A few weeks ago I met with a home seller that I'll refer to as Betty Bookmark. Betty is a local school teacher interested in selling her home in the Longwood Village neighborhood located in Cypress, about 25 miles northwest of Houston. Depending on the specifics (because all real estate is local & believe it or not, specifics are critical) the average price per square foot without swimming pools is around $123. We'll circle back to AVM's versus the claim that CMA's are akin to prehistoric thinking in another post. Betty was smart when making her next decision. She interviewed 3 different concepts from 3 different companies, one being an ibuyer type of company that I'll reference as Co.66... or C66 for short, another being a discount model and the third being myself, the most lambasted concept (by the disruptor's) you will meet on any given day: A RE/MAX Realtor who works at a traditional based brokerage. 

To be fair, discount models have a place in our industry, but what many people don't realize is that the discount concept has been around since day one. It's quite simply called "Seller Negotiations." Every time you sit down with a Realtor to sell your home you are in a position to negotiate the commission, particularly if you are also buying a home with the same Broker, which in my opinion can be incredibly advantageous as working with one agent who handles both selling & buying can be helpful in many ways,  so long as said agent is familiar with the market where you're purchasing your next home. If you are buying a brand-new home, then the strength of your ability to negotiate is even better and even "easier." You don't have to use the home builders preferred Realtor (We know a guy...) or a watered-down version (of what you might think is an expensive agent) to get the same financial savings. If I were selling my home in an area where the average days on mkt were say.. less than a week, I'd probably negotiate the hell out of the commission with a full-time broker who had a good deal of experience. But that's me. If you called me to sell your home and historical data supported a heavily favored Sellers Mkt then I'd be much more willing to cut my fees.... 

Pride & value go a long way, but me being unwilling to budge on "my fee" just feeds the further creation of disruption, hence forth C66 & all the new models you see popping up on the Internet. Which brings me to Betty's 2nd interview. C66 wants desperately to be like Amazon. Who wouldn’t? Amazon has essentially slaughtered the retail industry. The prehistoric methods, lack of attention to technology, arrogance and corporate greed is essentially all but killing off big brick and mortar retail. Red Apple Sale? Whatever. A couple of months back I was in a local Sears and it was HOT as in about 83 degrees hot. I remembered Sears for "tools" from "back in the day" so I stopped in. The place looked and felt awful. You could almost see the crows swirling in the rafters waiting for the last gasp of life before they plucked the eyes out of the place. *This stigma is an opportunity for the real estate disruptor's.* Are things changing, yes! And they always will. Anyone who believes otherwise is foolish, but let's get real when we talk about numbers, reality and expectations...

Here were the 3 financial options Betty was given by all three companies:

C66 offered to buy Betty’s home. They explained that “placing it on the market” could cost her a lot of unnecessary time, inconvenience & even money. Their biggest hook was “you can move whenever you like and we’ll offer you a fair market price! Sounds pretty damn good if you ask me. FYI: There are two types of emotional chasers out there. First, there's the run of mill, bottom feeding, wannabe "house flipper." This is the company that hopes you are suffering so they can take advantage of you. Your husband died and you can’t pay the bills? Your wife has fallen ill and you have to sell immediately? Maybe you’re dying? This type of investor will hand you two things… a box of Kleenex and a pen. The pen is to sign paperwork. And to be honest, there are ppl out there that need a “Yesterday buyer for 20% below fair mkt value.” IT’S MY MONEY AND I WANT IT NOW! Or maybe you MUST have it. C66 on the other hand pretends to routinely elevate themselves from this strategy and make all kinds of assertions that are simply and “mostly” untrue. Let me further explain. This company essentially offered Betty $18,000 below fair market value on her home. They also attempted to show her a “side by side comparison of costs” with you guessed it, “today’s traditional model” by trying to make her believe that the “average Realtor costs” are upwards of an astonishing 10%. C66 went on to tell her that their costs were “only 9 percent.” Betty graduated from junior high, so it didn’t take her very long to look at the numbers from both models and realize that this was simply a play on "those guys are outdated, old and JUST LIKE SEARS!" You see, Betty is moving to another city across the county and she very much needs “a specific closing date” but she isn’t foolish or desperate enough to pay more than $25,0000 in junk costs to do so. She would soon learn from interviewing other agents and conducting research that the average days on market were not as scary as C66 tried to describe. #uncertainty 

When you sell your home with me or many other agents, you typically pay a fee of 4-6%. Everything is negotiable. The buyer’s brokerage is paid 3% and my brokerage (where I work) gets the rest. You’ll get a full package of advertising, marketing and all the stuff (and sometimes more, depending on you who you go with) that you would expect from a “traditional / full-time brokerage." But what about the costs? Let’s assume you are paying 5% in total commissions. Each party to the home selling/buying process has a set of costs known as closings costs. Sellers typically pay about 1.2% in closings costs in addition to the agreed upon commission. And guess what, the 1.2% has NOTHING to do with the Realtors, and it almost NEVER matters who you list with. 1.2% = Home Warranty for the buyer, the cost to close at the title company, OTP (Owners Title Policy) and other ancillary fees that again, have NOTHING to do with Realtors. 5% plus 1.2% equals 6.2% in total costs. There are no tricks here. I’m not withholding anything in terms of typical Realtor costs or typical Seller Closing Costs. After you agree to a set price with a buyer you will have inspections. Inspections are mostly reduced to an agreed upon financial concession made from seller to buyer. Take for an example a broken water heater, some wood rot around several windows & torn window screens. $1,500 in lieu of these repairs would be considered adequate all depending on how the negotiations were conducted on the sale of the home and of course the local market.

 Betty was then presented with the discount Realtors presentation. Essentially the gentlemen she met with offered to list her home for $500 plus the 3% in buyer’s agent commission for a total of 3.5% ALONG with the same 1.2% you see in option one. The problem with this particular discount broker is that the $500 was essentially a bait and switch scheme. Every single necessary tool to sell was an add on or as he called it an “ala carte” option. (mmmm, Luby’s.) Almost an hour and half later she discovered his total costs was more like 1.5% or half what a traditional agent might charge. She didn’t car for his strategy, style or the fact that she’d “one of his associates” aka: Coordinators. This particular company is also closed on the weekends and if you call them after 5 p.m. you get a voice mail letting you know they “were closed for they day, but would return calls the following morning.”

Betty ultimately used a good Realtor to sell her home and it wasn’t through C66. She was armed with information prior to listing her property. She did some of her own research and then spoke to various Realtors before finally making an “informed and calculated decision.” Here are a few things to remember: Your average days on market, appropriate listing price, homes condition, lot location, floor-plan, homes updating, schools, neighborhood, current interest rates, time of year and how you live are all extremely important. 

The idea that working with a big company big box company like RE/MAX or Keller Williams or any other competitor of mine is (going to cost you “way more”) is complete horseshit. Every Realtor I’ve met wants what’s best for their client. From Boutique Brokerages to the largest, the costs aren’t much different. Home Depot, Lowes, HEB, Kroger… they aren’t all the same, but a box of cereal isn’t going to cost twice as much at Kroger “because they are losing market share in Texas” or because they are “out dated and old fashion.” Next time you’re at Lowe's price compare with  Home Depot. Across the board there’s variation but not by an outlandish figure, not across the board. And as we all know.. they will gladly price match most of the time! Walmart lives on the sales strategy that everything is cheaper, but that’s definitely not the case. And remember about quality versus “cheap.” Do you feel comfortable buying food at the Dollar Store? Why not? 

When you list your home with a Realtor there’s almost a guarantee that you will have a discussion of comparable sales, average days on market, market conditions and so forth. If this doesn’t take place you’re sitting down with the wrong person. Period.

You should never fear about your home rotting on the market. If it does and it catches you off guard then it is very likely ALSO YOUR FAULT. Is your home priced incorrectly for the homes condition and location? Do you command your Listing Agent? Are you grabbing the wheel while also asking why they “missed that turn?” Doing the correct research UPFRONT and being reasonable is critical. Did you hire an agent who is an order taker or did you hire a Realtor who isn’t afraid to give advice, even it isn’t what you want to hear? If you are afraid of dealing with reality, in desperate need to sell (and lose a ton of money) because you for one reason or another reached critical mass, then maybe you should work with a company that can buy your home and close in 18 days. Or maybe you could pump the brakes and challenge yourself to quite simply pull out your own calculator, talk to different people so you can make the best decision possible.