Posts Tagged ‘real estate commissions’

5 Changes to Real Estate Markets That May Be on the Horizon

Thursday, March 16th, 2017

As many in the real estate industry anticipated, the mortgage interest rate has been raised, and predictions are that rates will go up again, possibly multiple times this year. What does that mean for home buyers, sellers and the real estate market in general?

1. Inventory will likely remain low. Since inventory in most markets is already low the rise in rates could keep it that way. That is because home sellers who were considering selling may choose to stay in their homes. Those who have low mortgage rates currently may decide not to make a  move if their new rates will be higher – it will all depend on numbers for many sellers. OR – there is always a chance that rising rates may cause some to sell quickly in order to prevent being locked into their homes for potentially years to come…it will remain to be seen.

2. People may be priced out of markets. If there are fewer homes on the market then home buyers will have a more difficult time finding homes due to high demand and low supply, which normally creates higher prices. As competition heats up, some buyers – likely many first time home buyers – will be priced out of the housing markets in many areas. Unless home builders supply the market with new inventory there could be a stall ahead.

3. Cash buyers will continue to play a role. In many markets, especially condo and townhome markets priced at $650,000 and under, I believe cash buyers will continue to be out in force snatching up these properties. Many first time buyers will have to contend with these cash buyers, and usually that is a losing game for the buyer who is getting a loan (since cash buyers do not require appraisals and can close more quickly; not having to rely on a lender to get the sale closed is a plus to many home sellers).

4. Rental market will continue to be saturated. If the above holds true then the already saturated rental market will continue to be busy – landlords will be able to make good money and raise rents because there will be plenty of renters needing homes who will pay the higher prices if current tenants cannot. This point correlates with the increase in cash buyers that we have seen lately in the “lower end” markets – many of them have been purchasing the lower priced properties for income potential, and it is a great time to make money in the rental market.

5. Real estate industry could see changes. With less inventory real estate brokers and agents could see a big change in the industry. Much like the exodus of sales people during the foreclosure crisis of 2008-2011, I predict many agents will again leave the business because they will not be able to survive in such a tight market. I also predict agent commissions will go down if there are fewer homes which sell faster.

The bottom line is that the real estate market in many areas, at least here in San Diego County and others in California, is still “hot,” but it is getting more difficult for people to get into it. This could affect future home ownership rates and the real estate industry as a whole.

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Will Lower Commissions Become Standard in Real Estate?

Monday, April 25th, 2016

For years the idea of lowering real estate commissions has been the topic of conversation amongst many in the real estate industry. Since the discount brokerages came onto the scene in full force back in the early 2000s, many home sellers have sought out agents who will cut commissions to save sellers money. Could lower commissions eventually become the norm? http://www.dreamstime.com/-image4640694

A recent study by Realtor Magazine indicated that 62% of buyers and sellers want lower fees in real estate transactions, yet of those 22% still want to receive quality service and worry that low fees do not go hand in hand with that type of service. So while sellers want to pay Wal-Mart fees, they obviously still want Nordstrom service.

I have written many blogs over the years about the benefit of working with agents who provide stellar service – not just in marketing a property or knowing a neighborhood, but with respect to the very important legalities of real estate transactions – negotiations (by the way, 89% of sellers in a recent study indicated that negotiation was the number 1 skill they desired of their real estate agents), paperwork, disclosures and other potential liabilities.

Many sellers for years have complained that it is not right that an agent can be paid 2 1/2-3% of the purchase price for a million dollar home and the same for a $300,000 home. The real question is how much work is that agent doing? I personally know of listing agents who “list and pray,” doing virtually no or little work to market a home and bring a buyer without spending time or money out of pocket. Also, what about the buyer’s agent who has been working for months with her buyers, showing them 20, 30+ homes, driving the around to show them areas and being there on hours of phone calls, writing offers…that agent gets nothing until she actually closes a sale, which may or may not happen.

If you wonder what agents actually do, here is a list of some of the things your agent should be doing…so do not be afraid to ask your agent what he or she is doing for you.

1. Marketing – this varies vastly so make sure you understand the marketing plan that is proposed

2. Open houses – if desired

3. Broker caravan

4. Professional photography

5. Creating custom flyers and other marketing pieces (mailers, ads, emails, etc.)

6. Showing advice/preparation and staging, if necessary

7. Handling all paperwork and explaining it all to you

8. Showing the property (being available to do so – you’d be surprised how many agents are not)

9. Negotiations with the other party/agent – this does not stop after a contract is signed, as it is still often necessary for repairs/credits.

10. Providing a list of repair people if needed

11. Constant communications with all parties involved – agents, lender, escrow, title, and of course, you

12. Making sure you have copies of your entire file at the close of escrow, and helping with other things like finding agents out of the area if you are moving somewhere else, or helping you synchronize closings of current and new homes. I have even helped clients move out and clean up after everything is taken from a home.

Of course each listing may require a different plan, and some may need more pre-listing work or more marketing than others, which of course means more money. So, will lower real estate commissions eventually become standardized? That remains to be seen but hopefully if they do, quality service won’t go down with them.

 

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For Those Who Think Real Estate Agents are Overpaid…

Friday, November 8th, 2013

I have heard it for as long as I have been in this business: “real estate agents make too  much money.” Ironically enough, in my past career as an attorney I was paid by the hour, and thus my income depended on the amount of work I put into each case.  Being a hard worker by nature I have to say I did pretty well, likewise with real estate – I work very hard. When I hear people complain that I make too much money I know they do not understand how much work we real estate agents do..I have actually blogged about it before (click here to read that blog).

Here is a great infographic from Diggsy that sheds light on real estate agent commissions. The tax number is way too low (obviously it depends on one’s tax bracket – I have to put more aside for taxes), and of course some numbers vary (insurance, marketing, and of course many other expenses, especially if you own a brokerage like me), but it is a very good indicator of what we agents really end up putting in our pockets at a closing. Have a look and see what you think.

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