"For Sale By Owner" IS A LOSING GAME.

Even though selling as a pure For Sale By Owner (FSBO) can be the cheapest way to sell, it is BY FAR the least successful method around. The last year that a national survey was performed (2013) showed that only 14% sold this way and we're sure some of them actually had to pay a Buyer's Agent (ultimately paying around 3%) to sell. Of the 32 FSBOs that we tracked in Metro Milwaukee in 2013 and 2014 only 6 did not convert to sell with a Realtor at some point and may have sold as a FSBO (7 actually converted to our program).

The very reason we exist is the result of FSBOs. It was winter of 1984 when our founder walked away from buying a For Sale By Owner (FSBO) after he realized the Buyer's legal cost and time away from work necessary to meet with a lawyer (lawyers are NOT fond of meeting after business hours). He wondered how many other buyers walk away from buying a FSBO if Realtor assisted homes are easier to make offers on. A little research at the central library consisted of surveying 100 FSBOs from the newspaper ads of 3-6 months before, showed that very few sellers were successful (at that time only 16% of FSBOs were able to sell without any Realtor help). THE SUCCESS RATE IS DISMALLY LOW. It was then that he realized that there it has to be a better way for real estate to be sold and Homeowners Concept was born as the "missing link" for FSBOs to achieve the Realtor advantages without the hefty commission.

It is the time one loses trying to sell as a FSBO (usually 9-12 weeks) that damages the home's chance of getting sold or getting sold at its highest price. It is the buyers' reluctance to enter negotiations with the seller directly and spend hundreds if not thousands of dollars in legal fees plus maneuver through the transaction on their own that dooms the FSBOs. Most buyers do not want to spend ($500+ upfront ) on a retainer to make an Offer to a seller. If the Offer does not go together the retainer is gone. If any issues come up during negotiations or inspection (and these days it seems that there is always inspection issues) or thereafter it is more money the buyers are on the hook for. Can you blame Buyers for skipping buying a FSBO?

One of the fallacies sellers have is that a buyer will use "their" lawyer to do the buyer contract, counters, amendments, etc. That is extremely rare as buyers are reluctant to go to the seller's attorney. Keep in mind that attorneys list their homes with Realtors at the same rate as any other profession (THEY know better). Over the years we have had hundreds of sellers who were trying it on their own, turn to our company and within a number of days to a few weeks get an accepted offer as a result of us being involved.

With our 1.5% commission there is absolutely no reason why anyone would want to attempt selling FSBO. If sellers knew all the facts, they would never resort to sell a property as a FSBO not as long as companies like Homeowners Concept are around.

ABSOLUTELY, POSITIVELY NO NEED TO PAY 5 OR 6% COMMISSION!

We've proven beyond a shadow of a doubt that using Homeowners Concept is an extremely successful way to sell a home and at the same time save on commissions (even our top tier of 3.9% saves a seller thousands of dollars on an average home). Just think about the stats for a minute: Homeowners Concept is celebrating its 31st year in business, we have sold upwards of 23,000 properties, saving sellers close to $75 million in commissions. All that business was handled by top notch Realtors who've been in business much longer and do many more sales per year than the average agent. AND to top it off Homeowners Concept has maintained an A+ rating with the Better Business Bureau, unlike other large real estate firms charging 5 or 6%, which have not!

Unfortunately many sellers continue to waste money paying 5 or 6% commission all the while working with mediocre agents. The REAL ESTATE INDUSTRY HAS DONE AN INCREDIBLE job BRAINWASHING people into paying high commissions. Would you buy or pay more for a home because the owner is paying more commission to an agent? Of course not. On any given week, hundreds of homes expire unsold in our local MLS that were on the market with any of the high commission companies. There is no shortage of unhappy sellers who were going to pay 6% and did not sell or sold at a much lower price (sometimes after multiple reductions) than they were told. NO REASONABLE person can argue that paying a high commission will give one an advantage over someone who's paying our 1.5% or 3.9% commission, considering the marketing and expertise we offer is at higher levels than the competition.

Speaking about marketing, not only do we offer all the real estate websites INCLUDING the top 2 sites Zillow and Trulia (which, believe it or not some 6% agencies exclude their listings from!) we also offer our own website AND our own magazine! Now that's what you call, covering ALL avenues for buyers to find your property. As one creates more demand, one has a better chance of selling and selling at a higher price.

SELECTING A TOP REALTOR IS KEY TO A SUCCESSFUL AND SMOOTH SALE.

Buying or selling a home is the single largest transaction that most consumers undertake. The process can be filled with uncertainty, emotion and pitfalls, so most buyers and sellers choose to work with a real estate agent to help them through the process. Selecting an agent is obviously an important step, and most consumers would agree that agent expertise and experience should weigh heavily in that choice. The shocking statistic is that the majority of home buyers and sellers select agents who have little or no experience closing real estate transactions.

Most Consumers Do Not Select Experienced Real Estate Agents

If one delves into the statistics one can see that the average agent sold a little over 6 properties in 2014 in metro Milwaukee. That is one every other month. Hardly enough to be an expert in this field. If one removes the number of sales from the top 200 agents (practically all of Homeowners Concept Realtors belong in this elite list) then we are left with 2,800+ agents that only did 3 to 4 deals last year. Surprised by the data? Most people are. If there is one thing that can be said for our industry, it is that there are loads of hucksters and part-timers out there who fast talk their way into a couple of deals each year. Consumers can do better.

How Many Transactions is Too Many?

A small group of agents closed a very large number of transactions in 2014. A few agents closed more than 80 transactions last year. Certainly they have significant transaction experience, but realize that the only way this is physically possible is by working with a substantial team of folks or by sacrificing service. There are only so many hours in each work week and in the high commission world an agent spends considerable time trying to get listings. If you are planning to work with a very high volume agent, recognize that you will be interacting more with their team than with the agent who is getting credit for the transaction, or you may be sacrificing service levels because your agent is assisting so many customers. You will want to understand who is on the team, and when exactly you will get to work with the main agent, along with getting clarity on the service levels that they provide to you.

Striking a Balance

Consumers should require that their agents demonstrate results. Stick with full-time agents who do this for a living and are closing at least 2 to 3 deals per month, and you’ll be using an agent in the top 5% of all agents in Greater Milwaukee. Our own agents consistently rank in the top 5% of agents (and of course, the savings in commissions is a bonus!). We are able to close more deals than a typical agent by focusing 100% of our work on selling homes and closing deals, not on trying to prospect for clients (our program sells itself). Also, we strategically do not hire too many agents.We only hire upon demand and only have full time agents that have been in business for at at least 5 years (for proof call around any of the traditional brokerages; if you're licensed they'll hire you). Consequently, our agents sell between 4 and 11 times as many homes per year as the average agent. Consumers should be more diligent when selecting their real estate agent and make sure that they select agents who have substantial experience getting deals done.

OUR LISTINGS ARE ON ZILLOW AND TRULIA, UNLIKE OTHER COMPANIES'.

Up until mid April of 2015, listings of the SE-WI MLS were automatically fed to Zillow and Trulia (the #1 and #2 real estate websites). Since then however, companies have to individually engage and pay additional money to feed their listings to Zillow and Trulia. Homeowners Concept has done so. Interestingly, most of the other large real estate firms are still absent from these very powerful websites.

Furthermore for the past two years the largest firm in Metro Milwaukee has been excluding their listings from Zillow and Trulia. The reason this local company and some of the others recently, have decided not to display their listings on the top websites is that they lose buyers to other agents who advertise alongside each property. By doing so though, they compromise their sellers' ability to get maximum exposure for their home and ultimately sell in a timely fashion and for the highest price. BOTTOM LINE, greed trumps ethics. If only sellers knew the REAL reason their home does not show up on Zillow and Trulia!

Home sellers think they're better off signing up with a couple of the largest local firms but what they don't realize is that company size is completely irrelevant to buyers. Latest data shows that almost 95% of the buyers find their eventual home on their own, primarily using these 2 real estate sites. So not having your home show up there, is definitely a disadvantage in getting top dollar.

This is a perfect example that Homeowners Concept's Full Service programs provides more marketing than having to pay 6% which ultimately results in a higher offer.

ARE YOU GUILTY OF THIS?

People say some of the craziest things.

We're sure you've heard (and perhaps even uttered) one of these phrases listed below.

And before we explore them one by one, consider why the perception of value is so often clear in one case, and yet totally ambiguous in others.

Value Is In The Eye Of The Beholder

Opinions of value versus cost will be uttered all the time, perhaps you've heard such things as:

• There’s no way I’m going to pay $8 for a beer
• I can’t justify spending $200 on a pair of shoes
• We won’t be going there for vacation, airline prices are too high
• I’ll get the T-bone, the filet is way too pricey
• I’ll wait to watch the movie when it's at the budget cinema

Most people seem to be pretty sensible on how they spend their money on daily purchases. Nobody likes to spend too much, even when it’s not a financial concern, not overspending is often an issue of pride.

The Value Of The Right Real Estate Professional

So if you’re with us up to this point, let us hit you with the “craziest thing” that we referenced at the beginning of this post … it’s something that is heard by real estate agents across the Country all the time … when talking to somebody looking to buy or sell a home. Here’s what they say:

• I hired my friend, he has a real estate license

Seriously? We’re not talking about an $8 beer or a $200 pair of shoes. We’re not even talking about a $3000 vacation. We’re talking about a decision that is likely going to cost the customer $12,000 for an average home of $200,000.

Why is it that people don’t think ahead before they hire somebody to help them sell a home? Is there a difference between a highly trained and experienced negotiator versus somebody who works in an industry part-time or has not been in business for very long? Is it worth your time to find out?

We cannot stress [strongly enough] the importance of investigating  for the job of selling a home and for the job of helping you buy a home.

There are huge differences in service and capabilities that you can discover, all you need to do is a little research. Perhaps the same amount of research you would do to find the best deal on a family vacation.

So do yourself a favor and save some money when you buy or sell your next home. Talk to multiple agents and find the one that will ensure you get the best deal. If you've been on the Homeowners Concept website for more than a couple of minutes you've probably come to the conclusion that we offer much more highly skilled Realtors than the average agency (most of our Realtors are in the top 200 agents of Greater Milwaukee - out of 3,000+) and charge less commission and no administrative fees. Making an intelligent decision is well within your reach.

WHY, ON AVERAGE, PAYING A HIGH COMMISSION GETS YOU MEDIOCRE SERVICE.

The majority of people complain about the high real estate commissions, yet most home sellers mainly due to ignorance, continue to pay a high 5 or 6% commission. If only they knew! While they pay a hefty commission, most sellers and buyers end up working with an agent that is less experienced and has limited time in business than one would get from Homeowners Concept (our agents sell 3-4 times more homes per year than the average agent, have 19 years in real estate vs 5.5 and the company has maintained an A+ BBB rating for 30 years now!). And to add salt to injury, the vast majority of sellers pay hundreds more dollars in administrative fees at closing in addition to the 6% commission!

The problem with charging high commissions stems from the way the traditional companies operate. There are way too many agents for the amount of sales. The traditional offices count on each agent to bring in some business from their circle. The brokerages will split usually 50-50 the commission with an agent that does just a few sales a year. Once an agent becomes a "big producer" and has many sales a year then the office has to give the agent a higher split, sometimes up to 80%, otherwise the agent will leave for a competing company. So, it is to the company's advantage to keep hiring and maintaining sub-par agents not only for the new business but also because it is much more profitable for the company.

Don’t believe this? Go around and interview to be a potential agent at many of the real estate companies. Many have extremely low bars to entry and simply want an army of low-producing agents to fatten their bottom line. These mediocre agents eke out a modest living via their personal network, and the brokerage takes home fat commission splits. After a few years, the majority of new agents drop out of real estate because they cannot get to a level of having sufficient amount of sales to get to higher splits and make a decent living. Let's face it, a higher number of agents working the metro area does not translate to more sales. You never hear how many sales per agent a company produces but only how many agents they have. That is why the quality of agents remains strikingly low in our industry and is also a primary factor in why commission rates to sell your home remain so high.

Think about it; a more efficient and effective program such as Homeowners Concept makes so much sense for the consumer. Fewer agents who negotiate and close a lot of sales each year, who are extremely proficient in real estate yet charge a low commission but enough to make a living. This way, the consumers (sellers and buyers of properties) win as they get to work with someone who truly is an expert yet pay a reasonable fee.

THE EMOTIONAL SIDE OF REAL ESTATE

If there is one piece of advice we can offer to home buyers today, it’s that emotions seem to rule the day for some home sellers in today’s market. If you can recognize that there is a human being on the other end of the transaction who may be driven by emotion or irrationalities, you will be able to craft an offer and approach the results in a successful sale at a fair price.
As a home buyer, you may feel emboldened by what you have heard or read about today’s housing market in certain locales. Friends and family may offer up a variety of semi-educated advice about how to take advantage of the situation. Our experience with thousands of offers over the past few years has shown that overly aggressive up-front offers may reach a dead end, or backfire on you in later inspection negotiations.
When we represent buyers, our job is to get the property at the best possible price. That obligation is balanced by a competing factor, which is that we also must help you to actually get the property under contract. Having seen thousands of deals over the past few years, I can say with quite a degree of certainty that extreme low-ball offers are not the path to success with home sellers. A very low offer from a buyer with a large range of negotiability is almost certainly going to get a worse result than a more carefully thought out offer that involves less negotiation. Here are some of the emotional factors that may drive how a home seller negotiates with you.

1. Attachment to the home – Never underestimate a seller’s personal attachment to their home. If they’ve lived in it for years, brought up children there or celebrated other major life events in the home, parting with the home can be difficult. Many sellers have a conscious or subconscious desire to see the home passed to someone that they feel good about. They may make this judgment based on the offer terms you are presenting.
2. I’m offended – We've seen some of the most rational, data-driven creatures come totally unglued when presented with what they feel is an unfair offer. Sometimes they legitimately get their feelings hurt, as they perceive their home value differently than the buyer. Many times they just don’t think you’re a serious buyer. (Clearly you are, if you spent the time to write up an offer.)
3. My home is better than the neighbors’ – This is a tough one, particularly in fairly homogenous neighborhoods. Sellers may perceive their yard, lot location, or the finishes of their home as wildly superior to their neighbors. All you can do if offer up your own opinion and analysis of competing properties, but some gaps simply can’t be bridged. A private backyard may be worth $20k to one buyer and nothing to the next.
4. I just spent $70k on upgrades, so my house is worth $70k more – Recent upgrades were likely costly, and their memory is fresh in the seller’s mind. New countertops or updated bathrooms do legitimately add value to a home, but not on a dollar-for-dollar basis. Other upgrades like a new roof or siding may simply be maintenance items that add no measurable value to the home. They simply make the property more sellable. Try to step back from debating the value of individual upgrades and focus on the overall price of the home and how it relates to similar sales in the area.
5. I just lowered my price – There is a totally predictable psychology at work when a property is first listed and each time the seller makes a price drop. Negotiability in the first few days or couple of weeks is definitely limited.
6. Get to the point – Most sellers do not relish negotiation. It makes them nervous and uncomfortable. Craft an offer that will get you to your desired result in 2-3 steps at most. Any more than that, and I can almost guarantee that a seller will begin to feel that they are being taken advantage of or that they are being nickeled and dimed.
7. Don’t forget about the inspection – Unless you are buying a brand-new home, you are going to be worried about repair and maintenance items that show up during your home inspection. Buyers want perfection, and long-time home owners recognize that every older home has issues and ongoing maintenance items. If you beat a seller down too hard on price during the initial negotiation, there is not going to be anything left to give if your inspection turns up issues that you want fixed. We find that inspection negotiations can often be more contentious than initial price negotiations.

You should always try your best to negotiate a great deal on a house, but if you can put yourself in the seller’s shoes for a moment and acknowledge some of the emotional factors driving their decisions, you will craft offers that have a better chance of success. Nothing here says that you should overpay on a house, and if all of the data tells you are overpaying, sometimes letting more time pass is the only solution that is going to get the seller in a frame of mind where your offer can be successful.

HOW PAYING LESS COMMISSION MADE THIS 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 hundreds extra in 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). Every once in a while a seller refuses to listen to facts and market data. And paying much more commission and extra fees makes absolutely no difference to a buyer as these sellers found out.

WHERE IS THE BEST PLACE TO GET A MORTGAGE?

Getting a mortgage can be a daunting task to the uninitiated, but it pays to understand the process upfront and pick the right mortgage company to work with to ensure a successful and quick closing.

When getting a mortgage, there are three key individuals in the process: the loan officer, the loan processor and an underwriter. Your interface to the lender is a loan officer, sometimes called an account manager or mortgage banker. Their job is to collect a complete and accurate loan application package from the borrower, and provide quotes and estimates of your loan terms. Loan officers usually have a processor that helps them to gather, submit and track application status along the way. The other key person in the mortgage process is the underwriter. The underwriter reviews loan files to see if they fall within the lender’s lending guidelines and are the ones who will ultimately approve or deny a loan application.

Choosing the Right Mortgage Professional

You have countless choices of loan officers, but many buyers make a critical mistake and simply walk into their local bank or credit union branch to apply for a home loan. In-branch loan officers often wear many hats taking loan applications, opening checking accounts and processing deposits. Anything not mortgage-related is a distraction, and you are best served by loan officers who do mortgages for a living. Moreover, many of the loan officers at bank branches are on salary or salary plus commission so are not as dependent at trying to complete each loan timely.
Mortgage brokers do not originate loans, but simply act to broker your loan application to an appropriate mortgage lender. Mortgage brokers have an advantage over banks or credit unions because they can place the loan with any of the lenders in their portfolio. Having the ability to shop the loan and not be bound by the underwriting criteria of one particular bank or credit union is a clear advantage these days. Furthermore all mortgage brokers have to be individually licensed by the state while loan officers working at a bank do not have to (they work under the bank's license). In other words you find more experienced and more seasoned loan officers at a mortgage company which results in not only knowing upfront that the loan can be funded but also how it should be processed so that it is underwritten and eventually funded at closing.

Ask the Right Questions Before Applying for Your Mortgage

Nothing is more painful than loan delays when closing the purchase of your home. One way to avoid them is to ask the right questions, which almost no one does.

1. Where is my loan going to be processed and underwritten?
2. What is your current turnaround time for loan underwriting?
3. Do you have a mechanism for escalating files that are in jeopardy of being delayed?
4. Can you provide statistics on what percentage of loans you close on time?
5. Will you provide any guarantees or fee reductions if my loan is late?

By asking the right questions upfront, you can avoid painful loan delays at the back end of the home buying process.
We have had great success with Netcentral Mortgage as they have helped in making numerous loans in the past 14 years that other banks and credit unions could not. They're extremely competitive and they can be reached at 414-258-7833.