The National Association of Realtors is out with a serious report about the real estate industry that insinuates that huge change is coming soon. The study, prepared by an outside consulting group, compiles information gleaned from interviews with 70 real estate industry experts and insiders. The group’s predictions for the industry were so tumultuous that the report itself is entitled, ‘The Danger Report.’ While there were sobering predictions in a number of areas, a few jumped out at me, specifically:
Real estate commissions paid by American consumers are too high.
Because ordinary real estate commissions are usually a percentage of the final sales price of the home being sold, the size of commissions consumers pay their agents has increased to stratospheric levels. Consider that a typical Oahu homeowner selling a $950,000 home and paying an ordinary broker, say, 6% commission would pay $57,000 in commission . . . and I think the point is well made!
But, beyond that, here in the United States, our real estate commission percentages are out of step with much of the rest of the world. For example, in the UK, real estate commissions average 1%-2% of the sales price; in the Netherlands, 1.5% – 2%; in Austrailia, 2% – 3%; and in Germany, 3% – 6%. Here in the USA however, commission percentages hover between 5% and 6%.
Commission sticker shock was one of the things that led me to become a Help-U-Sell Broker way back in the late 90’s. I figured if I could find a better way to do the business that saved consumers money on commissions, I’d have a winner. The Help-U-Sell Low Set Fee pricing model proved to be that better way, and today, 16+ years later, we are still saving consumers many thousands over what they’d pay an ordinary broker.
The next item that caught my attention was this (and I’ll quote the headline directly from the report):
The real estate industry is saddled with a large number of part-time, untrained, unethical and/or incompetent agents. This knowledge gap threatens the credibility of the industry.
Real estate has always been a fairly easy business to get into. It requires completion of a course of study, the passing of a State exam, and a few hundred dollars in licensing fees. But knowing how to do the business and to look out for your customers and clients in their transactions is another matter. It is something you learn through doing with expert coaching on the side, not something you learn in order to pass the real estate exam.
I am proud to say the team at Help-U-Sell Honolulu Properties is full time, experienced and well able to deal with the problems that arise in any real estate transaction. . We have helped thousands of home buyers and sellers successfully navigate the difficult waters of a real estate transaction, AND we have saved them many thousands of dollars. We are education junkies and often find ourselves in classes aimed at increasing our knowledge and improving our skills.
As dark as The Danger Report seems to be, I am excited and proud of where Help-U-Sell Honolulu Properties stands relative to it. We are the low cost alternative to the ordinary real estate model – a model undergoing tremendous upheaval as it works to become more like . . . well, us!
Help-U-Sell Honolulu Properties is a full service real estate company that provides exceptional service while charging less than ordinary Realtors. We’ve been successfully helping buyers and sellers all over Oahu for more than 12 years and we’d be delighted to help you achieve your housing dreams. Contact us at (808) 593-8811, or visit our website.
There is a little controversy right now about the concept of a ‘Pocket Listing.’ There have been a number of recent news and opinion pieces, mostly from Realtor groups, condemning the practice of keeping a salable listing out of the MLS. Before I tell you what I think, let’s examine the Realtor point-of-view.
Since the advent of the MLS, the residential real estate business has operated on a cooperative basis. Because most MLS membership agreements require that every home listed by a member broker be offered for sale with an MLS listing (unless the seller signs an op-out waiver), every Realtor has an opportunity to sell any property listed with a competitor and earn a portion of the commission.
This is marketed as being in the best interest of the seller because it maximizes the opportunities for exposure of the home, getting it in front of more and more potential buyers through their individual agents. And after all, whether another Realtor comes in with the buyer or the listing agent finds the buyer him or herself, the cost to the seller will be the same; it won’t cost any more.
And that’s where the problem lies – real estate commissions are HIGH because each one is designed to compensate an outside broker and agent whether they are involved in the sale or not.
In general, when a seller lists with a traditional broker, he or she agrees to pay a percentage based commission. The actual percent varies, but will often be in the 5% – 7% range. Let’s consider something right in the middle, say, 6%. On a $500,000 home, that’s a $30,000 commission! Huge, right!? But one of the reasons it is so high is the listing office has to be prepared for the likely event that an outside broker and agent will bring the buyer – and, generally, they’ll be paid half of that commission. Of course, if there is no outside broker, if the listing broker finds the buyer his or herself, the seller still pays $30,000 because . . . well because that’s just the way it’s done!
At Help-U-Sell Honolulu Properties we don’t charge a percentage based commission, we charge a Low Set Fee. And, we unbundle commissions. If there is no outside broker involved, you don’t pay for one. Now that’s a real benefit to a home seller, one you can put a dollar sign on!
My opinion? I don’t think this needs to be an either/or question. How about flexibility? That’s why we put most listings in the MLS but only charge our sellers for an outside broker and agent if they are involved in the sale. If we sell the house without an outside MLS broker, the seller doesn’t pay for one.
And, if your home is very marketable and priced well, we have no problem holding it out of the MLS so you can save the most on commissions. Often, what I recommend is that we start without MLS and if we don’t have an offer or sufficient activity in 30 days, then go into the MLS and offer the home for sale through outside brokers.
At Help-U-Sell Honolulu Properties, we are about two things:
- Getting your house sold for top dollar
- Saving you the most money in commission expense
We will consult with you at the time of listing and continuously thereafter about how best to market the home, whether an MLS listing makes sense or not, and how to maximize your savings while selling for the greatest possible price.
We’ve been at it here in Hawaii for more than 10 years. At what? you ask. At providing real estate services that are priced fairly and reasonably; at pioneering a newer, better way of doing the real estate business; at not just selling real estate, but also changing the way real estate is sold. We’ve gone from nothing to being one of the most substantial residential real estate companies on Oahu, which is a testament to the effectiveness of the program we offer.
Oh, we get the job done just like the best known companies on the island. We offer full service that goes beyond our clients’ expectations. We delight the people who work with us so much that most of our business comes from their referrals. Best of all, we save our clients thousands of dollars over what they’d likely pay an old fashioned real estate broker.
We are not married to the old way of doing business. Nor are we married to the old way of charging for our services. Help-U-Sell Honolulu Properties is the next big thing in real estate, a new way to buy and sell and the best way to save in the process.
Sometimes the best way to explain the difference is to put a pencil to it and run the numbers. Here is short video that does just that:
I spend a little time each month to determine what search phrases real estate consumers use online to find real estate brokers. When I discover the phrases consumers are using, I sprinkle them throughout my websites (including this blog) and thus increase the number of times Help-U-Sell Honolulu Properties shows up in search results. In 2013, that’s just good marketing!
Most phrases are predictable: ‘Hawaii Kai homes for sale’, ‘Mililani real estate’ and the like. But sometimes I uncover something unexpected. That’s what happened over the weekend. Here is a Google search phrase that is being used a lot in one form or another:
People want to know what they’ll have to pay a real estate professional to market their property — no surprise there. But what jarred me this weekend was not the question, it was the word: PERCENTAGE.
Seventy plus years of ‘that’s just the way we do it’ has trained the public to expect to pay a percentage of the sale price of their house to an agent when it sells . . . and that makes no sense whatsoever.
What does a percentage of you home’s value have to do with getting it sold? Nothing!
Think about it:
Here you are in your $525,000 house. Thankfully, you are not upside down. You have roughly $100,000 in equity. So you decide to sell, and list with XYZ Realty**, who charges you (and every seller with whom they work) 6%*. When your house sells (for full price), that’s a commission of $31,500!
I’ll give you a moment to catch your breath . . . before I point out that that may be 6% of the sales price, but it’s more than a 30% of your equity!
Meanwhile, your neighbor down the street also wants to sell, but his home is smaller. It’s only worth $450,000. He also lists with XYZ and agrees to pay the 6% Commission. When the house sells for full price, the homeowner is going to pay $27,000 — still high, but not nearly as high as your $31,500 commission.
Now, here’s the question of the day: What did YOU get for the extra $4,500 you paid to sell your house through ABC?
More Open Houses?
A better Sign?
Oh, maybe your agent worked $4,500 harder! Right.
What you got for the extra $4,500 you paid is this:
It makes no sense today, made no sense yesterday, and will never make any sense at all.
At Help-U-Sell Honolulu Properties, we charge home sellers a set fee. It’s logical. We’ve worked very hard to determine the hard costs of carrying a listing in Oahu. We then add a reasonable profit to those costs, and . . . that’s it.
I hope next time you need to sell, you’ll do the right thing and call the set fee alternative, Help-U-Sell Honolulu Properties. You’ll save a bundle (the set fee is usually thousands of dollars less than whatever percentage based commission you’re being quoted). And you’ll have the satisfaction of knowing that, finally, for the first time in your real estate life, you haven’t been taken to the cleaners!
*Commissions, whether set fee or percentage based, are always negotiable. They are not set by law or REALTOR rule. They are set individually by office Brokers. Price fixing occurs when different Brokers get together and agree to charge the same thing. That’s highly illegal. Different Help-U-Sell offices charge different Set Fees, because the carrying costs of marketing a listing vary from market to market, as do the number of days it takes a properly priced listing to sell.
**The “XYZ Realty” referred to in this blog is fictitious and is used only for illustrative purposes. Any resemblance between it and any other “XYZ Realty”, is purely coincidental.