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

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

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.

Entry filed under: Uncategorized. Tags: .

What’s Driving Arizona’s Population Growth? ASU economists say all signs pointing upward for Phoenix real estate

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed



Fresh Tweets

%d bloggers like this: