Thank you to all of our clients, friends and supporters for making 2013 our best year yet. Happy Holidays to all and we look forward to another great year in 2014.
Blog :: 2013
It seems like with every new Holiday Season American consumers are demanding more and more value from retailers. In our technological age shoppers have become ultra savvy when it comes to value and price. No longer are consumers fooled into simply assuming that the most expensive item is the highest quality item. Consumers instinctively understand that value is more important than price and that with just a little extra research they can usually find a high quality item at a better value than the highest price one.
The question then for me is why has the American consumer not been more discerning when shopping for a real estate agent or firm? With a little extra research the consumer would realize that the highest price agents and firms are not necessarily the highest quality and that there are far better values available than the highest priced firms and agents.
Thanks to advancements in technology and overall efficiency, real estate agents can now provide the same if not higher quality services at a fraction of the cost. Why then have the prices for services not changed for the vast majority of providers over the past 30 plus years?
When the precursor to today's modern cellphone was introduced in the 1980's the original model cost $4,000 per phone. Can you imagine if you walked into Best Buy today and saw a cellphone listed for $4,000? Let's see do I buy an Iphone for $300 or the $4,000 phone that takes 10 hours to charge for 30 minutes of talk time? That would be a "no brainer".
If consumers were complacent the quality and value of goods in America would never improve. Thanks to American consumer demands the quality of almost every product has improved over time and the value of those products has increased immensely. If consumers start demanding better value and quality out of real estate agents and firms things will change. However, until consumers start flexing their purchasing power, the value provided by most firms will remain poor.
We encourage you to demand better value out of today's real estate industry. Thank you.
The median home price in Chittenden County Vermont is roughly $262,000. Under the prevailing compensation model in Chittenden County, real estate firms charge 6% to represent a seller and 3% to represent a buyer in Chittenden County.
Assume that an agent completes 12 transactions in a year or 1 per month. At the median sales price above that agent would have sold $3,144,000 of real estate throughout the year. Assume that 1/2 of the transactions were at the rate of 6% and the other 1/2 were completed at the 3% rate. The total fees collected by that agent during the year would be $141,480.
Assume that the agent retains 70% of the fees and the other 30% goes towards overhead, costs and expenses. The agent would collect $99,036 for the year.
$99,036 and only completing 1 transaction per month? Assume that a transaction took 40 hours of the agent's time (which based upon my experience as a real estate agent, real estate lawyer, buyer and seller is on the extremely high side), the agent could essentially make $100,000 working 1 week per month.
With all of the advancements in technology and agent efficiency, don't you think that the prevailing model is outdated?
For a more equitable model check out our buyer agent services where we rebate our fees to our clients.
Look at Myth #4. Clearly they did not ask Flat Fee for a statement. With our model buyers have a say in the commission, as they should.
Please help us spread the word that Flat Fee Real Estate is looking to hire more agents in Vermont. In 5 short years our unique model has taken off in Vermont. We have grown by leaps and bounds, last year ranking 9th out of 417 firms in Vermont in terms of gross sales volume. And we accomplished that feat with only 5 agents. Imagine where we will be in a few more years as we double in size.
If you know anyone that is looking for an exciting career change or is simply looking to change firms, please let them know that they will likely find no greater future and long term career success than at Flat Fee Real Estate.
Thank you very much for your help and your support.
Because Flat fee shares its commission with its buyer clients, our buyers have a competitive edge when bidding on houses. Here is an example:
A home is listed by a firm and the seller is offering buyer agents a 3% commission. The home is listed for $350,000.
A buyer with an agent that does not share their commission offers $325,000 for the home.
A buyer client of Flat Fee offers $330,000 for the same home.
In almost every case, the seller is going to accept the higher offer of $330,000.
At closing Flat Fee receives a commission check for $9,900. Flat Fee keeps $3,500 and gives the rest, $6,400, to our client.
Thus, even though our client offered $5,000 more for the house, they actually paid $1,400 less than the other buyer was offering for the house.
As you can see buyers gain a competitive edge by using Flat Fee.
With bone chilling temperatures outside it may be difficult to think about Spring and Summer. However, because purchasing a home is typically the largest financial investment an individual or family will make in a year, it is important to begin planning well ahead of the time you actually want to buy. For most families the preferred buying season is in the Spring or Summer in hopes of making the physical move prior to the upcoming school year.
Although historically there is greater inventory in the Spring and Summer, there are new homes listed every day in Vermont. Even though you may not be ready to look at homes or have even developed your house budget, by starting to follow the new listings now you will develop a better idea of the market and current values. Then when it comes time to get serious about looking in the Spring and Summer you will already have an idea of what your budget can afford. You will also have a good handle on which homes represent good value and which are overpriced.
Stay warm and call us if you have questions about the home buying process. Thank you.