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.
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.
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