Time to set the record straight on Flat Rate Real Estate Firms

I have been hearing a lot of radio and television ads aimed at making Reators look like bad folks that out to gouge their clients with “high” commissions. They claim low commissions and leave word fees out of their ads completely. But their “fees” are where they make up the difference. I plan on laying that out in this blog post

I work hard to maintain a level of integrity that is a standard that was set by my father while he was training me back in 1992. I wanted to reach out personally about the new companies that are misleading people in my industry. Lately these firms are trying to make it look as if I don’t care for my clients and are overcharging them, and worse, not providing the high level of service that I hope that I do for you. Clients are number one to me and open communication is the key to our relationship.

There are a handful of real estate companies, (I will leave them nameless at this point, But I am certain that you’ve heard of most of them), coming out and advertising all over on tv, radio and online that they will sell a home for less than a traditional broker. This is the misleading part, almost fraudulently misleading.

They say that they will save you money by charging a small flat fee as their commission. What they don’t tell you in the ads is that they charge what they call, service fees. These fees add up to over 10% of the sales price! This is the small print. See an actual example of an offer from one of these companies below. For an offer of $334,000, their service fees total $35,070 which equates to 10.5%, while my commission structure is 2.8% for the buyer side and 3%-3.2% listing side for a total of 5.8%-6%. Their fees add up to over double what the listing side broker receives in a normal transaction!

“Commissions” and “fees” are in the same boat, just labeled differently. A seller needs to add up all and compare and they will see that Realtors are clearly not the ones do the gouging!

I wouldn’t say that they are lying, they have figured out a way to say it in a manipulated way to stay on the legal side and then hit you with the small print. And that is that the service fees are not spoken to in the ads. It is a classic case of “if it sounds too good to be true…”

I wanted to get this info to you in case you know of someone falling for this type of sales tactic. Communication has always been paramount to me so feel free to call me directly if you want to discuss this right away.

Regards,

Jeff (303)794-4530

“Commissions” and “fees” are in the same boat, just labeled differently A seller needs to add up all and compare and they will see that Realtors are clearly not the ones gouging!

Are We in a Bubble? Will the Real Estate Market Crash?

Time to reach back out on this Blog and talk to home owners and reassure them of their investment in real estate. As you may have noticed in the news the interest rates are up and the market is shifting towards a buyer market for the 1st time in years. Here in the Denver Metro market the inventory of homes has grown by 400% since this time last year! More homes to buy means that buyers have a lot more time to make decisions and are not being rushed into making snap decisions. Buyers have been required to pay over asking prices for so long and those days are behind us for the time being. This does mean that prices will drop a bit but it won’t be anything like the Great Recession of 2008-2009. There are MANY reasons why it will be different and I’d love to talk with you about some of these.

First, and I don’t want to get into the weeds about the 2008 crash, suffice it to say, bad loans were handed out like candy with crazy adjustable rates and because of that people found themselves upside down with higher monthly payments than they were expecting. In other words, bad lending practice… See * below for a little explanation into this world. This type of banking led to people walking away from their homes. After all, they had very little to lose when you put 0% down and in the cases of 125% LTV mortgages, even less to lose! The foreclosure market went nuts and snowballed throughout nearly every neighborhood in America. This caused the landslide that followed for roughly 4 years. Caused mostly by this bad lending practice that allowed for little or no equity to begin with.

Since then, lending practices have changed markedly. No more funny-money loans and equity was a must. Gone were the days of the 0% loans and wild adjustable rates. Now lenders are lending to legitimate borrowers that have substantial money to put down. Borrowers are less apt to walk away from a home they put 20%+ cash into. They have more skin in the game and with the low interest rates they received at closing, they are more likely and able to make the payments and not foreclose. This should keep the foreclosure market from snowballing again.

The next reason why this market will not burst like 2008 is that the inventory of homes is still incredibly low. Even with the 400% increase year over year, we are still 75% below where a “normal” market needs to be. Homeowners were buying these homes with interest rates in the 2’s and 3’s, they want to keep that rate for as long as they can and since they have enough equity in the home, even if we see a slide in pricing, the equity will cushion that fall. This means most homeowners will NOT be upside down. With skin in the game and an interest rate that is super manageable, seller will be able to weather any storm that is approaching. This will keep the inventories down and a balance in the market so that we shouldn’t see the pricing landslide like we did in 2008.

Here’s another reminder of what drives markets. News media likes to exaggerate. News used to be just that; news. Now it seems to be more about commentary. News channels must fill 24 hours with stuff and most of that has become commentary, which is not news, it’s opinion. News media outlets like to pick and choose with stories follow the side they are on. Making some things look either better or worse than they really are so that they can sell their product and fill the air. It doesn’t matter and never will matter to me which side is doing what, that is because I like to read from both playbooks and make my own decision. I vet out what is being said and look for other viewpoints from that I formulate which path I want to follow. So, especially when it comes to the market, be wary of any “News” you might hear. Most likely it is a lot of commentary based on a little bit of news. My advice is to vet it out and find a few sources that back up the claims before taking drastic moves of any kind.

I heard recently that problems can become opportunities if you know where to look. Someone asked my wife and myself, if we could go back and do 2008 over again if we knew what we know now. Our answers were a resounding yes. The years following the worst real estate and banking disaster of our lifetimes were that of amazing heights! The market didn’t only recover, it flourished! Tenacity to live through the pain is how many people came out as winners on the other side. So my next point is to not panic. It may feel like a disaster is headed our way, but if you have the tenacity to weather the storm and you will come out of it better than before. Markets recover from crashes, they just do. Look back in history and tell me of a crash that didn’t recover. We’ve got this.

Hopefully, this has been helpful and remember, we are all in this together, so we can’t lose.

go to my website for more information regarding the Denver market. www.jeffhansencolorado.com

*When buyers entered the market back in 2005-2008, they were doing so with what many would call funny money. Lenders were offering loans that required little or NO money down. Not only that, but some loans included money for re-hab of the home you were buying thus creating a loan that was OVER the value of the current home. In some cases unto 25% more. Buyers of these homes were upside down from the day they bought them. There was a great deal of loans that were arrgesive adjustable rate loans starting out at very low interest rates and increasing over time, also in a very aggressive way. For example. lenders would offer loans with no money down and 0% interest for the first year. In some cases the rate would then increase by 1.5 to 2% each month after. Also, the loans are being handed out in risky ways. For example, there were loan products that were called “Stated” or “No Doc” loans. This is when the borrower literally “states” how much they make, They did not have to prove that they really made that amount with documentation or even a call to the employer! The borrower stated how much they made and the lender went with it… There are many more examples of the risky lending practices, but these were the big catalysts of the market crash.

No Showings On Your Home? Sounds Easy…

There are a few services advertising on radio and television that tout “No Showings” and a “Guaranteed Sale” offering an effortless sale of your home. Those guaranteed offers may even be at your asking price…(maybe not, but let’s pretend that they do…) OK, well, how is that helpful if what you really want to get for your home is the BEST possible price. In today’s market we are having our listings viewed from 25-50 times per day on the first weekend! This is truly the craziest market I have seen in my lifetime! From that, we are getting the opportunity to receive multiple offers on those homes, sometimes in the range of 15 to 20 offers! This is the true meaning of bidding war. And in these bidding wars, experienced agents are getting tens and in some cases hundreds of thousands of dollars over the asking price! So I ask, why would you want NO SHOWINGS? Seems to me like LOTS of showings is better for your bottom line. Now I know that showing your home is a pain. But I have ways of relieving that pain. Take for instance that this spring and summer I am offering to put sellers up in a hotel here in town for the first weekend that their home is on the market, whisking them away from the madness! And that way they get to reap the benefits of the bidding wars. Seems simple enough to me. Call me and I can explain.

Inventory of Homes For Sale at an ALL TIME LOW

Just a quickie here, I just ran a search for homes of all kind and all price ranges in Highlands Ranch, CO and for the whole entire town of Highlands Ranch there are only 12 homes For Sale! WHAT?! That is a record! Contact me for more information regarding your town!

Go HERE to get assistance from an experienced realtor.

And go HERE to get assistance from an experienced lender that WILL Pre-Approve you!

Good time for buyers to buy homes? Yes. Finally…

Wanting to Sell VS Needing to Sell

For many years it has been difficult for buyers to buy homes without being subjected to a crazy bidding war. The inventories of homes for sale were historically low while at the same time, buyers were wanting to get in on the hot market. This caused some of the most insane offers to be made on homes. Sellers wanted in on that so they tried selling their homes at super high list prices and in most cases got that or more! Sellers in these cases wanted to sell.

Those markets do not last long. Most of the time, in normal markets, sellers need to sell. For example, their companies transfer them out of town, there’s a divorce or a death in the family, etc. These are not times that sellers want to sell, it is when they need to sell. We are now in a market that is seeing more sellers that need to sell and don’t really want to sell; it is not the time to test the market. During these times, the sellers’ focus is not on how high they can push the market price, it’s on how quickly can they get this home sold. They tend to price their homes more reasonably and are willing to work with buyers to find a fair price. 

This is amplified in the slow times of the year. Seasonally, homes sales change. Springtime is historically the hottest time to sell, and the holidays are just the opposite. 

For buyers we are in what could be considered a “perfect storm”. The market has slowed enough that the sellers that are on the market because the need to be not because they want to be, along with the fact that we are heading into the holiday season, so those on the market now are wanting to get rid of their home as soon as they can. This makes for a buyer’s market. Plus with the low interest rates, we have not seen a market skewed in the buyers side in years! So yes, it Finally is a great time to buy a home.

Go HERE to get assistance from an experienced realtor.

And go HERE to get assistance from an experienced lender that WILL Pre-Approve you!

 

What You Don’t Want To See On A Home Tour

How about another edition of WYDWTSOAHT?

As a realtor it can be difficult to describe what can go wrong with the structure of a home. Certain homes are constructed incorrectly or on land that has issues with the soil making it susceptible to structural problems in the future. One example of this is when a home is built on land that has a high concentration of Bentonite soil. Bentonite will expand when exposed to water. This expansion can cause cracking in the foundations of homes. A lot of times the expansion goes unnoticed, except, that is, to the trained eye. In some cases, however, the untrained eye picks up on it…. See below!

This was in the basement floor of a home I showed a few years ago. Of course it spurred on a conversation with my buyers and of course they did not buy this home. We discussed the issues soil can cause on foundations and they were educated so that their eyes became “trained eyes” Let me do the same for you.

 

Go HERE to get assistance from an experienced realtor.

And go HERE to get assistance from an experienced lender that WILL Pre-Approve you!

One Reason for Denver’s Real Estate Market’s Health

Real Estate stuff; If you own a home in Metro Denver, You are doing quite well! And it appears to be something that will sustain for years. Here’s one of the reasons why that is: The inventory of homes in the city of Denver is just over 1000 homes for sale! 1000! In Littleton there are only 185! And if you happen to live in Highlands Ranch and wanted to sell your home right now, you would only be in competition with 61 other sellers!!!! That is right, 61 homes, (or condos) for sale in ALL price ranges! WOW! Supply is low, so prices are rising.

Go HERE to get assistance from an experienced realtor.

And go HERE to get assistance from an experienced lender that WILL Pre-Approve you!

Homework

Sometimes when I list a home, I need to give advice that the homeowner and/or the neighborhood might not be to keen on. For instance, in older neighborhoods there are older trees. Older trees become fixtures in some neighborhoods. But older trees can start to look a bit shabby. They aren’t quite dead, just having a bad couple of years. There is a debate on whether or not these big trees will recover and if so, how long will it be before they are the beauties they used to be. In the meantime, people must sell their homes and to do so, need to have it’s curb appeal top notch. It is controversial for me to suggest that the tree, experiencing a few bad years, has become an eyesore and is hurting the curb appeal of the home. But, you can see from the photos below, that it makes a difference. The point of this “Homework” is that, some decisions are hard when trying to get your home ready for sale. But those hard choices can make a dramatic difference. And it could be that difference that makes the sale successful. I love trees and never want to see one taken down; But, sometimes, for the good of the home and the neighborhood, it’s time.

BEFORE

AFTER

WYDWTSOAHT

I showed homes yesterday in Washington Park and ran into another What You Don’t Want To See On A Home Tour example. Can anyone tell me what this is?

Nope, Scarface doesn’t live there, that is not what it looks like. We saw this powdery substance on the chair and wondered what was going on and then my buyer looked up and saw this:

You can see that there is some active water damage going on in the ceiling above. Clearly this is new to the seller and I am pretty certain that they are not even aware that there was a leak. So in this case, it IS something the you DO want to see during a home tour. It is something that can be easily fixed and not necessarily a “deal killer”. The sellers were informed and the problem solved. But not knowing about it during the home tour could have been bad…

Sometimes you see these little leaks turn into big problems, like the home we saw 3 homes later!

No kidding, this happened to the same buyer on the same home tour! We seemed to be attracting homes with water issues that day! This one looks a bit more serious and this would qualify as a WYDWTSOAHT…

As always, I encourage you to browse the blog to see more WYDWTSOAHT posts and other interesting Real Estate Related blog posts… Also, stay tuned for future WYDWTSOAHT posts.

Go HERE to get assistance from an experienced realtor.

And go HERE to get assistance from an experienced lender that WILL Pre-Approve you!

 

What You Don’t Want To See On A Home Tour

Here’s another edition of WYDWTSOAHT!

A lot of homes have mice. It’s a fact of homeownership; either you’ve had mice of will get mice. How you handle the situation is what matters. Hiring a professional is recommended, but not cheap. DYI is usually the route homeowners take. Here is a tip, when selling your home, have the mouse problem under control so that you do not “showcase” the fact that you have the little buggers running through the home by leaving traps in every room. Nothing ruins the mood of a buyer like to sight of a dead mouse in a trap! If trapping is necessary, use store bought and not some of the homemade beauties I’ve seen out there, like this one I recently saw in a home in Denver:

I have no idea how this works, but it does, here’s proof:

Look closely, there is a floater in there! Yuck.

This one definitely qualified as a “What You Don’t Want To See On A Home Tour!” Have a great day and remember, sometimes it makes sense to leave some things to the professionals…

Browse the blog to see more WYDWTSOAHT posts and other interesting Real Estate Related blog posts…

Go HERE to get assistance from an experienced realtor.

And go HERE to get assistance from an experienced lender that WILL Pre-Approve you!