ALL OF OUR PROPERTIES NOW HAVE VIDEOS ON YOUTUBE!

Besides the additional marketing we do for all the properties we have for sale via our exclusive magazine, we now also post a video of each home on You Tube. You Tube is the second most visited website after Google and is gaining traction as a gateway for real estate. All of our property videos can be found at www.youtube.com/HomeownersMKE. Barely 2 weeks old and a number of these properties have multiple unique hits.

As one can see, paying thousands of dollars less in commission to Homeowners Concept vs a 6% broker gets you not only more advertising but also a much more experienced agent. All of our agents sell 3 to 4 times more homes per year than the average agent and have been in business for 16 years vs only 4.5!

EVEN THE FOUNDER OF ForSaleByOwner.com SELLS USING A BROKER!!

Former FSBO CEO sells home using a Realtor (reported in the AGBeat website: http://agentgenius.com/real-estate-news-events/forsalebyowner-com-founder-gives-up-on-own-listing-hires-real-estate-broker)

Founder and former CEO of ForSalebyOwner.com, Colby Sambrotto listed his 2,000 square foot New York condominium on his own through online classified ads and FSBO sites, but after six months, he opted to hire New York broker Jesse Buckler who immediately advised a price change as the listing was not attracting the right buyer.

After giving up on the FSBO route, Sambrotto’s decision to hire a broker led to attracting multiple offers, closing for $150,000 over the original asking price. The Wall Street Journal reports the listing sold for $2.15 million including a 6% commission.

Many FSBOs turn to Realtors

The news stands as an enormous validation of the real estate profession and while some may tease, it is no laughing matter and the former FSBO CEO made a good financial decision.

AGBeat columnist Herman Chan said, “If people want to take a stab at For Sale By Owner (ie FSBO), go for it. But well over 90% of FSBO’s eventually have to list with a real estate agent to get their house sold. It’s harder than it looks!”

The inability of FSBOs to sell completely on their own was the foundation of Homeowners Concept when we began in 1984. 27 years later and 23,000+ properties sold, Homeowners Concept has given home sellers a program they can successfully sell their property without a hefty commission.

5 YEAR ADJUSTABLE RATE MORTGAGES AT 3%!

Many buyers are not aware of the extremely low Adjustable Rate Mortgages (ARM) available, specifically the 5 and 7 year. As of this writing one can lock in for a 7 year ARM for 3.4% rate. The 5 year is even better at 3%. These are conventional rates although FHA which offers lower downpayment and more flexible underwriting criteria is also offering low ARM rates. The rates are quoted by Netcentral Mortgage (netcentralmorgage.com/414-258-7833) which is located in the same building as our central office in Wauwatosa.

In the conservative environment of Southeast Wisconsin most buyers refuse to even consider the ARMs. Yet, if one had been in an ARM for the last 25 years, they would have enjoyed tremendous savings over a fixed mortgage (and would not have to incur refinancing charges AND would have paid off the loan much sooner). As the rates adjusted lower the ARM would have adjusted lower and ARM rates are lower than 30 year rates.

Most buyers have been reluctant to purchase or refinance with an adjustable rate having this fear that rates will go up, yet if one looks at Japan the fixed mortgage rates are close to 2%. In the economic environment we are in, it is very conceivable that fixed rates can continue to move lower to the 3-4% range. Adjustments to the ARM rates at the end of 5 or 7 year anniversary would then translate into a new rate in the 2-3% range.

HOW PAYING LESS COMMISSION MAKES THE SALE POSSIBLE.

This Cudahy home on Rosewood Dr had been with Homeowners Concept for a number of months but had switched to a 6% broker after it expired unsold. During the time it was listed we had 3 offers from 3 different buyers but all where for a price that was unacceptable to the seller.

The first offer was the highest for about $205,000 but sellers felt that "they were not going to give it away" (they were priced at $219,900). A couple of months later sellers reduced the advertised price to $209,900 and another offer came in for just under $200,000. Again sellers rejected it as inadequate. After a period of time a third offer came in even lower than the first two offers. Despite the writing on the wall, the sellers refused to accept reality. About this time the listing came up for expiration and to our amazement sellers wanted to try a "high commission" broker and pay thousands of dollars more in commission and administrative fees.

After a few weeks with the new broker, sellers reduced their price to under $200,000 (and willing to pay 6% on top of it). The buyer with the 3rd offer was made aware of the reduction and was willing to redraft the offer now that the sellers had come to grips with pricing. The new offer was finally accepted and because buyer had been found during the time with Homeowners Concept, the commission to seller fell under our 1.5% commission (buyer was an exclusion to their new listing with the high commission broker). Sellers were very lucky that the buyer had not found a property and as a result we were able to put the deal together and save them a big chunk of the 6% commission.

In summary, most sellers rely on our expertise (and we do have much more expertise than the average high commission agents) especially important in the real estate environment that we are in. Every so often though some sellers refuse to listen to facts and market data. And by paying much more commission makes absolutely no difference to a buyer as these sellers found out. Cases such as this have happened to us before (we have been saving sellers the huge commission for 26 years now and sold tens of thousands of homes). We even have had a few situations whereby Homeowners Concept brought the buyer to the table after the sellers had switched to a 6% broker. In those cases sellers paid 6% and Homeowners Concept was paid MORE than our low fee (we got paid the co-broke commission since we brought the buyer - 2.4% on average -).

PAYING 6% RESULTS IN MANY BROKERS LAUGHING ALL THE WAY TO THE BANK.

Real estate brokers collected $42 Billion last year in commissions. But it could've been much less if all sellers used a program similar to Homeowners Concept. It's a statement we can make with certainty having sold upwards of 23,000 properties since 1984.

Our program has been proven unequivocally to be extremely successful and actually work better than paying a 6% commission. There have been hundreds of instances over the years that our lower commission made the difference in the sale of the home. The thousands in savings and no excessive administrative fees at closing have helped considerably. Couple the savings with all the expertise we bring to the table (only full time, seasoned, incredibly knowledgeable Realtors) and one can see that paying more than our top of the line 4.4% program is a pure waste of someone's hard earned equity.

Bottom line is that if you're paying more than our top of the line 4.4% program you are absolutely paying too much to sell!

UNBELIEVABLE!

Paying $500 Upfront PLUS $100 per month until the home sells, THEN pay another 3% at closing. That's exactly what some sellers are doing by listing with this local limited service turned into a full service company. A client of ours at S108 W39570 Oregon Trail in Eagle paid $500 upfront in April of 2010. At the end of April 2011 she was on the hook for another $1,200 and no sale (a total of $1,700 with no results)! That's when she had enough and quit the service.

Unfortunately for this seller and many others she was hoping for a quick sale and she figured that maybe the $500 upfront and another $200 to $300 accumulated by the time of a sale would be enough. What sellers do not take into account is the fact that this company is running about 70% expiration rate. In other words 7 out of 10 properties expire unsold. All the hundreds or thousands of dollars each and every seller pays upfront is lost. Gambling at a casino has much better odds.

Even the lucky sellers that sell via this method they still have to pay 3% additional at closing. Assuming 6 months of selling time ($1,200) plus 3% (for an average priced home of $200,000) the total is around 3.6%. Since the company makes money regardless, there is little incentive to try to move the properties expeditiously. One though MUST factor in the 70% that do NOT sell and the money invested by those sellers.

There is a great amount of ignorance on the part of the sellers that sign up for this outrageous selling plan. One can see paying hundreds or thousands of dollars upfront and maybe pay a few hundreds more at closing provided one had the same chance of selling as competing methods. But to pay all this money upfront without any guarantee of a sale whatsoever and get hit with a 3% additional at closing makes absolutely no sense.

You know someone who's a Realtor but do not want to list w/them.

We recently had a seller that was absolutely getting the value and savings of our program but was in a quandary on how to deal with a sister in law who is also in real estate and wanted his business but of course was charging more and offering less than Homeowners Concept.

As we have written in the past, it is quite common for sellers to know someone in real estate (there are way too many agents for the amount of sales). This could be a relative, a friend, or even the agent that sold them the home. However, the more sellers (or buyers, for that matter) investigate Homeowners Concept, the more they want to work with us. The savings in commissions is certainly a consideration but the fact that we bring to the table many more years of expertise and a high volume of sales than the average agent trumps the competition.

In this case, the sister in law has only been in business for 4 years and last year only closed 4 homes - a little less than average - and much, much less than an average Homeowners Concept agent. With our suggestion, the seller offered his sister in law an incentive that if she rounds up a buyer for him he will pay her a bonus commission (which in effect will be double the commission cut she was going to receive from her broker). This works like a charm and sellers get to keep the relationship/friendship intact and enjoy listing commission savings plus higher expertise! Of tens of the times this has been offered by sellers in the past it has never come to pass. Nevertheless, true friends/relatives understand business and the fact that you need the profit for themselves and family.

MORE BUYERS ARE DITCHING THEIR AGENTS AND SHOP ON THEIR OWN

Home Buyers go hunting alone by rejecting the services of a buyer's agent.

The buyers who purchased a property through a real estate agent just 57% had buyer representation in 2010, according to a report by the National Association of Realtors. That's down from 62% in 2009 and 64% in 2006, before the housing bust.

Also, fewer buyers are first learning about the home they purchase from real estate agents: just 37% are reporting real estate agents as their first source of information on the home they purchased, down from 50% a decade ago, according to NAR.

Bottom line: The trend is that U.S. home buyers are doing it themselves with the help of the internet and smart phones.

After years of trepidation, home buyers are finally beginning to wade back into the housing market. But as they do, many are making the surprising choice to hunt alone, rejecting the assistance of what's known in real estate as a buyer's agent. Smart home sellers that use companies like Homeowners Concept benefit the most from this trend by not having to pay a buyer's agent.

SELLER LEVELS OF MOTIVATION

Understanding Home Sellers

With nearly 55% of the homes on the market failing to sell in the first 6 months on the market, it is important for a prospective home buyer to understand that there are home sellers out there with different levels of motivation. Choosing the sellers with the highest motivation will allow the buyer to make a safe purchase in today’s real estate market.

I like to classify seller motivation levels in three distinctly different categories:

1. Considering Selling – This homeowner does not really need to sell the home. If they can get their price, they will sell. If not, they will stay in their home. This type of homeowner will not sell their home in today’s market, so home buyers who actually view the property are just wasting time.
2. Want to Sell – This homeowner has a real need to sell, but has not priced the home correctly for one of many possible reasons. Often times, this homeowner feels as if they have plenty of time to sell, so they are “starting high and will lower the price if it does not sell.” Due to the extreme glut of homes on the market, this homeowner will most likely join the ranks of the 55% “Failed To Sell” group.
3. Must Sell – This homeowner absolutely must sell the home, and the asking price of the property for sale demonstrates this. It is the best buy in its category, and all realistic home buyers view the house. This home has an excellent chance of selling, even in a difficult real estate market.

HOW DAYS ON THE MARKET CAN BE MISLEADING.

We often hear “how long does it take to sell a home?” This is a touchy subject. The short answer of course is that with appropriate liquidity in the market it is “a couple of weeks”, but there's more to that.

First of all, selling a home is not rocket science. All you really have to do is tell the people who are ready to buy a home that you have one that they will like. If it is better priced compared to the competition, buyers would want to see it. If it shows well, one or more buyers would most likely write an Offer. With the right agent a sale will ensue. So the key to selling a home is to know where the buyers are, price the home to be attractive, promote the home to those ready buyers and have an expert agent on your side to negotiate and iron out issues so that the sale happens.

We know that 94% of homebuyers are using the internet to identify a home, and we know the processes that they are undergoing in their efforts to buy a home. So the market time (which is the answer to how long does it take to sell a home) is the time that it takes to fully expose a home to this buying audience (not shoppers or lookers but actual BUYERS). Thanks to the internet, this is usually 5-10 days.

Liquidity Matters When Selling A Home

There are times and price ranges where liquidity in the market might extend this market time, sometimes considerably. For example, if you have a $1.5M home to sell, and your market area only sees two sales in this price range every year, it might take a while for that buyer to come along. But when you see multiple buyers in a price range each month, enough liquidity exists for a quick sale.

You can determine liquidity by examining the active listings and the number of recent sales in your market area for your type of property. A good agent can provide that information and any of our agents excel at that. Supply and demand is a critical component of any market, and one should not try to sell a home without a solid understanding of where they fit into the market.

So to summarize, with proper liquidity and a targeted marketing plan, market time (or days on the market) for most homes is 2-3 weeks. For most properties, anything longer than that is due to a lack of information or lack of motivation on the part of the home seller (and anybody involved advising them on the sale of their home).

Measuring Days On Market (DOM)

It is misleading when a real estate agent reports “it takes 75 days for a home in this price range to sell.” Most agents look at “average market time” and think it is a valid measurement of how long does it take to sell a home. It is not.

When somebody gathers up a group of properties and determines an average of this, what they are really reporting is the average marketing time it took to sell a group of houses based upon the last time the property was listed in the MLS. Maybe an example would make this clear:

Mr and Mrs Miller listed their home “For Sale By Owner” for 30 days to try to sell it on their own. They had no luck (as one would know reading this blog) so they hired Broker A to sell their home. The home was listed for 6 months with Broker A and the property failed to sell. The Millers listed with Broker B and probably after some reduction in price, the property sold in 50 days. So, the MLS report would show a market time of 50 days!

Total time on the market for the Millers though was:

30 days “For Sale By Owner”
180 days with Broker A
50 days with Broker B
This is a total of 260 days, yet the MLS would report it as “50 days.” There is a way to find out the cumulative Days on the Market but an agent has to do a more comprehensive analysis of the MLS data (of course, our agents do this more intensive step).

Worst of all, what about the days on the market for all the homes that failed to sell. What if in our scenario the Miller’s home never sold? How would those days be factored into the mix? The facts on market timing are just a bunch of mis-measured time frames thrown into a pot and boiled. If liquidity is abundant, the home will sell when enough of the buying market sees it, and a well run marketing campaign will achieve that in a couple of weeks.

TAX BENEFITS OF OWNING VS RENTING.

When it comes to the tax benefits of renting vs buying, the benefits of buying far outweigh the benefits of renting.

Home mortgage interest deduction: The interest paid on a mortgage or mortgages of up to $1 million for a principal residence and/or second home is deductible as an itemized deduction. In the early years of a home loan most of the payments consist of interest, so this deduction is particularly substantial during the first years of homeownership.

In Wisconsin and depending on a buyer's bracket, this deduction can reduce the cost of borrowing by one-third or more.

Home equity loan deduction: Homeowners can borrow up to $100,000 against the equity in their home and deduct the interest as an itemized deduction. The money can be used for any purpose, such as paying off high-interest credit card debt. In contract, the interest on credit card debt is not deductible.

Property tax deduction: Homeowners also get to deduct from their federal income taxes the state and local property taxes they pay on their home. This is another itemized deduction that renters don't get.

Deductible homebuying expenses: Various closing costs ordinarily involved in a home purchase are also deductible as itemized deductions, including loan origination fees (points), prorated interest on a new loan, and prorated property taxes paid at settlement.

$250,000/$500,000 home-sale exclusion: Perhaps the greatest tax benefit of owning a home comes when a person sells it at a profit. Homeowners who lived in their home for two of the prior five years prior to its sale need pay no income tax on a substantial amount of their profit -- $250,000 for single homeowners and $500,000 for married homeowners who file jointly. This exclusion can be used once every 24 months.

14 days of free rental income: Another little known tax benefit of owning a home is that the owner can rent it out for up to 14 days during the year and pay no tax at all on the rental income. In contrast, a renter who sublets his or her rental must pay income tax on all the rental income he or she earns.

Tax benefits of renting:

The only tax benefit that a renter can qualify for by virtue of being a renter is the home office deduction. This is a business deduction available to renters who own a business and have a home office they use regularly and exclusively for business purposes.

Some employees can qualify for this deduction as well. The deduction is limited to the amount of profit earned from the business each year. If a renter pays a lot of rent, this deduction can be substantial. Homeowners who are in business and have a home office can also qualify for the deduction.

Of course, the value of the tax benefits of buying a home depends on the state the buyer lives in and his or her tax bracket. Buyers who live in higher tax states like Wisconsin get the most benefit.

SHOULD THIS BROKER HAVE PRICED THIS HOME THAT LOW?.

The seller of this home at 1660 Stephan Lane in Sullivan, went first on the market with Shorewest Realtors for $325,000 in April of 2009. After a full year on the market the seller had reduced to $305,000 with no sale.

We took over the listing in April 2010 at $295,000 and after 3 months on the market we had a Offer that was contingent on the sale of the buyers' property for $260,000. The equity that the buyers needed to purchase the home on Stephan Lane was tied up in the buyers' home. Unfortunately the buyers had little room to move on the price of their home and were unable to sell in time and move up to the home on Stephan Lane.

What happened next though is quite a shocker. At the end of 2010 the seller was pressured to list with another agent "someone his kids were recommending". Sure enough in January of 2011 the seller listed the property with Realty Executives at a price - here it comes: - $200,000 AND paying more in commission and closing costs! $75,000 BELOW the last price and $60,000 below the contingent Offer! Granted it is not unusual for a seller to reduce after switching brokers but a 27% reduction especially when one has an offer for much, much higher is to say the least, unheard of. Furthermore, we had gone through a very slow Summer and Fall due to the expiration of the buyer credit. Sales pick up considerably after the holidays. So a good agent would have suggested to the seller to reduce somewhat and watch for the market reaction as showings and sales pick up. None of this happened of course. The seller said to us afterwards that his kids wanted him to unload the property.

As one would expect after a couple of weeks with the new fire sale price the home was under contract and recently closed. Did the broker do the seller justice? Even if the seller had a possible "mental breakdown" is it ethical for a broker to just take advantage of the situation and get the quick sale? I can certainly state that in 27 years in business, we have never taken an expired listing over and had anywhere close to such a dramatic reduction. Knowing what we know about the previous offer and going into the best time of the year makes this reduction obscene and the broker possibly not serving the best interests of the seller.

There have been cases where sellers have been very low on their perceived market price. If the market analysis shows higher, with the sellers' approval, we have marketed homes and ultimately gotten more than the sellers originally thought. Many clients refer to us as the Good Guys not only because we save sellers on commissions and closing costs but by also doing what is necessary to maximize sellers' net amount. Actions by few brokers as in this case, give the industry a bad name.

7 HOMES SOLD WITH HOMEOWNERS CONCEPT!

We  found out during our first sale that their agents sell a lot of homes, many more than your average broker. That is a great advantage to have when you need representation. We have listed 7 homes and condos with Homeowners Concept in the last 22 years and have saved thousands of dollars on each sale! Plus they don't charge any extra fees other brokers tack on. Each transaction with Homeowners Concept allowed us to "move up the real estate ladder" buying a more expensive home.
Our 2 agents have been highly skilled as you would expect. When we sold a home in Whitefish Bay our agent ironed out a number of issues with the inspection and occupancy. This saved us valuable time during the peak market season. When we had a cash buyer for a condo we owned in Pewaukee our agent got a bank letter to verify the buyer’s funds. Again, we did not turn other buyers away if this buyer was not qualified. Their agents know how to move fast and efficiently so that sellers can close quickly.

Since buying and selling with Homeowners Concept, we have saved tens of thousands of dollars that would have been paid in realtor fees. Why get burned twice in this current real estate market? You will get burned the first time by the poor market and you will get burned twice with the high 6% commission typical of other realtors.

We are now in our dream home but, when it is time to sell again you can bet we will be on the phone calling Homeowners Concept.

Barbara and Dr. Bob C.