British are upset paying even 3% commissions!!

http://news.bbc.co.uk/2/hi/business/6172846.stm. Yet most people is this country still pay 5 or 6% without giving it a thought. Why such a discrepancy? For many Americans they still have this misperception that paying more in commission will result in the home selling faster or for more money. The billions of dollars spent by the high commission brokers have brainwashed consumers into this fantasy. If you are a regular reader of this blog you already know that there is not a shred of evidence to support these perceptions. In fact a lower commission does make the home more competitive resulting in a faster sale. Not paying thousands more nets the seller more money at closing and we have thousands of such cases here at Homeowners Concept.

Another reason is that many sellers cannot break away from the "obligation" to list with a high commission agent because he or she is a relative or "friend" who still charges 5 or 6% commission and in many cases is unskilled or part time in real estate. This compromises the saleability of the property and prolongs the sale.

Lastly, the consumer in this country has long felt rich and confident in the economic future that paying more for many things was part showing off and part keeping up with the "Joneses". Nevertheless, with the economic downturn of late many people are reassessing this desire to overspend for products and services. In other words, the American consumer is becoming more savvy. Maybe in the not too distant future ALL sellers will be paying reasonable commissions that wise Homeowners Concept sellers currently pay.

Paying 6% AND giving it away?

There is that persona that agents are like used car salesmen. Before I go further I want to say that I'm sure that there are a great deal of honest and ethical used-car salesmen but I use that industry because...well...you know exactly why. I must also state that for the most part, agents are ethical and look out for their clients, the seller. The bar is definitely being raised thanks in part to a much more savvy and demanding consumer. That said, it only takes one bad apple to spoil the bunch and oh boy are there some apples out there that are just rotten to the core. The following example is precisely why some members of the public continue to distrust our profession.

A relative told one of her neighbors about saving the high commission using Homeowners. Her neighbor though was "obligated" to list it with the Realtor that sold it to her and had now become her "friend" (how can one be obligated to pay someone excessive commission?). The property at 7738 W. Mt Vernon (MLS # 1086757) is in a very desirable area of Milwaukee and has a Fair Market Value of $154,000. It has a large yard, updated KIT w/SS appliances included, rec rm and it is in immaculate condition. One could see this property going for more than FMV closer to $160k. YET it was listed by the friend agent for $139,900 and of course sold in the first couple of days. By comparison 206 N. 79th (MLS 1088899) which is very close to the subject property sold above assessment. The seller probably left $10-15,000 on the table PLUS paid a hefty commission. This could have been deliberate (just to get the listing sold and out the door) or could be a case of ineptness. The agent she listed with does just a few deals a year.

We occasionally do get sellers who unknowingly want to underprice their property but we take the Realtor ethics at heart and refuse to participate in this. Our agents' expertise which is much higher than the average high commission agent (see About Us) prevents us from making errors such as this. I cannot fathom any of our agents underpricing any of their clients much less their "friends".

June area homes sales up, but prices down

A small uptick in June sales is countered by continued decline in prices. Metro Milwaukee area were up 3.6 percent in June to 1,582 versus 1,527 in June, 2008. Prices of homes though continue to decline - down 11.8 percent this year. The biggest price drop is in Milwaukee County where home prices are down 26.9 percent this year.

Milwaukee County has been a bright spot in the region for the number of home sales. June was the third consecutive month that Milwaukee County had higher homes sales than in 2008. Milwaukee County had 915 homes sold in June, up 10.8 percent compared to 2008, but down 15 percent compared to June of 2007.

Ozaukee County had 100 homes sold in June, up 63.9 percent compared to June of 2008, but still down 28.1 percent compared to June of 2007.

Washington County had 150 homes sold in June, up 12.8 percent compared to June of 2008, but down 10.7 percent compared to June of 2007.

Waukesha County had 417 homes sold in June, down 12.2 percent compared to June of 2008 and down 27.6 compared to June of 2007.

Walworth County posted a small home sale increase in June, while Racine and Kenosha counties saw declines. Home sales in Walworth County were up 0.9 percent, in Kenosha County was down 15.3 percent and in Racine County were down 5.5 percent.

With home inventory at almost 11 months (2.5 times larger than in 2004), sellers have to be extremely competitive in their pricing in order to sell. Only very serious sellers are able to sell (See blog spot of May 7, 2009 for further explanation). Sellers who are wise, use Homeowners Concept's low commission structure to sell so they can be more competitive.

Is it lazyness or incompetence?

We have run into the following situation before and brings to light that sellers get compromised despite paying a high commission of 5% or 6% (see blog post of 3/12/09 for a better understanding of why paying more commission gets you less expertise).

One of our agents is working with a buyer who decided to offer on the home at 165 N. 72nd st in Milwaukee (MLS# 1086805). As our Offer was being considered, another Offer by a different buyer came in. Evidently, the other Offer was better in price to the one our buyer submitted because seller signed off on the competing Offer.

We realize sellers do not know the proper way to maximize their selling price. This is where the listing agent, who seller is paying a high commission, either was lazy or incompetent in advising the seller to make a multiple counteroffer to both buyers. You see, our buyer was WILLING to go higher, had he be given the opportunity. By accepting the first offer, seller definitely left money on the table AND paid a high commission on top of that.

Because Homeowners Concept agents do 3-4 times more sales and have been in business for 12 years longer than the average agent, a seller can expect to net much more at closing (adding to the thousands in savings from paying just our low commission).