Buyers - How do they search for property?

Typically, homebuyers don't walk into a local real estate office and say "I would like to buy a home, what do you have for sale?"

You should understand that real estate offices actually serve more to attract real estate agents rather than home-buyers; most real estate companies generate revenue and thus, profits, by charging their agents for space and services in order for them to operate their business. For this reason, many agents simply cannot reduce their commission, as they have to pay the enormous overhead the company has created for them Unfortunately, the elaborate buildings don't help home-owners sell their homes more quickly, easily or for more money Most deals are signed at kitchen tables or in local meeting places.

98% of all home-buyers begin their search for a home using one of five techniques. Prepare your marketing to target these areas and you will increase the number of qualified buyers who view your home effectively peaking the sales price.

Statistics on where buyers found the homes they purchased:

Internet: 51%

Real estate agent: 34%

Yard sign/open house sign: 8%

Friend, relative or neighbor: 4%

Home builder or their agent: 2%

Directly from sellers/Knew the sellers: 1%

Print newspaper advertisement: 1%

Source: 2016 National Association of REALTORS® Profile of Home Buyers and Sellers

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Here are some pitfall for some of the ways buyers begin their search:

Contacting a Lender.

Many buyers contact a lender to find out what they can qualify for before they begin looking at property.

Most lenders have relationships with specific real estate agents, so when his/her clients are ready to begin looking for a property or estimating the value of their current residence, that lender will most likely refer them to one of a handful of real estate agents who refer business back to that lender.

Most lenders will lobby hard for their client to use a real estate agent because they know that 60% of all deals without at least one agent involved do not successfully close, and the lender wants to get paid for the work he/she has done.

Contacting a Real Estate Agent.

Real estate agents prepare lists of available homes from the MLS; typically agents do not offer "For Sale By Owner" properties in these presentations for the following reasons: it is too time-consuming, the agents want to support their network, and there is always a concern that the homeowner will not agree to pay a commission to the agent.

It is important for you, as a seller, to know what the agent's motive is when preparing a list of properties for a buyer. When a person calls an agent and asks for a list of active properties to view, the agent views this opportunity as a job interview. The agent wants to impress the buyer and make sure that they secure them as a client. This is important to you because you want your home to be one of the properties in the proposal that the agent submits to the buyer.

*There are several ways of getting your property in the MLS which won't require you paying a 6% or 7% commission; we will discuss them later in this seminar. The point is, to get the highest price for your home, you want to make sure your home is in the MLS. Additionally, you want to make sure your home is included in the maximum number of agent presentations as possible, and to do this, several pictures and complete details about the property should be placed in the MLS.

The Internet

The amount of information that can be gained without even speaking to anyone is amazing. Look at this tutorial for instance. By the time you have finished reading this you are going to be armed with knowledge that will help you to sell your property in the shortest amount of time and for the highest possible price, without speaking to a single person.

*However you try to sell your home, you want maximum exposure. 1 or 2 websites won't cut it. You need to have your listing spread across 100's or real estate portals for maximum exposure.

Print.

Typically, most of the properties found in print have already been sold, especially in a hot market.

Agents actually use these publications to attract buyers. If used correctly, agents can find a lot of buyers, but using them to sell a particular property isn't realistic. Less than 1% of all homes are sold as a result of being in these magazines.

5. Driving around and looking for yard signs

Many people like to find an area they would like to live and then begin driving around that area looking at houses, pulling flyers and/or calling phone numbers off yard signs. 28% of all buyers find their homes this way.

Almost ALL real estate companies handle sign calls by utilizing Floor Duty. That's where new agents sign up to sit at the phone and get to practice on buyers when they call on property signs.
Here's the right way to do it.

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The fundamentals of the typical real estate transaction

Typically, there are two sides to every home sale: the listing side and the selling side.
The listing side is performed by the homeowner, when a FSBO (For Sale By Owner), or a listing agent. The associated tasks are:

Market the property
Manage the showings
Negotiate the Contract
Coordinate the Closing

The selling side or the side with the 'Buyers Agent' has the following duties:

Bring a qualified buyer
Prepare and present offer from buyer
Coordinate Inspections and Appraisal
Coordinate with the lender

When a listing agent is involved in the sale of a house, he/she is typically paid a commission equal to 5%-7% of the gross sales price which is then "shared" with a Buyers Agent. For example, when a house is listed, the listing agreement may call for a 6% commission, and when the home sells, the listing agent is paid 3% of the sales price and the selling agent (or Buyers Agent) is paid 3% of the sales price. The selling agent's commission is sometimes referred to as a COOP.

Many ForSale By Owners (FSBO) recognize the value in paying a COOP (or Buyers Agent Commission), but attempt to sell their home without the aid of a listing agent, in order to avoid paying the additional percentage.

The Buyers Agent is the agent that has what you, as the homeowner, needs - a qualified buyer. It is this agent that may find themselves searching properties and traveling all over town for days, weeks, and sometimes months before finding the perfect home for their buyer client.

Compare the following sales by the same listing agent

Sale Price
$175,000

Services Provided: Placed in the MLS, Yard Sign on the property, Showing Management, Print advertisements, Contract Negotiations, Closing Management

6% Commission
Listing Agent - $5,250
Buyers Agent - $5,250

Sale Price
$475,000

Services Provided: Placed in the MLS, Yard Sign on the property, Showing Management, Print advertisements, Contract Negotiations, Closing Management

6% Commission
Listing Agent - $14,250
Buyers Agent - $14,250

Here you can see that the home owner of sale 2 paid the Listing Agent $9,000.00 more than the owner of sale 1 for the exact same services. The value homeowner 2 received from the listing agent wasn't even close to the same value homeowner 1 received. This "flaw" has not been addressed for years. Consumers haven't demanded a change and no real estate companies have opted to build a company that would provide true and equal value to all property-owners.

To do this, a real estate company would have to compare the current methods of selling property, take the best attributes from each, and then apply a new fee structure that won't vary or fluctuate the value of the marketing systems currently in place. I am still amazed that consumers haven't held real estate agents accountable by requiring reduced commissions for a job that requires only a fraction of the work compared to a few decades ago. I challenge you to identify another industry where economies of scale are implemented but the fees charged and production levels remain the same. I will save you some time; there isn't one! Industries have been redesigned from the bottom up due to this very scenario. Look at the stock trading and travel industries for cases in point.

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Home Selling Methods Compared

Let's take this a little further by comparing the three main formats for selling property:

For Sale By Owner (FSBO)
Limited Service Companies---> ILLEGAL IN COLORADO
Full COMMISSION Agencies

Use the following criteria when comparing:

Do they provide Full Service - or are there tasks that the homeowner will need to accomplish i.e. showings, contract negotiations, closing management?
What is included in the marketing plan - print, MLS, yard sign, recorded information etc?
Contract Term - what is the listing term?
Do they offer an adjustable compensation plan - if the listing agents sells the property, do they reduce the commission from their advertised structure?
Sales Commission Structures - how much do they charge?

	FSBO	Limited Service Agency	Full Commission Agency
Services
Full Service	No	No	Yes
Showing Management	No	No	Yes
Closing Management	No	Yes	Yes
Contract Negotiations	No	No	Yes
Open Houses	No	No	Yes
Print Advertising	additional Fee	additional Fee	Yes
Multiple Listing Service	additional fee	Yes	Yes
Property Recordings	No	No	Sometimes
Contract Term	30-365 days	90-180 days	90-365 days
Up Front Fees	Yes	No	No
Adjustable Commission	No	No	No
Cost	$300-$2000	$2995 + 3.0%	6%-7%

*This comparison is a compilation of information from many companies nationwide, there are not absolutes but a general overview of the way the different types of companies act within the industry.

For Sale By Owner
As you can see, most FSBO companies will charge you up front for services. In most cases, they will put your property on their website and in their magazine and offer you their yard sign if they have one, but this is the extent of the service. If you want additional services they charge you per item; in some cases, they charge an additional $1000 just to manage the closing. The important thing to know is that you pay them up front or monthly, non-refundable fees and expenses, and you are missing out on 70% of the buyers looking for property. That may be why they ask for payment in advance. Over 70% of all For Sale By Owners list with an agent within 90 days due to of lack of activity or a failed closing.

Assisted Sales Agencies
These companies typically offer you a MLS listing, a yard sign and closing management for a base price of $2000-$4000 + Buyers agent commission of 3% of the gross sales price. Most of them will upgrade you to a 5% or 6% listing if you want additional or Full Service. For the most part their advertising is confined to the MLS and the Internet sites that MLS is associated with. They require a contract term of 3-6 months. Again, these types of companies are illegal in Colorado.

Full Commission Agencies
They do it all for 6-7% of the gross sales price of your property. They will require a 3-6 month contract and in most cases will not reduce the commission if the listing agent sells your property. Is your listing agent is managing your yard sign, internet, and print advertising properly? 28% of the time, they should sell your house themselves, without the aid of a buyers agent, which should reduce the overall commission paid. Most listing agents are unwilling or not allowed by their managing broker to reduce the amount of commission in these circumstances.

Using the information we have learned thus far, let's outline the logical evolution of what today's real estate companies should look like were they to evolve like companies in other industries. At the very least, let's outline what your requirements should be of any company or individual that you chose to work with.

Services

Placement in the Local MLS

Local online advertisements

Showing management

Contract preparation and negotiation

Closing management

Home For Sale Yard Sign

Inclusion on local and national websites

The only things left to determine are:

What is an acceptable Flat Fee for the listing side?
How to determine a suitable fee to pay the buyers agent for bringing a qualified buyer?

First, the Flat Fee; for the following services: MLS, internet advertising, distribution to real estate portals, showing and closing management, contract preparation and negotiation of the sale; it is our belief that taking into consideration all overhead and marketing expenses a fair price for such service is approximately $2500.

Second, the Buyers Agent Commission - It is vital to offer a commission that will not deter an agent from presenting your property to their prospective buyers. Too small a commission will reduce the overall value of the MLS, and remember, that is where 70% of all closed deals are generated. In all geographic areas, a typical commission offered to the buyer's agent has been established over time.

This fee is typically between 2.5 and 3.0%. As a home-owner, you are certainly not bound to offer this amount. You may adjust this number and I would recommend using the strength of the current market, the quality of your home, and your time frame for selling your home to determine the commission you want to offer.

This brings us to the best case scenario for listing your property for sale. Your requirements should be the following:

Full Service Listing for $2500 (Listing Agent Commission) plus 3% of the sales price (COOP or Buyer's Agent Commission) paid at closing.

If the listing agent sells the property, the total commission should be reduced to a 3% total commission minus any upfront fees. This would ensure your listing agent's diligence in attempting to sell your home to one of many prospective buyers not yet working with a real estate agent. Why? Because he/she would actually make more money while saving your even more in real estate commissions than originally contemplated in the fee arrangement, a true win-win scenario;
Your property should be displayed in the MLS as well as several Internet real estate portals; the agent should provide full management of showings, contracts, negotiations, and title company closing. You should be able to cancel at anytime with notice and without cost.

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What we would like to share with you:

Want Expert Help Selling your home?

We’ll ﻿﻿﻿sell your home for as little as $2500!

​

Buyers - How do they search for property?

Want Expert Help Selling your home?

We’ll ﻿﻿﻿sell your home for as little as $2500!

​

Here are some pitfall for some of the ways buyers begin their search:

Want Expert Help Selling your home?

We’ll ﻿﻿﻿sell your home for as little as $2500!

​

The fundamentals of the typical real estate transaction

Sale Price $175,000

Sale Price$475,000

Want Expert Help Selling your home?

We’ll ﻿﻿﻿sell your home for as little as $2500!

​

Home Selling Methods Compared

Use the following criteria when comparing:

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Proper Use of a Real Estate Sign

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Request a Consultation to Find Your Dream Home

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Interested in finding out more about listing your home for as low as $2500?

Get Your Colorado Home Sold for as little as $2500 WITH a Top Agent!

Keep Reading to Learn More!

We’ll sell your home for as little as $2500!

We’ll sell your home for as little as $2500!

We’ll sell your home
for as little as $2500!

Sale Price
$175,000

Sale Price
$475,000

We’ll sell your home for as little as $2500!

We’ll sell your home
for as little as $2500!

We’ll sell your home for as little as $2500!