Tiered Real Estate Blog – Reality in Realty

So I was reading a posting about how big real estate commissions should survive and keep going and I say “death to big commissions!”

First, why do consumers accept big commissions? We live in a Wal-Mart world. A world where you can get everything for cheap. They demand some sort of value, but if they wanted to pay top dollar then places like Wal-Mart wouldn’t control our economy (and if you don’t think they control our economy you should look at their sales vs. GDP). What we are finding is that consumers don’t want to pay the huge commissions, but they have trouble finding quality companies (like Tiered Real Estate) who are willing to do a good job for less money.

Next, why do agents need to charge huge commissions? They don’t. Real estate companies need them to. If you think about these big real estate commissions, ask yourself ‘how much does the agent actually receive?’ In the example placed in this posting, the person was arguing for 6% commissions. Of that 6%, less than 3% makes it into agent pockets. Split that in half (one half for buyer and one half for seller) and each agent is fighting for just over 1% of that commission. So where does the other money go? Into the franchise/corporate/big business/office pockets. So agents don’t need to charge the big money, companies do. Any agent who broke down what they actually made would look for new alternatives.

Finally, why do these big commissions continue? A lack of consumer education. No one wants consumers to know how it really works. They don’t want to be transparent. They want to push consumers to a point of no return and then they ‘can’t’ turn back. Sounds cruel, but I have watched it happen (on the other side) much too often. On the other side is fancy sales pitches or advertising. I have talked to many people who “didn’t pay any commission” but paid to list their home for sale. Wow! Would you do that? What if it doesn’t sell? You just lost a LOT of money and the company doesn’t care! It already has your money. I am amazed.

So do yourself a favor. Get all of the information. Talk it over. Question it. Don’t be pressured into doing something that isn’t right. Death to big commissions. Life to honest commissions. If you are an agent, find or start a Tiered Real Estate company. If you are a consumer, find a Tiered Real Estate company to help you. If you are like Tiered Real Estate, join our network. If you are one of those ‘other guys’ then I would run. Consumers want companies like Tiered Real Estate and you can only put them down for so long until a revolution takes place. Viva la revolution!

Jim Cramer, during his “Mad Money” TV show, predicted the bottom of the market. The interesting thing about Cramer’s prediction is that it is focused on stocks (particularly the stocks of builders) and not specifically on housing. Obviously, an investment person like Cramer would focus on that side.

There have been a great many predictions about the market. So far, they have all been pretty bad. When the market was turning down, there were a great many people telling you to look up. When the market started its freefall, the doomsdayers talked about 1929 and the Great Depression. If you believe many of the big real estate organizations (you know who I am talking about), then you would have believed, for about two years, that it is turning around ‘next month’/'next quarter’/'next minute’/etc. Any length of time at all so that you wouldn’t feel there is a panic. Obviously, they have a stake in the market (i.e. our jobs) so they don’t want anyone to feel bad about it.

The amazing thing is that this is just a correction like free markets make. They happen on a regular basis. They always happen. The market always bounces back. The other interesting thing is that the market never goes to ‘zero’. We never have a month where no one buys or sells a home. Even in the 1980′s, when interest rates went to 18% and beyond!, people still bought and sold homes. There are still millions of people who are moving their families from place to place. In fact this sales market has turned into a boom in the rental market. People have to have a place to live. You may have been foreclosed upon or gone through bankruptcy and lost your home, but you can’t move your family into a cardboard box and most families cannot handle the burden of taking in another family. So what happens? They rent. And the market and the cycle continue.

In 3-5 years, when these bad credit renters have cleaned up their credit reports, increased their credit scores to a decent level, shown that they are good risks for banks and they have grown very tired of renting, they will start talking about buying again. And then guess what? The market will boom right back up because all of these people (who have no home to sell) will come back in the market and start buying up available homes. And the cycle goes on…

Yes, you can take a light fixture with you when you sell your home. First, be certain to tell your Realtor so that they can let prospective buyers understand that particular light fixture will not be staying with the home. An even better idea is to change the light fixture before you have showings. That way prospective buyers can look at the home and see exactly what they are getting. Ultimately, everything concerning your home is a negotiation point and can be worked out with the prospective buyer. If you want help buying, selling or renting a home, call the experts at Tiered Real Estate.

Have you seen these ads, commercials and/or websites that advertise homes for next to nothing? I have to admit that I am always skeptical. These are set up NOT to actually sell you a home, but to sell you some information to “help you find and buy” a home. They are selling something. You have to be cautious of what and for how much.

The interesting thing to me is that they are not completely wrong. Wow! That is almost scary to say. As I sit here right now, Wednesday morning, August 20th at 6 am central time, there are 29 homes for sale in the Chicagoland area that are LISTED at $10,000 or less (this information comes from the Multiple Listing Service. You can also do a search of your own at Realtor.com). Now you probably know what you get for that much and/or the kind of neighborhood that it is in. Yet, you have to think of the investment…

• Maybe it is worth buying and tearing down. (Maybe the land is worth it, or will be worth it in 5-10 years.)
• Maybe it is worth buying and just sitting on it for a while.
• Maybe I can fix it up and put a renter into it and get cash flow.

My point is that there are homes for sale for virtually nothing. If you are truly interested, do your homework. Try asking a real estate agent what is available. They usually work for free (and get their commission when the sale takes place), so why not? It is worth considering… especially if it doesn’t cost anything to ask.

Have a great day and keep the faith!

It was reported on Tuesday that housing starts in July dropped 39% which is the most in 17 years. My question is: who was still building in the first place? Two or three ago, when things started to plummet from its peak and the handwriting was on the wall, shouldn’t most builders have curled up into the fetal position, gone into hibernation and weathered the storm? I am not saying that you should turn paying customers away, but all of the speculation should have ended. Immediately. That way the industry wouldn’t plunge further and builders wouldn’t be exposed even more.

Apparently, not everyone could read the writing on the wall and some kept building. And some ended up like Neuman homes (bankruptcy). I am sure that not everyone is through.

So, it does not surprise me that housing starts are down. It surprises me that almost 1 million people want to build in this economy. I do realize that there are some benefits to building right now. One of those is hungry/starving/laid off construction workers. I have heard a great many stories of construction workers who have been laid off and are looking for any sort of work to put food on the table. Usually this involves working for less than scale which saves a home builder money. (This can work out well for home improvement projects too! You might want to check with a business or two to see if the cost of your home improvement project has recently gone down!) However, I find it surprising that there are a million new homes that can be built based on these cost savings. With consumer confidence way down, it seems odd to me.

What is the good news? The good news is that many of the builders who were smart and went into hibernation have started building again. Why is that good? If the smart ones saw the decline coming and virtually stopped building, then by returning to building it may indicate that they see that the end of this market is in sight and it is time to start returning to work (cautiously of course). In the Midwest (where we are located) we have had encouraging sales numbers and increase in phone calls that correspond to this return to building. While it has not been a very pleasant few years, we are optimistic that we are at or near the turn back upwards.

Have a great day and keep the faith!

Absolutely! As real estate agents we have the ability to share rental listings with thousands of other agents through the multiple listing service and to millions of monthly visitors to Realtor.com. We are able to use all of our real estate agent tools to help you not only find a renter, but to help renters find a place to rent. If you are looking to rent or have a place that you would like to have rented, give us a call at 866-904-TIERED and let Tiered Real Estate put our tools to work to help you!

“Curb Appeal” refers to the impression that your home gives when someone drives or walks by. If potential buyers are turned off by the exterior of your home, they may never come inside to see the beauty within. Before you go to work ‘fixing’ your curb appeal,you should evaluate it. Stand by the street (not in the street) and look at your home. What stands out? Are your gutters overflowing or hanging off? Do you need to paint? Are you missing shutters, shingles or pieces of siding? Is your home dirty? Do you still have that bush that died two years ago in front of your home? Attracting the right buyer starts with a good first impression and that impression starts the first time they drive by. So take advantage of nice days by cleaning up the outside of your home. If you would like the assistance of a real estate professional to help you evaluate your “Curb Appeal,” call Tiered Real Estate at (815) 521-9102.

Yes, it is important. A study taken by the National Association of Realtors reported that 1 out of every 10 sales was due to the sign! Especially in today’s market, you don’t want to eliminate 10% of your buyers. If you are concerned about the neighbors, you shouldn’t be. The neighbors that like you will want to help you out of kindness. Those that don’t like you will help you because they want to get rid of you. Either way, you win! If your concern is the number of homes for sale on your street, why should you let them get the extra exposure? Don’t give them a reason to fall in love with someone else’s home because it had a sign up and they could call for information from their car. Is it time for you to buy, sell or rent? Call Tiered Real Estate and let us help you.

A lockbox is a device that is placed on your door to allow Realtors to easily show your home. There are several different styles of lockboxes but each one is designed for the same function, to securely store your house key. They allow you to have showings when you are not home. It is a good idea to not be home for showings so that the buyers will feel more comfortable discussing and viewing your home. This will enable the Realtor to provide feedback even if the buyer decides not to make an offer. If you are interested in buying, selling or renting a home, call one of the outstanding agents at Tiered Real Estate.