Frequently Asked Questions—or at least, they should be!

What does CNBC say about Selling by Owner or using a Discount Broker?  Click the link!

1.    What is your commission?  And, Why not use a "Flat Rate" Broker?

2.    How can I tell when a real estate person is lying to me?

3.    What are the worst mistakes I could make in picking a real estate salesperson to list my house?

4.    What are some good questions to ask in an interview?

5.  Where does research say Buyers are coming from these days?

Click on the question or scroll down for each question and answer.

1.  What is your commission? 

I charge from 3% to 6% to list a house.  Click here for a comparison between me and a "flat rate" Broker based on actual sales data

I will reduce my commission by 1% if:

--you make my job easy.  List your house for sale at my suggested "Quick Sale Price."

-- there is not a cooperating broker (I’m not trying to get rich off any one customer).

--your listing with me goes past six months without selling (If you’re not making top dollar, I’m not making top dollar.  That’s fair.).  Time listed with someone else does not count.

--you are selling at a loss (Actual loss, not compared to what you could have gotten if you had sold at the top of the market.  Click here to see my blog explaining “real numbers” and “imaginary numbers.”).

-- you are a public school teacher (like my wife).

--you are military, law enforcement, a firefighter, or retired from one of these services (If you risk your life to protect my family, you deserve a discount.  If you don’t, you don’t.).

--you’ve given me a discount on your services (This offer is a possibility, not a guarantee, depending on what your discount to me has been.  You wouldn't ask for anything  you don’t give, would you?)  And,

--for repeat business (I meant it when I said, “I’m not trying to get rich off any one customer.”).

Multiple 1% deductions can apply to a maximum of 3%.

If you do not qualify for one of my discounts and still want a lower rate, there are people who either have less experience or offer fewer services who will take less.  But you need to understand how much “saving”one percent can “cost” you.  In one example (click here to see it), my Seller paid me 6%, and his Neighbors paid their Broker 5%.  Same street, same builder, same floor plan, same month sales.  Do you think my Seller was glad he paid more?  You bet.  And when his Buyer got a new job in Tampa, he listed the house with me (and at a discount because he was repeat business and selling at a loss).

(Click here to see a comparison between me and a "flat rate" Broker based on actual sales data)  Or here to read what does CNBC say about Selling by Owner or using a Discount Broker?

Still not convinced?  Again, you can easily find someone who will take less.  But do you really want someone who can’t negotiate their own salary negotiating your sale price? 

Before you hire someone just because you can talk them down 1%, ask yourself:  "If they will come down that fast on their paycheck, how fast will they come down when negotiating a price for my house?"  Read on, because a $10,000 drop for you could only mean a $150 drop for us.  Do you think the REALTOR® who will cut their check $2,000 to get the listing will cut their check another $150 to get the deal?  And that $10,000 cut more than covered the difference in a "cut rate" broker and me.

 

Before you hire a REALTOR^®, read the Introduction and Chapter Two, “How is the Klu Klux Klan like a group of real estate agents?” in the best seller, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J. Dubner (HarperCollins, 2006). Click here.  What you will learn is many real estate sales people will list with you promising to get you top dollar, then beg you to take a low offer when it comes in.  Reason being, if your asking price is $200,000 and the offer is $190,000, your $10,000 loss, at 6%, split with the Buyer’s Broker 50-50, then split with their Broker at up to 50-50 (70-30 if you list with Keller-Williams), could be as little as a $150 loss to your real estate salesperson.  And most people would rather know they are getting a $2,350 check this month than work another month or two and hope to get $2,500 some time in the future.  “A bird in the hand . . ..”  Your loss;  their gain.    

So, who do you want working for you?  Someone with their best interest at heart, or your’s?  How much money are you willing to throw away in the hopes of saving 1%?

B.T.W., one good thing to ask any real estate salesperson in a listing interview is:  “In your experience, is the first offer usually the best?”  If they say, “Yes,” they will probably lie to you about other things.  Throw them out immediately, and call me.  By the way, I have promised every agent who has ever put their license with me I will fire them on the spot if I ever hear they told one of our Sellers, “The first offer is always the best!”  That saying is the mantra of the lazy real estate salesperson.  If your listing agent ever says that to you to get you to accept an offer, you are getting shafted.

Unfortunately, you are listening to the voice of experience (see the next question, “How can I tell when a real estate person is lying to me?”).  I was told that twice by people with whom I had listed my houses when I was getting pressured to accept an offer far lower than I had been promised they would get.  When I asked, “What about the amount you said you would get me, their scripts were:  “Well, Bill, now’s just not a good time to argue about that.”  If that’s what you want to hear, I could tell you with whom to list, but I won’t.  Suffice it to say, many have gotten big with their proven methodologies.

2.  How can I tell when a real estate person is lying to me?

Good question.  Some people might say, “Their lips are moving.”  Since first writing this blog, I have added to it several times.  Suffice it to say no one will ever write a definitive treatise on this subject.  Nonetheless, what follows should be helpful.

If someone tells you there aren't any real problems to worry about with a First Right of Refusal Contract, a Contingent upon something else closing Contract, or a Lease Purchase, run.  See Contracts to Avoid.

If you are selling your house, and someone who is trying to get the listing is telling you that you can get your dream price, there is a pretty good chance you need to beware. 

One quick trick is to ask, "Will you put that in writing?"  If they say, "Sure," call their bluff and hand them a piece of paper and a pen.  While you're at it, look over everything I've already put in writing.

If you're selling FSBO and someone tells you they have a Buyer who wants to make an offer, but you have to list with them first (exclusive listing, not an open listing where you can still sell it without them), red flags should be waving.

Ask for, and check, references.  BTW, here are mine:  Testimonial

Are they consistent?  Do say change their advice depending on their needs?  For example, my advice is always:  "Whether buying or selling, if there is a neighborhood expert, use him or her."  So, if a buyer wants to buy one of my listings in Piney-Z, but they have got something else to sell across town, do I change my advice and say I will list their home for sale?  If I'm consistent, and I want to get my listing sold ASAP, I help them find their neighborhood expert to sell.  For the good of everyone involved, I refer the business.  And I can prove in writing this is what I do.  Click to see proof.

If someone says, "Nah, you really don't need a lawyer," get one FAST, and one that specializes in real estate law.  Often when I encounter a problem with a customer my first advice to them  is consult a lawyer.  That way, 1)  if I am making a mistake, hopefully someone can catch it before harm is done, and 2) it is going to be very hard for anyone to prove malice of intent against me when I'm advising them to get a lawyer.

After buying and selling a couple of houses and being lied to by people I thought I could trust, I decided the best way to answer that question was to take the real estate pre-licensing class so I would know.  Well, I liked what I learned.  Then I decided, “I may not be the best real estate person in the world, but I can be better than most of the people with whom I’ve dealt.”  So, here I am.

One thing I tell my Buyers is that if I lie to them, I will have to face them at the Home Owners’ Association Meeting, at the swimming pool, the annual Bar-B-Que, . . ..  If I lie to them, they get to call me down in front of my neighbors, and ruin my business.

That hasn’t happened, and won't happen (see David Tucker's Testimonial and what he says about "honesty.").. 

What has happened, is several people who have bought my listings have called me when it was time to resell.  In all, 302 of the new houses sold in Piney-Z have already been on the market as a "resale," and 46 of those "resales" have been on the market a second time.  Of those 46 Sellers, 4 had been "my" Buyers, and 3 of those 4 listed with me (that's a 75% Customer retention factor in an industry where most people rate real estate sales people below used car sales people).  Of those 46 Sellers, 14 had been working with another REALTOR® when they bought my listing, but 7 of them listed with me.  That's a 50% cross over factor in my favor.   Altogether 14 of the 46 stuck with the same REALTOR® they had used previously, and I was that person 7 of 14 times.  As many of my customers chose to work with me again and chose to keep their old REALTOR® combined!  (Click here to see statistics taken from the Tallahassee Board of REALTORS® MLS on September 17, 2008, and viewable in an Excel spreadsheet where you can see all MLS closed re-sales by address, closing date, listing agent, and selling agent, then sort them and count them yourself.  You will see I list more, I sell more, and I have more repeat customers than anyone else servicing Piney-Z Plantation.)

Another way to tell if someone is lying, ask them for hard data.  When it comes to backing up sales claims in Piney-Z, I give you all the MLS data in a form you can search, sort, and compare.  Click here to see statistics.

It also stands to reason, the real estate professional who is lying to you about real estate in general probably doesn't want you to get your hands on good, professional information that will show them up.  So ask, "What resources do you give or loan your customers to help them sort through this process?"  I will give you a copy of Elizabeth Razzi's The Fearless Home Seller, loan you my copy of her The Fearless Home Buyer, loan you two books on staging, and several of David Knox's DVD on everything from picking an agent to pricing you home.  Click here to see Training Materials.   And, I offer you all the National Association of REALTORS^®  materials for Buyers and Sellers  http://www.realtor.org/buyers_and_sellers.   

How can you tell if a real estate person is lying to you?  Compare what they say to the facts, the statistics in the Multiple Listing Service, other printed resources, and check their references.

3.  What are the worst mistakes I could make in picking a real estate salesperson to list my house?

I could simply quote Elizabeth Razzi, but I have a vested interest since I am a neighborhood specialist, so read on down.  But you do need to consider what that expert said.  When asked during an interview on National Public Radio if she took her own advice when buying and selling homes, this expert who wrote a book on how to sell a home said she listed with a REALTOR® who was a “good person, but not my  neighborhood expert.”   Click here to see for yourself.  NOTE:  The person who wrote a book on how to sell your house listed with a REALTOR® instead of selling it herself.  Do you think all her experience taught her that when you sell your own house, you don’t save a commission, you earn one?  Your Buyer is going to know you are not paying a commission, and they don’t want you to save the money, THEY want to save the money, too.  So the first thing they will do when writing up an offer is to knock off that 6% you wanted to keep.  So, you’ll do the work, incur the liability, and not get to keep the money.  Doesn’t seem fair, does it?

Incidentally, I have personally have quit listing anything outside of Piney-Z.  I have an agent who works for me to whom I will refer that business. 

The other biggest mistakes people make are:  shopping commission, shopping promised sales price, and not checking out your potential broker.

Shopping Commission:  You want your REALTOR® to work hard for you and to care about you and how much money you will make.  Right?  So, who do you care for and want to see make as much money as possible?  Someone who is trying to press you into working for less?  Probably not.  Someone who doesn’t care about you, they just want a bargain?  Again, I don’t think so.  Or, do you want to be seen as someone who sees your business relationship as a partnership in which both parties can, and should, win? 

Sometimes, you have to spend money to make money.  You know that.  You also know you get what you pay for, don’t you?

A commodity is a product or a service that is the same regardless of the vendor form whom you obtain it.  One two liter bottle of Diet Pepsi is the same as any other.  The only difference between two bottles is the price.  So, when buying commodities, it makes sense to buy the lowest price.

Real estate sales expertise, however, is not a commodity.  All people may be created equal just as all two liter bottles of Diet Pepsi are, but all real estate brokers are not the same.  Think.  Research.  Ask.  Count signs in the neighborhood and wonder, “Do I think there could be a good reason I see more of one person’s signs than anyone else’s?  Hmmm.” 

And, as I’ve said in #1 above  . . .

If you do not qualify for one of my discounts and still want a lower rate, there are people who either have less experience or offer fewer services who will take less.  But you need to understand how much “saving”one percent can “cost” you.  In the following example, my Seller paid me 6%, and his Neighbors paid their Broker 5%.  Same street, same builder, same floor plan, same month sales.  Do you think my Seller was glad he paid more?  You bet.  And when his Buyer got a new job in Tampa, he listed the house with me (and at a discount because he was repeat business and selling at a loss).

Still not convinced?  Again, you can easily find someone who will take less.  But do you really want someone who can’t negotiate their own salary negotiating your sale price?