Archive for April, 2021

Selling a home? Commission is not everything. Service and Competence matters!

I woke up this morning to see a “For Sale” sign in one of our neighbors’ front yard. They listed their home with Homie, one of the recent tech-based discount real estate brokerage in the Metro Phoenix market.
I was disappointed to learn their house that has the same floor plan as mine was listed for $519,000 – at least $40,000 less than its current fair market value. Apparently, the seller did not get competent pricing guidance from the Homie listing agent.
My neighbor hired to list their home for a flat fee of $3,000 compared to $12,975 – the amount of a 2.5 percent commission at that low listing price using a traditional Realtor. 
Sure, they may save nearly $10,000 on the listing commission — but they gave away almost $40,000 by underpricing the home based on Homie’s “guidance.” 
With the market so hot right now, it is not surprising to get bids $20,000 or more above list price when using an experienced Realtor. This means the neighbor’s total loss could add up to up to $60,000 — or perhaps even more.
If you are a potential seller, please use this true story as an example that your decision to hire a Realtor should not be solely dependent on the amount of the commission. Many wholesale investors like Offerpad, Homie, Opendoor will sell you on a flat-fee commission. With a flat fee, you get less or no guidance, inferior expertise and often, inexperienced newer agents.

To make my point clearer, I called Homie group to explain their selling option to me acting as a potential Seller. The Homie agent indicated that they would sell my home for a $3,000 flat fee vs a traditional  $18,000 6 percent commission (3 percent for the listing broker and 3 percent for the buyer’s broker) for a traditional Realtor on a $300,000 home. They indicated this would “save” me $15,000 just by listing with them.
But I had to correct his calculation. First, I said, the going rate for traditional Realtor commission is now 5 percent, not 6 percent, due to home values rising. Second, the Homie agent failed to mention that I would also have to pay a 2.5 percent commission for the buyer’s broker if I listed with Homie. 

So, my total commission to list with Homie would be $10,500 (the $3,000 listing flat fee plus $7,500 buyer broker fee). The accurate comparison is below:

$300,000 home                                                                 Traditional Realtor
$3,000 flat fee + 2.5% (buyer broker fee)                     2.5% listing fee + $2.5 Buyer broker fee
$3,000 + $7,500 = $10,500 Total to sell home              $7,500 + $7,500 = $15,000 total to sell home

Total savings to go with is $4,500, which is a difference of just over 1 percent. This is far less than the $15,000 the Homie agent initially mentioned as savings. “What business would give away $15,000 is too good to be true. “

At the end of my conversation with the Homie agent, he was impressed with the questions I asked and invited me to work for their company. My response was: “Thank you but because selling my home is the biggest investment in my life, I should care enough to know I am selling at the right price using the best services available.” I hope you do too.

April 9, 2021 at 6:00 am Leave a comment

What’s Driving Arizona’s Population Growth?

BLOG – April 5, 2021

As families begin taking road trips again as more people get vaccinated and normalcy slowly returns,
Arizona serves as an excellent state in which to play the license plate game (if the kids ever stop playing
with their iPhones or Nintendo Switch).
Even a short drive anywhere around Metro Phoenix – to get groceries or takeout, say – will usually offer
glimpses of cars with license plates from several other states: Minnesota, Nebraska, Michigan, of course –
but also Oregon, Washington, and of course, California.
A quick look at the drivers behind the wheel in these cars pretty convincingly proves these visitors are not
within the typical “snowbird” demographic of people we’re used seeing here temporarily at this time of
the year.

No, these folks are here because they’ve just moved to Arizona full-time – or are still looking for a home.
An outcome of the pandemic has been more acceptance and flexibility for working from home – so
Californians and others are free to uproot themselves from states with a higher cost of living to Arizona’s
healthy economy boasting thousands of new jobs in case the old job isn’t staying with work from home
positions forever.

Regarding that booming economy, local real estate analyst and economist Elliot D. Pollack noted in his
April 5th blog that the non-profit Milken Institute has ranked Metro Phoenix as the seventh-best in the
country for jobs, wages and high-tech growth. Pollack said the rankings also take housing affordability
and broadband access into account.

“Among the ranking of large metro areas, Greater Phoenix came in seventh behind communities such as
Provo-Orem, Utah (ranked first), Austin (third), and Raleigh (fifth). Nashville was ranked just behind
Greater Phoenix,” Pollack wrote.

“Phoenix’s ranking is certainly an indicator of a strong, surging economy, one that is built on a diversified
employment base rather than just population growth (which we are a leader in as well),” Pollack
continued. “But the amazing thing is that Phoenix can attain this ranking given its size. Phoenix is by far
the largest metro area on the list of top ten communities and some cities are so small they don’t even
belong on the same list.
“For Phoenix to even be on the list is testament to the efforts of our economic development organizations,
the universities, and the businesses that now are making their way here from high tax states,” Pollack
All of these indicators bode well for Metro Phoenix’s continued climb

April 5, 2021 at 3:51 pm Leave a comment



Fresh Tweets