it close. These days all that valuable information is online, free and available to all.

Marketing a home was not so easy. Homes for sale were put in books the real estate brokerages owned. Consumers had to hire an agent in order to see those books full of listings. If you wanted to see a house you needed an agent to set up a showing for you.

Now an agent sells homes through the internet. A house is listed on sites like Zillow and home shoppers find them. many of the online real estate portals don’t charge anything to advertise a house. List it and forget it until an offer comes in.

There was a time whenever a signature was needed the agent and client had to meet together. get in a car and drive to a meeting place. it was time consuming. Companies like docusign and authentisign have put a stop to all that driving around. Now signatures can be obtained never leaving your desk. Another way agents save a lot of time.

Everything that an agent does has become easier and less time consuming.

So why are real estate agents so expensive? It seems they have less work to do with all the technology available now. Consumers are finding homes themselves online. Information is free. Listing a home is incredibly easy when compared to 30 years ago.

Real estate agents are still able to make so much money because people are willing to pay it. When people think about selling a house the first thing they think of is hiring an agent. it’s just natural. The $18,000 fee to sell a $300,000 house doesn’t, in most cases, even raise an eyebrow.

Sell Your House Yourself

When more home sellers start figuring how easy it really is to sell a house the real estate industry will have to take notice and start making some changes. Fees will have to become more realistic if brokers want to stay in business.

Until that time home sellers will continue to pay agents a good portion of their profits and agents will continue to take it.

Except the savvy home sellers who figure out how to do it on their own.

Buyer Has A Real Estate Agent

by Joel Weihe

What do you do with your For Sale By Owner when the buyer has a real estate agent they want to work with? You actually have a multitude of choices. Remember, you are in control. That’s one of the reasons you decided to do a For Sale By Owner.

You can:

Pay the agent his or her rate..
Tell them thank you but no thank you you will wait for a buyer without an agent.
Negotiate with the buyers agent.
Separate the buyer from the agent.

Buyers agent shaking hands with their client outside of a house. — When your buyer has a real estate agent

Let’s go through these options one at a time. Keep in mind that the reason you’re selling your home yourself is to save money. Lots of money. Depending on your personality, time constraints and stubbornness will determine what’s in your best interest when your buyer has an agent.

Pay The Agent His or Her Rate

When your buyer has a real estate agent you can pay the agent his or her rate. In my state, Kansas, that is most likely 3% of the contract price. Otherwise it would be 6% if you were hiring a listing agent. The bonus to this option is the agent will do all the paperwork for you. You still save thousands of dollars on the listing side.

The agent will want to use their contracts so make sure you read and understand what it is you’re signing. Real estate contracts from real estate associations are designed to protect the real estate brokerage and absolve them from responsibility.

Beware the agent that tries and charge more or even double saying they have to “do all the work”. In my experience it is much easier to handle a real estate transaction when I don’t have to deal with another agent. When I handle the hole thing myself. In reality there’s really no more “work” involved for the buyers agent. Don’t let them fool you into thinking there is no matter how slick they talk.

Wait For Another Buyer

Tell them thank you but no thank you. This is exactly what it appears to be. You’re just not going to pay a real estate agent. In this case the potential buyer missed out on a great house because they hired a buyers agent.

There’s this thing in real estate called Agency. When a buyer is in an agency agreement it is their responsibility to pay the agent if you, the seller, doesn’t. At least in Kansas and most other states that’s how it works. The right thing to do for the agent would be to walk away and go find another client. Most of the time the real estate agent had nothing to do with the buyer finding your For Sale By Owner anyway.

Again, if you have prepared your home for market as we show you how to do and priced it right you will get lots of attention. So much that a buyer may be willing to pay their agent to get your house. So much that a buyer may be willing to fight to dump the agent to get your house.

I have been in this exact situation at times with a For Sale By Owner and simply walked away so my client could get their home. With a lot of these clients we still remain friends to this day and they send me referrals too!

If that makes me sound holier than thou I’m not. I’ve just always lived by the philosophy if you treat people right and fair you will get treated the same.

Negotiate When Buyer Has a Real Estate Agent

There is nothing that says you can’t negotiate with your buyers agent. Tell them you want to sell your house on your own but you’ll think about offering them 1.5% of the contract price. Or 2% or whatever you want to offer. They can see what a good job you’ve done getting ready, and that you won’t have any problem getting your home sold. Plus, once again, you can get the agent to do the work for you.

If you are going to negotiate do so with the buyer present. The agent will try and negotiate without the buyers knowledge, even though eventually he/she has to disclose it. They don’t want their client to know they aren’t getting their dream home because the agent isn’t willing to budge.

Separate the Buyer From the Agent

When your buyer has an agent try and separate the buyer from the agent. This is a little tricky and unless all the stars align might not even be possible. If there is way to have a conversation with your buyer without the agent present you may be able to work something out.

For instance in the past I have had people call me, from referrals, and ask me to help them find a house because they did not like their agent. Ethically I can’t do anything but advise them that if they don’t like their agent they need to break the contract, agency, that they have with that agent. Start by talking to the agent directly. If that doesn’t work talk to the agents broker. Ultimately If that still produces no desirable results call the real estate commision in your state and complain.

You can pass on that advice. If your home is as spectacular as it should be and your buyer has a real estate agent you can probably get them to drop the agent.

Sell Your Home Yourself

The real estate industry is in a great flux and changing rapidly. People are starting to figure out that real estate brokerages are expensive and just not that necessary anymore. Instead of being the caretakers of information, which is all publicly available now, they are switching to a service standard. We call it representation. A real estate agent simply represents.

If you need representation and you don’t have the time or inclination to sell your home yourself than hire an agent. I pay someone to mow my lawn because my time is worth more than if I were spending it mowing.

By following our detailed instruction we can show you how to sell your home yourself for the most money while at the same time saving thousands of dollars. It’s the thing agents should be doing for you to get top dollar and to often don’t.

8 Tips To Always Be Ready to Show Your House FSBO

by Joel Weihe

When you have your house on the market for sale it is important the house is always ready to show. You never know when that full price cash offer is going to request a showing. When they do you certainly want to be ready.

I always tell my listing clients that you never, ever, ever want to deny a showing. The person who is destined to buy your house may buy another on the same day access to yours was denied. That’s not to say the home won’t eventually sell but you could be losing out on a better offer. Point is you just never know.

When I’m scheduling showings as a buyers agent and a showing request is denied it is so very annoying, to me and my client. Sometimes I hear things like “the house is a mess” or “it’s just not a good time”. My buyer’s reaction usually is “they must not really want to sell their house”.

Although it’s not always easy it’s always a good idea to be ready to show!

Assuming you have already done all the work to get your home on the market there are some daily habits and hacks you can preform to make sure it’s always ready to show.

1) Develop new habits

Make it a habit to pick up as you go. If you’re anything like me you probably have routines. Routines like coming home from work or wherever and putting your stuff somewhere. Get in the habit of putting your “stuff”, like papers, receipts, extra pens, pocket change ect in a drawer or somewhere else out of sight.

When you use a dish in the kitchen immediately put in the dishwasher, providing you have a dishwasher. If not, wash it right away. If your reading a book, put it back in the bookshelf when done for the day. Simple things like that will make keeping the house show ready easy.

2) Keep it clean

When selling your home, and selling it for the top dollar and fast, it pays, literally, to always be ready to show. Keeping your house clean can make all the difference. It’s not always easy but it is profitable.

Run the vacuum every night, or have someone in the family do it. Wipe down and/or dust visible surfaces. Basically clean the house every night before turning in. This is not as difficult as it seems if you assign duties to family members and get into a routine. Get everyone excited about the move and make a game out it. It doesn’t have to be stressful.

It’s really not “cleaning” every night, like a deep clean. That’s already been done. This is more of a “straightening up” every evening. It won’t take long.

3) Use storage

Make your life easier during the home sale by getting rid of anything that is not day to day necessary. Many of my clients hire a storage facility or mobile storage unit like PODs to clear all the clutter out of the house. (Not that all your stuff is clutter but you know what I mean)

By having less stuff in the house it shows better and is easier to keep clean, organized and straight.

4) Stash your stuff

Stash your stuff. What I mean by stash your stuff is have places you can put things during showings or when you’re not going to be home. That can be drawers, cabinets, under furniture (yes, seriously) or neatly in a closet.

One of my clients had 6 younger foster children. With lots of toys. We really had a situation trying to figure out to keep the house picked up. As a solution I purchased several nice looking plastic storage totes from amazon. She kept them in different rooms the kids frequented. The kids were trained to pick up all the toys when finished playing and put them in the totes. Every time before they could leave the house for a showing or to go out the kids had to pick up their stuff and put it in the bins. It worked marvelously. They made a game of it.

5) No trash

Have literally no trash in your house. This can go back to developing habits and this one is emptying the trash every morning. Keep whatever you use to line your trash cans close by and simply gather up all the trash, take it outside and insert new fresh liners.

When people are looking at your home they open cabinets, it just happens. If that’s where you keep your refuse receptor they are going to see it. Having an empty trash can is much more appealing then a bag full of stinky ugly trash. Believe or not I’ve seen people open trash cans, decorative stand alone trashcans with lids. Weird? Yes, but it too happens.

6) Get some magic cleaners

There are all sorts of products on the market that make cleaning walls and surfaces fast, easy and convenient. For cleaning smudges, handprints and some writings a “magic sponge” does the trick. There are many different brands and types to choose from. Microfiber cloths are great for picking up dust, lint and pet dander off surfaces.

Keeping items like these handy can make straightening up and “quick cleans” easy, fast and profitable.

7) Avoid odors

While your house is on the market avoid any cooking that produces strong odors. Your cooking probably smells really good and I bet I would like it too but…not everyone has the same tastes as we do. What smells good to me and you may not to others, like that full price cash buyer.

You’ll also hear lots of advice about fresh baking, scentsy’s and other “good” smells. Don’t believe them. What is a good smell to one person may offend another. Plain neutral fresh air is the best.

8) Take a vacation

Just kidding, but maybe not. If you can swing it the least stressful option is to not be home at all. Prepare the house as per DIY Real Estate instructions and take off for a few weeks.

When selling your house yourself, and saving thousands of dollars, it’s not always realistic to take off. It’s still possible though if you could leave someone behind, like a family member. Maybe you have a good friend or neighbor willing to help with showings.

I have actually seen that happen before in my role as a real estate agent showing a buyer a FSBO home. The client wanted to see a For Sale By Owner house. When I called the owner to schedule he told me he was out of town. He gave us a number for a neighbor who let us in.

As you can see keeping your home show ready is possible and can be made to be not all that difficult. If all the hard work of preparing your house for market is done properly beforehand the touch ups for showings should be easy.

Keep in mind the rewards for all your hard work. You get to keep thousands of dollars you would have been paying me, or someone like me. And remember that you end up doing all the hard work of preparing your house for market and keeping it show ready anyway, whether you have an agent or not. No one does that for you so think about what it is you’re actually paying for.

I will show you in detail everything you need to know to have a successful For Sale By Owner. Literally everything a real estate agent should be doing and you can do better to sell your house fast and for the most money.

Click here to learn more about how to sell your house yourself and save thousands of dollars.

Educate Yourself On The Competition

by Joel Weihe

When you sell your house as a For Sale By Owner you need to know what your up against. You need to be better than the competition. It can be with price, condition, concessions or just by being the best. Know that the buyers seeing your home will be seeing others for sale in the neighborhood.

Strawberry market — Competition among strawberry sellers

Attend open houses in the area is one way to get to know the competition. Browsing the real estate internet portals like Zillow, Trulia Homes.com is another way. It’s a good idea to schedule viewings and go see the homes in real time.

Call the number on the sign or hire a buyers agent to show you around your neighborhood. Keep in mind that many Realtors will want to know if you’re pre-approved with a mortgage lender. If you’re buying another home after you sell yours than yes, you should have a re-approval letter. If not call around until you find one one that’s willing to show you listings without a pre-approval. They don’t need to know your not in the market to buy.

Use The Information You Find From The Competition.

Once you are well aware of the competition make sure your home outshines all the others in your area. Whatever you have to do to make your home better do it.

Often buyers are looking in a particular neighborhood or part of town. That means they will schedule several showings in the same area and compare what they see. By knowing what the competition, the other homes for sale around you, are doing you have the opportunity to make your listing the best!

We here at DIY Real Estate write and talk a lot about the WOW factor and first impressions. When a potential buyer pulls up to your home you want it to be the best looking house in the area (first impression). That will get them inside where you have the chance to show them that they can own the best house in the neighborhood.

Seriously, take the time and effort to make it so and you will sell your home fast and for top dollar, maybe even more. And all on your own without paying a real estate agent thousands of dollars just to “list” your house.

Make Sure Your For Sale By Owner is Ready to Sell

Some common complaints I hear from buyers when showing houses;

Not clean
Clutter
Needs paint
Dirty or damaged flooring
Pet smells
Price

This is not an exhaustive list but some of the most common. It gives you an idea of how you can be better. Being better is what gets your house sold. Leaving an impression is what gets your house remembered. Make sure your house is ready to sell before you put it up for sale.

Other Ways to make Your Listing Stand Out

Offering concessions is a way to make your offer more attractive than the others in your area. “Giving away” extra appliances can garner attention. Many buyers need help with closing costs and will ask anyway. Consider offering to pay a portion up front.

Do you have a really nice outside space? If your backyard is set up for outdoor activities or relaxation with games, grill area, cool furniture, a pool or whatever else, think about leaving that stuff for the buyer.

The point is to make your house stand out. make people want to make their own. You’ll sell it faster and you’ll get more money.

You can easily sell your home yourself and keep thousands of dollars in your pocket.

Joel

DIY Real Estate

Negotiating is More Than Just Price-Part 2

by Joel Weihe

Last post we went over a couple other negotiating points that you have to pay some attention to when selling your house yourself. Those were the type of financing your buyer is using and the ever important earnest money. This post considers closing date, possession and concessions.

1.Closing date

Closing date is generally up to the buyer due to their lender. When the lender is ready you can close. 30 days is a common time, sometimes 45 days for more complicated loans like VA’s or some FHA special programs.

If you’re buying a house after your sale you might want to try negotiating a 45 or 60 day contract on your property and a 30 day on your new house. That way you have some time to find a house so they both can close on the same day. More often than not your house has to close before you can close on your new house, so the existing mortgage can be paid off.

It’s always good to have a backup plan, especially in a active sellers’ market, in case you can’t find a new home in the allotted time. A backup plan as in a place to live while you look for your new home.

You also will be negotiating when the buyer is taking possession, the day of closing or sometime after. At closing means as soon as the papers are signed the buyer can move in. Which also means that you must be out.

2. Concessions
Concessions are when the buyer asks for something. The most common concession is the seller paying the buyers closing costs or a portion thereof for him/her. Other than the title insurance and the closing fee the buyers closing costs and prepaids are origination fees, filing fees, underwriting fees, appraisal fees among others.

Prepaids are part of those closing costs. Prepaids are so much taxes and insurance put into the buyers escrow account by the bank.

The buyer may be negotiating for furniture or appliances or other personal items.

You may not have to deal with any of that if your house is in the pristine condition it should be before putting it on the market. Look for that full price, or better, offer that comes with proper preparation of the property.

Remember it’s not just about price when negotiating a contract. There are other factors that matter to you also.