The home purchase or sale process may be one of the most frightening experiences of a lifetime, or the most thrilling. It is the biggest purchase most consumers will make. A big chunk of money is on the line. This article will give you an overview of some of the real estate scams and how to avoid them as discussed in the KHOW630 radio show that aired January 5, 2019 8AM.
Host: This is the overview of the three largest scams that are in place and working against home buyers and sellers and those needing a home loan. Be aware as they affect consumers when buying, selling or obtaining a new loan on homes.
- The perceived required 3% commission on the buyer’s side of a transaction.
- The perceived required 3% commission for the seller side.
- The hidden costs when a consumer acquires a new or different home loan.
Host: A reasonable commission rate is probably closer to 2% on each side of the transaction.
Author comment: The commission costs have always been an uncomfortable topic for consumers when it comes to real estate transactions. In 2019 this topic is expected to be examined ever more closely as consumers use easy-to-access sophisticated tools to do much of the discovery and evaluation of available properties for sale. The conversation is heating up about whether the typical 3% per side real estate agent’s fee and commission is reasonable or not. Good agents must be prepared to discuss their value.
Listen to the full radio show here, with comments by Kathleen Chiras at the beginning of the show.
How to deal with the commission cap proposal?
Author comment: It is always important for the consumers to do their research and hire a trustworthy real estate agent in order not to fall into any of these scams.
Kathleen Chiras of the Buyer Agent Search Network added, “An informed and educated consumer who’s not afraid to ask a few questions will be in a much stronger position than ever these days. One of those questions to start the discussion may simply be, ‘How do you get paid’? or “Are you willing or able to put a cap on your commission?”
Real life example of a buyer who wants a better deal from his agent
Chiras was contacted by a consumer who is looking for high-end property in Seattle, WA and wanted to know if the agents suggested by the program might have a flexible commission. Her program provides a good set of interview questions that the consumer can use as a way to screen and select the top agent out of the two she recommended. The consumer has a $2.5 million property in mind and wondered if the REALTORS recommended would be willing to negotiate and represent them on this particular property for $10,000. (This is about the same dollar amount as an agent might make on a $330,000 home). Many REALTORS might dismiss this offer because they could make as much as $55,000 or more–the 2- 3% that might be built into the sales price of a $2.5M listed property–with another buyer. Kathleen advised the consumer to have the agents give a breakdown of what they’re willing to do for the money they would earn. She suggested thy explore the contingencies if that particular property purchase doesn’t work out.
Chiras said, “After all, what is any one agent’s skillset worth to negotiate one specific deal?” Yet, what happens if the deal falls through? Should the agent be guaranteed some compensation for their efforts? When broken down by the tasks and the hours to expertly negotiate the deal, the agent might still be earning hundreds of dollars per hour. Yet other alternatives like real estate attorneys may charge $200-$400/hour and their pay is typically totally non-refundable and non-contingent upon a successful purchase. A compromise should be brokered between what the agent feels his or her services are worth, and what the consumer wishes to pay. This arrangement may involve some guarantees and protections on both sides. The agreement may involve an hourly fee, a capped fee, or a non-refundable retainer.
In this example, the agent from the Buyer Agent Search Network said they’re going to negotiate with the buyer to see if they can find a solution that is acceptable to both parties.
Finding the right agent
Author comment: Nowadays, it is hard to find top-notch real estate agents that are open and willing to negotiate commissions. That’s why having recommendations from a trusted and reliable source is important. Top agents are not afraid to discuss their value, and may be flexible on the commission structure.
The Buyer Agent Search Program has been committed in helping consumers find highly-qualified agents that serve their best interest for over 20 years. The consultation service is free of charge and has a wide network of agents serving all states in the United States, as well as Costa Rica and Canada. Consumers may go to this page in the Buyer Agent site to start browsing for trust-worthy and top-notch agents.
Consider doing something different with investments in 2019
Host: As we start a new year, why not consider doing something different with your investment dollars? Investing in the stock market has always taken some courage. In fact, many stockbrokers suggest that investors should not look at their stock prices every day because watching market fluctuations can be frightening,. A lot of volatility is expected in 2019.
Barry Miller, the radio show host, suggests it may be wise to take 100 minutes of time and explore real estate investing as a safer way of making money, and compare that with stock market investments. The stock market is at an all-time high, and some financial advisors are warning that “what goes up must come down”. Some are heralding annuities and a diversified portfolios as a long term safe strategy. This should be compared with the relative risks of real estate investments.
A 100-minute Hotspots Turn Key Residential Real Estate Seminar is happening on January 15, 2019, 7 pm. in Denver, CO. This seminar aims to show how to make a 30% or more annual return on the investments with little if any work on the investor’s part. The presenters have selected the 6 hottest residential real estate markets in the US. The free seminar will reveal a special strategy in place for analyzing return on investment in these markets. Interested participants may use the contact form at BuyerAgentSearch or call 303-758-4040 to register.