Archive for the ‘Home Selling’ Category

For Sale By Owner (FSBO) Myths (And a Couple of Facts)

Friday, June 17th, 2016

Updated in 2016…

With more than 90% of prospective buyers beginning their home search online and multiple web outlets for listing publication, it seems that more sellers would be bucking the broker’s commission and listing their property for sale by owner (FSBO). Cutting a commission by 3-6% could save thousands of dollars, but it would also put some real estate brokers out of business. At RealDirect, we recognize that the traditional method of selling real estate needs to adjust and embrace a new way of doing things in order to stay relevant. However, to many brokers who are wedded to a standard commission, the easiest way to keep money coming in is to use fear. Fear that selling with anyone but a traditional broker is hard. Fear that buyers’ brokers won’t show homes that are not listed with the big brokers. Fear that sellers won’t know how to price their property. While the list goes on and on, most of these fear tactics are inaccurate at best, and outright lies at worst. If you’re thinking about selling your home without a traditional broker (or a FSBO), we’d like to debunk some of the for sale by owner myths (and share a couple of facts).

Myths

Myth: If you don’t list with us, we won’t bring our buyers.

Fact: Buyers’ agents want to earn a commission. If their client says they want to see a property, agents will typically try to work out a deal. However, getting brokers and owner to agree to a deal can be tricky, with many of the large brokerages refusing to show homes where they do not have agreements in place. But by working with an FSBO like service such as RealDirect’s Owner Managed service, we take care of the agreement, so it will be easy for brokers to show your home. Plus we are members of the Real Estate Board of NY – which is the de facto MLS in NYC. Being a member of REBNY requires that you co-broke with all other REBNY brokers.

Myth: You’ll get more money if you sell with a traditional broker.

Fact: That’s just plain fuzzy math. First, this does not take into consideration that the net proceeds could be higher with alternative sales models because the closing costs are lower (i.e. commissions) even if the sales price is lower. But even if you do not take that into consideration, if the property is marketed to every possible buyer, as done with RealDirect, the sale will be highly competitive, and you will get the highest possible price.

Myth: It’s too much work for you to handle on your own.

Fact: Maybe. It depends on how much time you’re able to devote to showing and answering questions about your home. That’s why RealDirect offers different listing options which allow you to handle your own showings and open houses or have a licensed agent do them for you. Our platform has baked in marketing that covers all the mediums a traditional broker would use (and several they don’t). We’re available to negotiate for you, or you can handle it yourself. Because every situation and every seller is different, we don’t prescribe to a one-size-fits-all real estate model and we don’t believe in one-size-fits-all pricing. You shouldn’t have to, either.

That said, there are some scary things brokers will tell you that are actually accurate.

Fact: People won’t find you unless you’re in the MLS.
Your local MLS is what most buyers’ brokers use to find properties for their clients, and also where sites such as Streeteasy, Trulia, Zillow and others get some of their listing info. While it’s certainly possible to find a direct buyer by doing your own advertising, if you want to appeal to the widest buyer base possible, it is critical that your listing appear in the MLS. And being in the MLS (or REBNY database in NYC) will also help you with the next one…

Fact: You have to offer a buyer’s broker commission.
While you can forego paying 2.5-3% to a seller’s broker by listing your home “for sale by owner (FSBO)”, if you want brokers to bring buyers to your home, you have to be willing to pay their commission. You can opt to only show your home to direct buyers with a strict “no brokers” policy, but in doing so, you eliminate every single buyer who wishes to work with a broker instead of representing themselves – and that is the majority of buyers. And eliminating buyers from the buyer pool can result in a lower purchase price, and work against your sale.

So the key to successfully selling your home as a FSBO is to do your research, understand how the process works, realistically evaluate your level of time and willingness to do work, and make a decision you’re comfortable with. Scare tactics are just that. Don’t believe the “for sale by owner” myths.

How Real Estate Brokerage Commissions Work

Friday, April 24th, 2015

Before I became a real estate broker, I thought I knew how real estate brokers were paid. Listing brokers would simply split the commission with the buyer’s broker, and everyone took their money at the closing and lived happily ever after. And if there was no buyer’s broker, I figured the owner of the property would save the buyer’s broker commission.

Well, I clearly had no idea how it all worked. Here are some of the common misconceptions about real estate brokerage commissions, and the truth about how real estate brokerage commissions work.

1. Real Estate Brokerage commissions are way too high!
Actually I started RealDirect because of this myth, but eventually learned this was not, in fact, true. What I did discover, however, is that real estate brokerage commissions are almost always wrong. For every deal that closes in 2 weeks from when the property was listed, there are others that are on the market for a year and then get de-listed, only to be given to another brokerage. In the first case, the broker probably received a windfall for 2 weeks’ worth of work. But in the second case, a year’s worth of work was provided for free. So in all likelihood, any given deal is probably paying too much or too little to the broker.

2. Real Estate Agents can cut their commission to get a deal done.
While some agents will cut their commissions to get a deal done, not all can. Depending on the price of the home, the number of agents on the deal and the commission offered, it may or may not make sense to reduce the commission. And some brokerages have a blanket prohibition on this.

3. Real Estate Agent commissions are fixed by the brokerage.
Rarely do brokerages have fixed commissions – but they will often have minimums that they will take, and those are often tied to gross commission revenue rather than percentages per deal.

4. All Real Estate Brokerage commissions are 6%.
Commissions vary by region and company with some higher than 6% in low price areas with slow moving inventory, and lower in others.

5. Real Estate agents split their commissions evenly with their brokerage.
Commission splits vary dramatically between brokerages and even withing brokerages. There are 100% commission brokerages, where agents pay a fixed transaction fee per deal, and a monthly “desk fee”, and more traditional brokerages where the split is determined by how much business a broker does – i.e. the more business they bring in, the higher the split.

6. Real Estate Agents split the commission evenly between buyer’s and seller’s agent.
Listing agents offer what appears to be a 50:50 split, but it doesn’t have to be. Many listing agents are willing to pay more to buyer’s agents than they are getting for their listing.

7. If I don’t use an agent, the listing broker will make more money.
In many cases, listing brokers will keep the entire commission if the buyer comes without a broker. But some brokerages, like RealDirect, take a fixed commission or fee regardless of whether there is a buyer’s broker – so the seller gets the benefit of a direct deal, and not the broker.

8. If I don’t use an agent, the owner will save money, making my offer better to them.
While this is true for RealDirect, and for FSBO sellers, in most situations, as we have said above, the owner does not benefit from direct deals. So using a service like RealDirect for Buyers is the best way for buyers to gain an advantage on a purchase.

Kitchen Renovations for Resale: What You Get For the Money

Friday, April 24th, 2015

From a few hundred dollars for some paint and new hardware, to a six-figure gut renovation, updating a kitchen can be accomplished in a multitude of ways. Whether your kitchen just needs to be freshened up, or requires a complete overhaul, you’ll want to create a space that works for your own needs and adds to the resale value of your home. We’ve put together this guide to help you determine what your kitchen renovation needs really are and how best to accomplish your goals with an eye to resale.

Before undertaking a kitchen renovation, it’s important to assess your needs. Ask yourself the following questions:

What is my budget?
Does my current kitchen layout work?
What condition is my kitchen in? Can it be refinished, does it need to be gutted, or somewhere in between?

Once you have a clear picture of what needs to be addressed and how much you want to spend, you can move forward with your renovation project.

The Budget Kitchen Overhaul:
kitchen has functional layout, working appliances, cabinets & countertops in good condition
-paint walls
-paint cabinets
-change hardware
bonus – change out flooring, laminate, peel & stick, tile, add backsplash

Entry level renovation:
kitchen has functional layout, may need new appliances, countertops, floor
-paint walls
-paint cabinets
-change out light fixture
-new countertops (laminate)
-change out flooring
-add backsplash
-new hardware
-stainless steel appliances

Mid-range renovation
layout doesn’t work, nothing is salvageable
-new kitchen layout
-move plumbing
-midrange appliances
-rearrange cabinetry
-new cabinets (Ikea or Home Depot)
-new hardware
-new flooring
-new fixtures

High-end renovation
custom everything
high end appliances
architect design

http://www.remodeling.hw.net/2011/costvsvalue/division/middle-atlantic/city/new-york–ny.aspx

budget:
paint
flooring
backsplash
diy

low:
ikea cabinets
tile
stainless appliances

mid-range:
pre-fab cabinets
solid surface countertops

high end:
custom cabinetry
space reconfiguring

The First 24: What Happens Once Your Real Estate Listing Is Published?

Tuesday, July 17th, 2012

RealDirect's marketing outreach includes direct mail which is created and ordered within 24 hours of listing publication.

One of the cornerstone beliefs at RealDirect is creating efficiency in the real estate process through the smart use of technology. That’s why we’ve built a listing management dashboard that allows users to edit and update their listings, view stats, offer available showing appointments, set open houses and get helpful suggestions at any time. It’s also how we manage to accomplish an incredible amount of marketing outreach for each of our real estate listings within the first 24 hours of publication. (more…)

From Offer to Close in 10 Easy Steps

Wednesday, May 16th, 2012

When talking about the process of buying and selling real estate, the conversation often revolves around listing your home, finding the perfect place, or negotiating an offer. A less glamorous, more stressful, but equally important part of the real estate process is what happens to get the deal done. Here’s the process, from offer to close for a NYC co-op, in ten easy steps.

Step 1: The Offer
Buyer and seller, either on their own if unrepresented, or via their brokers, negotiate an offer. This process includes disclosure of financials including loan pre-qualification if financing is involved and discussion of contingencies if any.

Step 2: Contract
If both parties can come to an agreement on price and contingencies, a contract will be drawn up by the seller’s attorney. This contract is based on a deal sheet written up by the seller’s broker (if there is a broker). The deal sheet contains information such as the property location, price, terms of sale, contingencies, and names of all parties involved in the transaction.

Step 3: Due Diligence
While the contract is being drawn up and negotiated by both parties’ attorneys, the buyer’s attorney will conduct due diligence on the standing of the building. This includes looking into the building’s financials, completing a title search, and reviewing board minutes and the offering plan. This is also the time for buyers to conduct a home inspection if they wish.

Step 4: In Contract
Up to this point, though there is an accepted offer, the buyer and seller are not technically “in contract.” This means that the seller can continue to show the home and entertain other offers. Often, these offers are accepted only as back-ups in the event that the initial contract falls through. Once the attorneys finish negotiations, both the buyer and seller sign the final contract. At this point, the buyer will pay a deposit to be held in escrow by the seller’s attorney until closing. Once the contract is signed by both parties and a deposit is made, the listing is considered to be “in contract,” and no longer available to the market at large.

Step 5: Financials
Once the listing is in contract, the seller’s attorney will order the payoff file from the homeowner’s existing lender. During this time, if the buyer is using financing, they will move forward with the process of obtaining a mortgage. Contracts will generally allow 30 days or more for the buyer to obtain a mortgage commitment. The bank offering the mortgage commitment will complete an appraisal on the property to ensure that they are making a secure investment.

Step 6: The Board Package
Concurrent to the buyer securing financing, the buyer and seller (with their brokers, where applicable) will work on assembling the board package. Required documents vary from building to building, but generally consist of the sales application and contract, verification of employment, two years of tax returns, bank and financial holdings statements, references, commitment letter for financing, and personal financing . Once the buyer receives a commitment letter from their lender, the buyer will submit the board package to the building’s board for review.

Step 7: The Board Interview
Though the process varies widely from building to building, the board interview generally occurs at the building, either in a shareholder’s apartment or a common space. The meeting can be similar to a job interview from appropriate attire to the questions that are asked. The buyer should be prepared to answer any and all questions asked and to bring their pet if requested.

Step 8: The Closing is Set
At this time, buyers have received the “cleared to close” from their lender and are able to complete the transaction with financing in place. If possession is to occur at close, sellers will vacate the premises if they haven’t already. 24 hours before the closing, the buyer will conduct a walk-through of the property to confirm that it is in acceptable condition and any mandated repairs have been completed.

Step 9: Closing
Generally the parties in the closing room include the seller, the buyer, their brokers, their attorneys and a closing agent. All paperwork is signed by both parties, funds are distributed, keys are turned over, and the transaction is completed.

Step 10: Post-Close
While the buyer and seller have completed their responsibilities and the property has been transferred, their attorneys still have a few more steps to make everything official. The attorneys record the sale, transfer the deed or stock certificates, and send out final paperwork to both parties.

Running Comps in Park Slope

Friday, May 11th, 2012

I sat down with a new client in Park Slope yesterday to talk about listing his townhouse for sale. When we meet our clients in person, we do a thorough walk through of the home, and then sit down and discuss pricing with an ipad, looking in real time at comparable properties (comps) – sold, in contract, and what is currently on the market. We don’t leave our clients a stack of fancy brochures – I never thought it made sense when everything we discuss is on online and on our web site. However, most brokers do leave packages, and in this case, our competition had left a package of what they considered to be comps. And the conclusion they reached based on the comps, was that the home should be priced about 20% higher than we said it should.

We warn sellers not to go with the broker that simply suggest the highest price. Instead, we recommend they spend the time to really understand the comps they are looking at, and price their home accordingly. However, brokers know that sellers often consider a high listing price to be an important factor for choosing who to list with, so the temptation is often too great for brokers to resist comp inflation.

In this case, the brokers that came before us put a comp set in front of the seller that did not include sale price. They merely had a single photo of the front of each house, the addresses, and the price per foot. They failed to explain that larger homes carry higher cost per foot than smaller, narrower homes like this seller. They also ignored condition, and how that impacts price. And they didn’t take into account the block – a park block in Park Slope typically sells for more than a townhouse near 5th Avenue. Finally, they failed to take into consideration whether the house was a 1 or 2 family home. Buyers will often pay a premium for a renovated 1 family home when compared to a multi-family dwelling that has had or currently has tenants in place.

After we walked through each of the homes that were listed as “comps”, it became very clear that nearly all of the comps that were in the shiny packet were not, in fact, comparable to the seller’s home, and that the price was completely unrealistic (although very attractive). We were able to produce several good comps – even one on the same block in a nearly identical house, that was left out of the other report. When we took some time to go through them in detail, I believe the owner had a much better view of the market and where his home should be priced. It will be interesting to see where he prices it, and who gets the listing…

Sh*t Competitors Say

Thursday, March 8th, 2012

It should come as a surprise to no-one that real estate is a highly competitive business. That said, once a property is listed, 95% of real estate agents are respectful of the rules against trying to solicit the business of homeowners who have listed with another agent. We will occasionally hear from our clients about brokers from other firms using scare tactics to talk them out of working with RealDirect. Often, this is just a lack of awareness on the part of agents who haven’t worked with us yet. We understand. We haven’t been in business for decades like many of the larger NYC brokerages and it takes time to build a reputation. As we’ve sold an ever increasing number of properties, we’ve continued to earn the respect of our peers in the industry (we’ve even had a few brokers from other firms use RealDirect to sell their own home), and we hear less and less about other brokers attempting to poach our clients. But, every now and again, we hear about something like this gem sent to one of our sellers by a Senior Vice President at a traditional brokerage (excerpts pulled directly from the email are in bold and italics, with our responses below):

Now sorry but realdirect is that an online grocery seller?

Oh, I get it. You’re pretending to confuse us with a popular online grocery delivery service. Clever. While we don’t deliver food, much like Fresh Direct, we do use smart technology and stellar customer service to remove an unnecessary hassle from the lives of our clients.

How many agents they have?

What is the experience level of their agents?

It is interesting that this question is raised by someone from a traditional brokerage, where agents compete with each other for listings and commissions. In the traditional brokerage setting, the commission structure sets up an “every agent for himself” environment, so regardless of how many agents they have or how experienced they all are, the client can only count on the expertise of their individual agent. Because RealDirect functions as a team, our clients benefit from the support of ALL of our experienced agents and our marketing department, our design department and our tech department. In a traditional brokerage, those other departments (if they exist) are dedicated to promotion of the brand, whereas at RealDirect, the entire team works for the benefit of each client.

It seems more like a gimmick probably predicated in low fees

RealDirect is a REBNY firm with licensed agents and a proven track record of successful sales. In fact, while the average time on market for listings in Manhattan and Brooklyn for 2011 was 134 days, RealDirect’s listings sold in an average of 83 days. Additionally, because of our low fees, RealDirect sellers saved an average of $32,000 by working with us instead of a traditional brokerage with a 5-6% commission structure.

50% of our listings sell to buyers who are represented by a broker from another firm (the other 50% sell to unrepresented buyers, resulting in even greater savings for our clients). We work with agents from other firms all the time and most are professional, courteous and knowledgeable about their business. But for the small percentage of agents who think unethical scare tactics are good business, we’d like to point out that the numbers don’t lie. Our listings sell faster and our sellers net more money. That’s not a gimmick, that’s the future of real estate.

Top 10 Ways to Prepare Your Home for a Spring Sale

Monday, February 27th, 2012

April showers bring May flowers, but March prep work brings springtime home sales. Though it may seem too cold to be thinking about the spring real estate market, taking steps to prepare your home now will help you avoid the stress of a last minute rush to get ready. If you want to be in good shape when the weather starts to warm up, use these top 10 tips to prepare your home for sale in the spring.

1. Clean & Declutter
Make your move easier by beginning the packing process now. Clear out all clutter and remove items you don’t regularly use. Donate items that haven’t been used in the last twelve months, throw away items that are broken or damaged, shred and dispose of paperwork that is no longer needed, and move bulky pieces of furniture, holiday decor, out of season clothing and any other items you don’t need into a storage facility.

When you clean, pay attention to small details. Wash windows, dust blinds, launder curtains, dust baseboards, clean appliances, and straighten up the contents of your closets. Apartment Therapy has some great plans for getting your home clean and keeping it that way in less than an hour a day. (more…)

What are Buyers Looking For? Top 10 List

Wednesday, January 25th, 2012

As we mentioned in a previous post, when helping buyers find their perfect home, we gather information about multiple data points to help narrow down the properties that will suit the individual buyer’s needs. This data helps us eliminate properties that definitely will not work and hone in on properties that are the closest to ideal. This information also gives us some great insight into what buyers in general are looking for.

Based on our survey, the top ten items that buyers classify as “must have” or “wish list” are as follows:

Noah Rosenblatt, founder of Urbandigs.com expounded on our original post by saying:

“Over the past 6 years of writing this blog, I’ve made it very clear what buyers in the Manhattan markets bid up for:

1) Light/Views
2) Location
3) Raw Space”

He goes on to say “By far in this marketplace buyers bid up for views (think river or park views, followed by full city views) and natural sunlight. After that it tends to be about raw space and whether the subject property is large enough to meet the client’s needs. Then comes location – many would think location would be top of the list, but I find this not to be the case in a market like Manhattan. Let me explain.

As Manhattan prices rose and affordability declined over the past decade, buyers widened their criteria of neighborhoods they are willing to live. Buyers that once would only consider living in the West Village, realized that if they are going to buy what they want & need that they may have to consider Chelsea or other neighboring areas. Once that buyer gets a taste of more desirable features and starts to understand what his budget can get in another neighborhood, it anchors them to expecting those now affordable features; such as a bathroom in master bedroom or a full city view. The end result is a buyer who will now have a wider search requirement, dampening the power of “location” as the top desired feature they will bid up for.”

Based on our survey results, Noah is spot-on in his views of what buyers are looking for. Looking at our top 10 list, we see that buyers are looking for light, space and views. While location is important to buyers, specific location is not. Because there are so many outstanding choices in New York City, our data shows that buyers search for properties in an average of eight neighborhoods. While buyers do generally have a specific borough preference, within their borough of choice most buyers are not set on living in one specific neighborhood. When it comes to real estate in New York City, it seems that where you live has taken a back seat in importance to how you live.

Tips for Selling Your Home During the Holidays

Tuesday, December 13th, 2011

While many people choose to remove their home from the market during the busy months of November and December in order to avoid dealing with showings, there are still active buyers during the holiday season. For homeowners who decide to keep their property listed through the holidays, there are some important tips for staying “showing-ready” while still being festive.

1. Keep decorations simple, elegant and minimal. Opt for ornaments in colors like silver and gold instead of red and green and choose white lights instead of colored to avoid clashing with decor. Setting up a small display of holiday cards on a decorative plate shows lifestyle without going overboard.

2. Be mindful not to obstruct light or views. If you have a tree keep it small so it doesn’t crowd your space. Don’t hang anything in the windows as it’s vital to maximize the amount of light coming through and to show off great views.

3. Don’t wrap doors. Your door is the first thing potential buyers see when visiting your home. If you feel the need to decorate it, stick with a small, neutral wreath.

4. Presents, if displayed, should be tastefully wrapped and stacked neatly out of the way. If presents are bulky or numerous, they should be stashed in a bin and removed from the apartment prior to showings. Shoving them in a closet can give the impression that the home doesn’t have enough closet space.

5. Make the most of holiday cheer by baking cookies and setting them out with festive napkins. Your apartment will smell wonderful and your potential buyers won’t leave hungry.

Buyers who are actively looking during the holidays tend to be serious about their hunt and ready to make a decision, so follow the above tips to make the best possible impression and get your home sold.

Photo via OiMax