iBuyers: Facts and Fallacies

Never a dull moment in the Real Estate business!   Just when an agent feels she’s hit her stride, knows a thing or two with some experience under her belt, the universe throws us another curve ball!  This time its something called “the ibuyer.”  *shudder*

If you are tech savvy even a little bit, you might infer that ibuyer has something to do with an Apple product.   Not in this case.   But as consumers of real estate info, you should know about platforms that are on line, like Zillow or Opendoor that deal in featuring homes for sale or rent.   They are now referred to as ibuying platforms – places where buyers and sellers can find/feature homes for sale.

What’s new is that these platforms are trying to transition into the marketplace and cut out the real estate agent and broker and sell or list directly to/from a consumer.   They are trying to disrupt the real estate industry by attacking real estate agents, brokers, Multiple Listing Services and the National Association of Realtors with law suits claiming these entities keep commissions artificially high with an average of 6%.   Nothing can be further from the truth.

In every state in the union, commissions are negotiable.   But buyers and sellers need to understand that whatever the commission rate is – this is divided four times.  Once between buyer and seller brokers and then again between the  brokers and the agents.   Agents and brokers guide clients through the contracting process, inspections, lending and make sure deadlines are not missed which can put a client in a dire financial or legal situation.   How much is this guidance worth to a client who is unfamiliar with the real estate process?   One percent?  Two?

Secondly,  the MLS does not regulate commissions because as I have discussed in this blog before, they allow the discount brokers access and do not censor their listings at all.   Nationally commissions vary depending on state and also price point and many are below 6%.

The dirty little secret is that these ibuyer platforms are trying to appeal to the consumer by saying they don’t charge commissions (unlike traditional realtors).  However in many cases they  charge more per transaction than most real estate brokers – they just don’t call it a commission.  Zillow’s fees are as much as 7% and both Offerpad and Opendoor charge fees of 7.5%!   So BEWARE!   While giving buyers and sellers some supposed autonomy in their real estate transaction may sound good, in the end is it really?   If fees are higher what are you getting for your money?

The other fact that Missouri consumers need to know is that Zillow doesn’t have access to all of our tax information and sales info.  Therefore, they are not operating with full knowledge of our market so if you go onto Zillow be aware that they don’t have (by law) all the info realtors have at their disposal to price and market your home.

With an agent, you get a live human being who can guide you through the process, give you some good professional advice on pricing, offers, negotiating inspections and everything in between.   Agents are usually available 24/7 for their clients.  And hopefully, they keep you from very costly pitfalls that will make your commission costs pale in comparison!  As I have written before, what is the purchase or sale of your largest asset worth to you, the consumer?

Do you think Zillow will answer your phone calls at 10PM?  I seriously doubt it.


When it’s your child writing an offer…..

Well, it’s called the circle of life – per the movie the Lion King – which I saw with the child that is the subject of this piece in 1994 when he was three.   He sat on my lap the whole time – I think he was scared by some of the imagery.   But I digress…fast forward 25 years. The same child is 28 years old, returning to St. Louis and purchasing his first place!    He found a wonderful home in South City – the Northampton area.   Nicely renovated,  nothing to do but move in.   He was lucky – homes like this one tend to get snatched up by the highest bidder in a multiple offer situation.  We were able to get in and get it wrapped up before such a thing happened.   He has a GREAT Realtor!  ; )

Whenever I write offers for buyers, it’s always exciting.  They finally found a home that fits their needs and that they can envision themselves and their family living in happily.   It’s a particularly satisfying endeavor with a first time buyer.  So much excitement and so much of the future to look toward.  Many times, there is a wedding in the works too, or one that just occurred.  Sometimes, it’s because of a new baby that a first time home is needed.   I love working with first time buyers.

The downside is guiding them through the often competitive market for homes that many first time buyers are looking for.   Many firsties cannot waive contingencies for financing, nor can they do without closing costs.   These issues often put these buyers on the lower end of the “most attractive contract” scale when in a multiple offer situation.   The worst thing I have to do as an agent is tell a buyer they “didn’t get the house”.   It’s hard not to get your hopes up and then get disappointed.

And this time around, it was with my own child.   That’s a whole other level of nerve wracking.   Not only do you want them to get the house they want, you have a personal vested interest in their happiness.   So not having to deal with a situation that will put them in the dreaded competition with other buyers is a relief.

The other thing I found myself having to do was to confirm that my child, who I sometimes still see as the three year old on my lap during the Lion King movie, has the money for 1. down payment 2. earnest money 3. inspection funds 4. enough to bring some of the closing costs to the table on top of his down payment.   The answer better be YES.   (it was).   #adulting #winning

I’ve already informed him, he is hosting the next family get together….and when I renovate my kitchen later this year, I will come and stay at his house to avoid the mess.  It’s another proud mom ( and dad) moment.   He said that he had the best 48 hours of his life recently when he received a job offer here in the Lou,  wrote on and got an accepted offer on a home and the BLUES won the Stanley Cup.   We are so happy to have him back and can’t wait for what other wonderful blessings he has to look forward to.   Way to go sweet boy!

Your Largest Asset is your Home….Don’t Discount it.

When I get ready in the morning, I am usually listening to the radio getting the latest news etc.   This morning I heard an advertisement from one of our area’s discount real  estate brokers.   I’m sure you’ve heard the ads about lower commission rates.   The ad goes on to say that the company has done over $250,000,000 in sales.  Sounds impressive until you are an agent in an office that by ITSELF does over 500,000,000 in sales EVERY YEAR.   Never mind our entire company!

When I hear these ads I often wonder if people really consider what listing with a discount broker (or for that matter a transaction broker) might actually mean.   These brokers pay buyers agents the bulk of the commission and this leaves very little to the listing/transaction broker.   How much do you think that will buy the seller in marketing, internet position and relocation outreach?   Not to mention print advertising and time the listing agent will spend out of pocket on behalf of a seller – from print ads to photography and sometimes even some fixes or cleaning.

We have agents in our company that do more in volume and sales by themselves than one of these smaller brokerages.     And while big corporate entities are sometimes seen as cumbersome,  the clout a large corporation brings to the table for their clients can be invaluable.  This is especially true in Real Estate.  Being able to buy position on the internet so when buyers are looking online themselves, a company like Coldwell Banker Gundaker will pop up at the top of the list  means our listings will be seen before other smaller companies.  I also think that there is a comfort level and familiarity with known entities and this can give buyers and sellers peace of mind.

There is also the not so small detail of agent education and support.  This is HUGELY important when you put your largest asset in the hands of an agent.  Do they know what they are doing?  What kind of continuing ed to they get?  What kind of admin and legal support do they have?  Will a small brokerage have this support built in for agents?   I’ve written about being on the other side of deals with some of these smaller outfits and have been not so pleasantly surprised at the lack of knowledge agents exhibit.  Mistakes can cost a buyer or a seller a lot of money so make sure your agent is knowledgeable!

Some other things to think about when making these decisions:

  1.  Anyone can put a home on line for a fee…what will drive buyers to your home?
  2. What other websites, local, national and international will your listing appear on?
  3.  How much print advertising and postcard mailings will a company/agent do for you?  These are all questions a prospective seller must ask themselves.
  4. One other thing that is important to ask a broker or agent…what percentage of          listings actually sell vs. expire. 
  5. And what is the original list price to actual sale price percentage? 
  6. The other thing to look at or ask about is what is the average list price of the company.  This can be important if you have a home over 350K to sell and most definitely with upper end properties of 750K or more.

In the end the decision to sell your home is a very important one.  Make sure you are informed about the company and agent you are going to list with.  Saving money on commissions can cost you as much or more in sale price and pitfalls – so be aware!

To Update or Not to Update….That is the question!

The 2019 market is getting into full swing!   The theme for my business this year is turning out to be homes that need updates and whether or not to do them.   Obviously, a home that has newer updates will appeal more to buyers and sell for a higher price.   The question comes in when trying to decide to update for the market, how much to do/spend vs pay off when the house sells.  What I have found is that no two fixers are alike.  There are generally two categories…..

The immaculate home that is dated.  This seller is often faced with a home that is over 15 years old and has not been renovated in all that time.   They have taken excellent care of the home overall and may have done a few minor changes over the years  but have not brought the home up to current standards – materials or fixtures – wise.   This is a tough one.  These homes are not gut- rehabs or on a list to sell to an investor.  They are extremely livable – just not updated.    If the seller would rather not make any major updates, then the price will need to reflect the need for modernization.  Kitchen and bath updates are expensive and make a home hard to live in while they are going on.   Flooring changes can be very disruptive too  and also costly when you are looking at over 2000 sq ft of floors to update!   People with these types of homes need to also consider not only interior updating costs but also exterior issues that might come up.   Electrical, roof, decks, foundations, sewer laterals, siding and other major systems issues can also add to the cost a potential buyer will need to consider if they purchase the home.

Moral of this story:   its not a bad idea to update your home periodically in the time you own it.   Every 10-15  years is a good rule of thumb.  And you don’t have to do the whole house, just the major cost areas as they are needed.    Not only will it reflect better when you decide to sell, but when you renovate, you tend to find potential problems inside walls that could kill a deal down the road.   By renovating periodically you keep your house fresh, current and avoid nasty surprises when you do sell. By doing updates during the life of your ownership, you also avoid spending a lot when getting ready to sell and not realizing full dollar for dollar return.

The unlivable rehab:   This home is one that has not been renovated and also has not been well cared for.  This home would be on a list for an investor to buy for pennies on the dollar so that they can gut the home and then sell.   I’ve seen many of these types of homes being dealt with by heirs after a parent has passed on.   Sometimes homes are neglected due to owner illness and things fall into disrepair.  In these cases many heirs opt for emptying the home of contents and then selling  “as is” or to an investor.   This can be a good choice because often the investors save the seller on some commission costs.  And by selling as is, the heirs do not have to do any repairs.  It’s also hard for heirs to travel to the location of their parent’s home from their own location trying to oversee a renovation.   Downside, price point will be substantially lower.

I have had two situations where children wanted to renovate their deceased parent’s home.  Both had sentimental/emotional reasons for doing so which I completely understand. When this route is chosen,  it’s hard to gauge an exact payoff in terms of sale price.  Clearly, more will be gotten with a newly renovated home but it will not be a dollar for dollar return.   There is a psychological sense of closure when a son or daughter hands off their parent’s newly renovated home to a new family.  It can be very uplifting and cathartic!  Downsides are cost of renovations and those pesky hidden issues that might be found during renovation.  Important things to remember here are having some help with design choices/color schemes.   I would not want someone to go to the expense and trouble of a renovation only to make choices that are not current or desirable in today’s market.

In either the immaculate but dated home or the unlivable rehab,  a seller needs to also take into account how much is owed, if anything on the home.   In the case of the unlivable home, usually these are long term homes that are paid for.   This is helpful when making a decision to do a renovation.   If there is a mortgage on a home then perhaps a minor renovations will help to get a better price, helping a seller as they move on to another home.

If I could give advice to any  home owner, I would say to keep your home current.   Make  updates as you own the home.   Change appliances,  dated flooring and counter tops in kitchens and bathrooms.  Update or refresh cabinetry, either by painting or refacing – both fairly economical compared to cost of new cabinets.   You can do it a bit at a time, over time and you also get to enjoy the updates too and are not just doing things to pass on to a new owner.

Referrals, Actually.

Happy New Year everyone!!   I hope your holidays were warm, wonderful and full of joy!  Mike and I had the pleasure of our boys being in town for BOTH Thanksgiving and Christmas!   It is always so much fun when they are both with us.   Their humor and zest for life is infectious.  They bring old mom and dad along and make us laugh!!!  But alas,  it’s January, cold and the fun holidays are over.   Now it’s time to stop the gluttony, get out of our PJ’s and get back to work.  I am no exception…although the weather makes it REALLY hard.

Thankfully, I have great clients and I am already setting things up for the year in terms of listings on the market,  coming soon, and buyers lining up to purchase in the next year.   I am so fortunate that my friends, family and former clients reach out to me or refer me when the time comes for them or someone they know to buy or sell.   This is really the bedrock of my business.   I hope that by staying in touch through this blog, and other email or snail mail correspondence, I can continue to foster the relationships I developed when working with you and that really make my business so rewarding.   And that you will continue to trust me with your business.

It’s funny when working with folks to buy or sell, you have a very concentrated, consistent amount of time being with those people.  You talk almost every day…powwow about strategies for selling or for having a winning contract in a multiple offer situation.   Then once the closing happens, you don’t see those folks as much or talk to them as often!  Everyone gets on with their lives and moves on.   So when I reach out with correspondence and one of you messages me back, I’m so happy to hear from you.  I do see some of you regularly at the gym or church or neighborhood events.   But some I don’t get to see as often, or hear from.   So STAY IN TOUCH when you can!

This month, I am kicking off the new year and gearing up for the spring/summer busy market season in real estate.   I am already off to a great start but I can’t do it without my trusted clients.   If you know of someone who is looking to sell their home – PLEASE let me know.   I’d love to have the opportunity to speak to them about what I offer to get their home SOLD!  And if you have anyone looking to purchase – the same!!  Buyers need an agent to represent their interests in the process.

Right now I have three very special buyers, one is my own son, who is planning to relocate back to the LOU in the fall and will be purchasing his first home!  The other two are a married couple…family friends who are also buying their first place together.   So I am now putting my own child and the son and daughter in law of one of my dearest friends into their first homes!  The circle of life and all that.   It’s gratifying.   I just hope they both send me a lot of their friends.   I adore working with buyers and especially first time buyers!  I can act as a “parent” without being the actual parent when helping your kids/grandkids find that first home.

So remember:   In Realtor world, love is shown by referrals….so it’s Referrals, Actually that have helped me build my business these going on nine years.   I could not have done it without you all.   I am forever grateful.   So keep them coming!

I am a SURVIVOR! (of renovations!)

Well, it’s been a while since I sat down to even think about blogging or anything much else for that matter.   The spring/summer real estate market was busy and very good! Now that the Holidays are upon us, it’s nice to have a bit of a break as we gear up and prepare for the 2019 market and year.

The thing that has kept me from writing and most all else has been a few home improvements in my own home.   We started in September and finished end of October.  Three projects really.  We enclosed our loft and turned it into a room/office.   This was relatively painless as it was upstairs and didn’t impact our daily living.   It now has two huge picture windows, a door and is a functional space that is our home office but can also function as a second upstairs bedroom.   The loft was a lovely but a worthless space with no sound buffering or privacy when one needed to either have quiet for work or for sleeping.   All it took as drywall,  studs and trim plus the windows.   Easy peasy.   I added curtains to use for privacy when using as bedroom.   But when curtains are pulled back,  the windows allow light to come into and out of the room when it is used for an office.  I really feel it’s the best of both worlds….still feels open but is completely functional.

The bigger, more invasive renovation was the flooring and master bath.   The flooring was our plan at first but then because master bath would be impacted we decided to go ahead and redo the whole bathroom (it needed it!).   This required us to live in our upstairs rooms for about 2 weeks.   The furniture in our home was moved by Two Men and Truck into our basement and garage leaving two chairs in the great room so we could sit in the evenings and watch TV.   Sleeping on a bed other than your own ( we have a king and the upstairs bed is a queen) and not having easy access to clothing and toiletries is enough to make a person barmy.   Zeke the Basset Hound was confused and didn’t understand why he had to suffer his short legs going up and down the stairs every day just to get in his bed.   Of course, it also drove home issues that need to be resolved upstairs but I digress.

We took out cherry red laminate flooring and some tile (bathroom).   The builder of our villa designed our units to have concrete sub floors (even the first floor with basement underneath).  Luckily the floors were in good shape and no leveling was required.   The front entrance had hardwood in it (also red wood) so that area had to have sub-flooring replaced but luckily it was a small area in the entry and half bath.   Of course, once we tore out the fixtures in the half bath, we decided to get new ones.  Who knew a pedestal sink would illuminate off set plumbing??   Needless to say, we ended up with a European sized vanity that was three times the cost of the pedestal sink.   But it was cheaper than moving plumbing.

To say the folks at Home Depot and Menards knew me by name is an understatement.   I was the “go fer”….if the contractor needed anything I would go and get it.   I brought 12′ baseboards in my Terrain three or four times.  This required beach towels and baseboards sticking out of my sun roof.   I hauled toilets, sinks, fixtures, trim, tile, grout, mastic etc. etc. etc.   I was staying pretty close to home to answer design questions and run errands.   I will say this, HOME DEPOT ROCKS.   And Menards is a great new addition to the home improvement community here in the LOU.   They had helpful people and would take returns easily.   They also gave us some incentives for using them which will help us defray costs when we do our kitchen next year!

Bathroom renovation ended up being a real education.   Luckily, other than two layers of tile in the shower ( previous renovation was just put over old tile) and a piece of rotted wood in the shower step up, the bathroom guts were in good shape.   BUT, tile work is tedious and takes many days to complete.  Step one, jack hammer out old tile.   I think the men doing this work really like doing it.   It’s loud and messy and causes maximum destruction.   Step two,  tear out old tile floors and shower surround and tear out old vanity, sinks and toilet.   Again, destruction is fun and messy!!   Step three, start to tile floors, and shower.   Cutting and placing tiles is painstaking, then you have to wait til its all done to grout.   Then you have to wait again for this to dry and set.   It takes DAYS.   Once all that is done, you can place and set vanity.  THEN the quartz people come and measure for template.  Then it’s another week til the counter top is installed.   Then and only then do you have sinks but WAIT!   Only after all that is done do you get faucets and water running.   I never really realized how long and how many steps were required.  In the mean time you are living in a construction zone, constant dust and general upheaval.   It’s not fun….kind of like childbirth….horrible while its happening but in the end you are very happy!

I decided to blog about this because it is a great experience that I can hopefully pass on to my clients/friends.   The renovations we did are huge for return on investment.   Getting rid of dated flooring or carpeting and replacing with a modern bamboo or hardwood engineered floor is a huge change and one that pays off when you sell.   Master bath the same.   We did not change the foot print which leaves plumbing and electrical in place and just refurbishing the shower surround and new vanity.   These keep overall costs down while modernizing the look.  Same would be true for a kitchen.   If you can keep cabinetry and just paint or reface and then just update counters etc.   Then your costs stay low and your return on investment is high.   When you gut a bathroom or kitchen and start over you don’t get as high a return because costs are so much more.

I also wanted to give a shout out to my contractor Andy, for putting up with Mike and I and being such a great collaborator.   A good contractor is like a good husband….you want honest and reliable.   Not a fly by night.   Thank you Andy!   Also, Two Men and  Truck were fantastic and lower in cost for moving all of our stuff both out and in.  And as I have mentioned,  Home Depot and Menards were also vendors I will continue to work with!  If you are considering updating a home and need help/referrals please let me know.   Its part of the service I offer.   And I can set your expectation for what will truly be involved.  Your home is your largest asset usually, keeping it beautiful and thus, desirable is a must.  It’s NOT fun, but it’s worth it.


The HOT (and bothered) Spring Market

I knew when it snowed on Easter we wouldn’t have a traditional spring in terms of weather.   We went from freezing to the heat wave in a matter of one month!   Hopefully, mother nature will want to effect some balance and give us a cool, colorful Fall down the road.

On the real estate end, this has been a very busy, typical spring market.   Perhaps the hot weather is a metaphor for the market.   HOT.   Not complaining…at all.   However, when one has 5 transactions all going on at the same time,  a little humor (and patience) is in order, and more than one alcoholic beverage.

Inspections have been the bane of my existence this year.   Trying to negotiate with the buyer/seller,  running into issues being covered up,  and last minute predications from an FHA loan that no one bothered to inform me (the sellers agent) about until the day before closing!   And then, there is the dreaded sewer lateral!    I have both a seller and a buyer on whom the irony of the flushing of money literally down the drain is not lost.

Let me explain.   One seller’s agent tried to tell me and the buyer I had that the professional sewer lateral report was in error.   That the sewer was just fine (I didn’t realize the agent was a sewer professional) and that regardless, there was an excellent sewer lateral program in the municipality.   They didn’t bother to note that anything directly under the home (as this issue was) is not covered by municipality program.   The same agent also denied the termite report which found activity that needed mitigating.  Again, didn’t realize the agent was also a termite professional!    Needless to say my buyer terminated that contract and moved on.   The agent was from an small “mom and pop”  agency and I have to wonder about the education these people get from their company.  I also wonder once we terminated,  if they disclosed issues found to next potential buyer if they were not repaired as is required.

Ironically, about the same time,  came a buyers agent from the same brokerage that didn’t understand the need to get a copy of the appraisal for her buyer and see if there were any FHA (read: Govt) requirements for inspection.    As a seller/agent, I am not privy to appraisal info unless there is a problem and home does not appraise at sale price or higher.   But on FHA or VA loans, even if the home appraises at sale price or higher, there are often fixes that are required above and beyond the normal building inspection items.  I heard nothing and to a listing agent, no news is good news.   This agent did not follow up with lender and the day before our scheduled closing, the appraiser called me to see that work required was completed.  Imagine my reaction?!  Those of you who know me well are probably laughing thinking of me having an aneurysm!    Guess what?  Closing was delayed.   Thankfully, my seller was not purchasing another home and awaiting funds for that.   Buyers agent did not recognize that perhaps she had dropped a ball or two.   SMH.

These examples ended up adversely affecting my buyer and seller in the money spent on inspections as well as carrying costs past the originally scheduled closing date.   It’s especially frustrating as an agent that I cannot count on the other side to know their stuff.  I expect this when dealing with FSBO’s or transaction brokers who only put your home on the MLS and don’t really provide any seller support otherwise.   More and more, I am finding that I have to be concerned about the other side’s responsibilities as well.

When dealing with the sale or purchase of your largest asset, folks need to consider carefully the brokerage/agent they hire.   In the end mistakes such as the ones I often discuss in this blog cost people more than the savings on commissions.   Not to mention the stress involved for everyone.