real estate commissions are always negotiable

You may have heard or you may believe that REALTORS and real estate agents all charge X%.

The truth is we are not allowed to know what other agents are charging and there is no central data repository where commissions data can be collected and analyzed.

Some real estate companies tell their agents to charge X amount. Real estate agents are independent contractors and can say no or move to another company.

Real estate commissions are always negotiable. It isn’t always easy to negotiate with real estate agents. We negotiate all the time. Most of us wake up unemployed each morning and spend the day looking for clients. Those of us who survive get to be pretty good at negotiating.

If you find real estate agent who will not negotiate find one who will. There are like a zillion agents who are qualified to sell your home and who would do a good job. There isn’t any reason to settle.

You want an agents who is easy to work with and one who can negotiate.

When negotiating commission agents are taught to tell homeowners that agents who will discount their commission will likely get less for your house. There is no data to back that up. It is the sellers who have the last word about which offer gets accepted, not the agent.

Some agents will tell you they are worth “X” % and show you a list of services they provide and ask you which services they should cut so that they can work for less. Go ahead and challenge the agent to tell you how much each of those services cost.

Buyers agents usually get paid by the seller through the listing agent. I for one have never asked a buyer to pay my commission directly but I certainly could.

If a home buyer asked me to give them part of the commission I would probably say no. What some buyers do not realize is that working with a buyer is a lot more work than working with a seller.

Finding a home for sale has gotten fairly easy but is only a small part of the job. Learning to handle the multiple offers, negotiations during the inspection period and getting it all the way to the closing table can be challenging.

When choosing an agent a home buyer or seller should be choosing an agent who has experience. Agents with no experience can charge as much as experienced agents charge.

When looking for an agent ask your neighbors, friends, family, and co-workers for a recommendation. Talk to a few agents and ask them how much they charge. Also, ask about any fees charged by the real estate company in addition to a commission.

Also see Oink!

How not to chose a real estate agent

Sell it as it is

Houses can be sold “as is”. Often estates are sold this way but any house can be sold as is. That means not having to worry about making repairs even if home buyers ask for them. There are always people who will buy houses that need some work or maybe just some TLC.

If making repairs and getting a house ready for sale seems overwhelming. Put it on the market as is. The house should be marketed accordingly so that buyers understand that the seller will not be making repairs.

living room

Wood is better than carpeting

Back in the 1950’s and 60’s carpeting over hardwood floors was common. Sometimes the carpeting was put in right after the home was built and the floors underneath it are in mint condition.

Home buyers prefer hardwood floors. I have known this for many years. National Association of REALTORS® found that 54% of home buyers were willing to pay more for a home with hardwood flooring. (study was done in 2016)

I am not suggesting that people who want to sell their homes run out and replace the carpeting with hardwood floors. Sometimes the carpeting needs to be replaced and there is hardwood flooring under it. Even hardwood floors that need a little work are better than old carpeting and usually better than new carpeting.

From experience, I know that there are certain types of homes that people expect to see hardwood flooring in. People expect older homes to have hardwood floors. That doesn’t mean that hardwood is preferred in bedrooms, kitchens, and baths or that every room in the house has to have hardwood floors.

It should also be noted that a buyer’s willingness to pay more for a home with hardwood doesn’t mean that they will be willing to pay enough to cover the cost of the hardwood floors. There is quite a price range for the flooring and it doesn’t always have to be oak.

Some of the most popular flooring options include mid-priced varieties such as teak, American cherry, and oak, which costs $5 to $10 per square foot for materials and another $4 to $8 per square foot for installation. Carpeting costs a lot less, which is one of the reasons why it became so popular.

There are a lot of choices even composite wood floors. Dark wood floors have made a big comeback.

Nothing is really all that black and white when it comes to making improvements that will have a positive impact on resale value. There are shades of gray but it is good to know home buyers will pay more for homes with hardwood floors.

Market house condos

How much did the current owner pay?

There is no relationship between the value of a house today and what the current owners paid for it. Home buyers like to find out how much the sellers paid for the home. Some want to use that information as the basis for an offer.

craftsman style dining room
Dining room with built-ins

It is interesting information but there is no relationship between what the current owner paid for a house and the current value of that house. Sometimes it is good to know that the seller paid more than you want to offer. Some sellers can not afford to accept an offer that won’t pay off their mortgage.

When someone purchases a home and uses financing the lender who is providing the financing has the property appraised. The appraiser looks at how much similar properties in the area have sold for in the last year or so. The subject property is compared with comparable properties and adjustments are made.

If the home buyer offers more money than the appraised value the buyer may have to bring more cash to the closing. Sometimes the buyer and seller renegotiate the sale price. Sometimes the buyer decides not to proceed. What happens when a property does not appraise for the amount offered depends upon how the purchase agreement is written and on what kind of financing is being used.

Minnesota appraisers have training and licenses.

Low appraisals happen. Pricing a property correctly is important. Even in today’s market, we are seeing houses that do not appraise for as much as they are listed for or as much as the buyer offers. It is possible to get multiple offers for more than the appraised value of a home for sale.

Your home doesn’t have to be new to be smart

queen anne house
Queen anne

My house is old. Part of it was built in 1858 and the newer part may have been built as recently as 1860. In fact, it was built without central heating, electricity, central air conditioning or plumbing. The house has all of that today and more.

It was built before many of the modern appliances we have today existed. They were added later. The electrical system and the plumbing and heating have all been updated even more recently.

I have one of those smart thermostats that I can control with an app or by voice the Amazon Echo. I don’t have to be at home to know what the temperature is in my house or to change the temperature.

There is a camera in my house that can be activated by motion and it can send me an email alerting me that someone has entered my house. I can watch someone take my stuff using an app on my phone as I dial 911 and yell at them through a speaker.

I have some lights and electrical outlets that can be controlled with an app on my phone or by voice. I am interested in upgrading some of the locks to smart locks.

As we add smart devices to our homes those devices will become obsolete and will need to be replaced with newer devices or some other kind of technology altogether.

When we bought our last refrigerator there was no such thing as a smart refrigerator that could help us keep track of what is inside the fridge and what we are out of.

This holiday season I gave my brother’s family an Instant Pot that is accessible by wifi. Doesn’t everyone need a smart Instant Pot?

You don’t have to buy a new house to have smart home technology, which is a good thing because not many new houses are being built.

 

Internet of things

How many houses do I need to see?

Home buyers always want to know how many houses they should see before they make an offer.  A decade or so ago there were many houses on the market to choose from. Today there are not so many but the answer to the question: “How many houses do I need to see?” hasn’t changed, it is still “it depends”.

It helps to start with a list of “must have” and “nice to have”.  Choosing a neighborhood or a couple of neighborhoods makes the home shopping process much easier. During the 17 years, I have helped people find that perfect home I have observed that people who are open to any neighborhood and who search in many neighborhoods usually do not find a house they want to buy.

Some home buyers spend hours online doing research and end up making an offer on the first or second house they tour. The internet is the best screening tool ever for house hunters. Use Google Maps to view the home from the street and check out the properties next door. Access sites like Zillow to get a rough estimate of the value of the home. Check property tax records for tax assessors valuation.

Part of my job when I am in the role of a buyer’s agent is to provide information about real estate. I can answer most questions because I have access to a lot of data and because I know people. 🙂

Some buyers drive by houses for sale, others walk the neighborhood and talk to nearby neighbors.

Most buyers need to see as many houses as they need to see before they are ready to make an offer. I have worked with clients who have looked at dozens of houses over a period of a couple of years before they have found the right one. Every year I work with at least one buyer who tours one home and makes an offer on it.