Read my previous blog before you read this one and you’ll better understand why the “Purple Monster” is a major concern for not only myself, professionally, but for you the consumer. As we dig deeper into the Monsters Layer we see that the Monster is feeding itself.
You will be seeing news stories in the coming weeks about the real estate industry, specifically realtors and commissions. Recently there have been 2 class action lawsuits filed against real estate agents claiming (it’s everyones favorite word these days) “collusion”!
These suits claim that we, as agents, get together and set commission prices at a hard 6%. 3% for the sellers agent, 3% for the buyers agent. They claim that we force this on the home seller and don’t budge. If you refuse to pay, they claim, we simply team up to avoid showing your home and selling it.
These claims are patently ridiculous!
Yes, the standard for a sale has been for decades 6% total commission. However this, like most items in a real estate transaction, is negotiable.
Compare that to the “Purple Monster” commission…er, sorry…”FEES”… 7.5% PLUS a lowball purchase price PLUS the “Repair costs” they will deduct from your purchase price 2-3 weeks into the contract (which by the way are not negotiable), and the 6% is pretty darn reasonable.
Here’s what they won’t tell you in the news stories. The news companies have ownership interest in the “Purple Monster” tech companies that are trying to take over the real estate industry. Yes…they ARE the Monster, and they are feeding themselves with your equity, while trying to put me and my fellow realtors out of business.
NewsCorp, owner of Fox News, Market Watch, The Wall Street Journal, and dozens of other news entities also own tech real estate sites like Realtor.com and Move.com. Imagine that…the ones that control the “News” are pushing “News” about how terrible realtors are, while simultaneously trying to take over the real estate industry. (There’s your collusion. Ugh…that word again.)
As you see in the headline above, they are making billions of dollars with their venture into tech real estate. This is their new gravy train and they want more.
So, what is the best way to push out your local face of real estate? Lawsuits and smearing us in the news…which, again, they control.
Here is an example headline of a story recently written on Market Watch (a NewsCorp company) telling you that realtors are greedy people who need to be shut down, but the tech companies (that they own) are great for you. The “future of buying and selling”, they tout. Make note of the convenient “Zillow” ad in the story:
This article makes claims that Real Estate Agents “Steer buyers away” from listings that have a lower than 3% commission.
In my 10 years as a real estate professional, I have run into that one time. The seller didn’t want to pay a 3% commission, we NEGOTIATED it to 2.5% (total of 5%). I had and agent call me saying that she wouldn’t show the home because the commission was “low”. I told her that she was HIGHLY unethical, and if I knew who she was I would have reported her to the ADRE.
That behavior is by far the exception, NOT the rule in my industry. Agents like that will not be successful. My guess is that she was not, and is likely doing a desk job in a different industry these days.
The article goes on to accuse real estate agents of a quiet “I’ll scratch your back” policy in the business alleging that we sit in a dark room, wringing our hands, and plotting to take your money. Devious huh? Simply not true. Here is an example of a real situation that I had where one of these tech companies would have costed my client about $15,000, maybe more, if he had sold to them.
This client had some cosmetic work to do on the home, just carpet and paint. He was curious about how these instant “Purple Monster” deals work, so he called me. After explaining it to him, I acquired an offer from one of them that came in at $269,000 with approximately $7,000 in commission…sorry…”Fees”. This was “site unseen” of course, so there was, and always is, a clause that at inspection they can lower the purchase price to “offset their costs”.
Oh…the inspectors are employees of the tech company, so there is a bias and a goal to find “issues”. (Is that…collusion?)
The home needed about $4000-$5000 worth of paint and carpet, a few minor wear and tear patches, and 2 new light fixtures. The owner opt’d to do that himself, it took about 2-3 weeks and we sold his home in 1 day for $285,000.
If we had listed “AS-IS”, the fixer-upper comps in the area were selling around $275,000 (NOT $269,000). In the end, after the evil real estate fees, he walked away with $6,000 MORE than he originally expected.
The tech company would have pocketed that profit in 3 weeks, not my client, had he sold to them.
Another lie the tech companies are trying to push on you is this:
They want you to believe that we, real estate agents, are inflating prices in order to get buyers to pay all the commissions…wait…earlier they said we were taking advantage of the seller with commissions…well…which is it?
Go back a few blogs and look at what I have been preaching about the Phoenix Market for months. Seller agents have been suggesting higher asking prices, due to low inventory and high demand, and the result was that buyers were not buying. The asking prices were too high.
Buyers determine the sale prices by what they are willing to pay, not the agents. As a matter of fact, a buyers agent typically recommends a lower that asking offer in an attempt to get a great deal, make the buyer happy, and get referrals.
If we were so focused on “fixing things”, we’d have a lot of angry clients and we’d be out of business. A realtor survives on referrals, that’s a fact. Ripping people off is not a great way to get a referral, would you agree?
Here is the bottom line, and I’ll let the tech Monster tell you themselves:
Note the terms “Disrupters” and “Little actual real estate experience”. But mostly, make note of “There’s money involved…we want a piece of the pie.”
That’s it. The “Purple Monsters” want the multi trillion dollars to be in their pocket.
That money comes from YOUR EQUITY!
Sellers: A web based buyer is an investor. The are in it to make money. If they gave you a full market value price for the home, they wouldn’t be able to resell it and make their money. The only way for them to profit is with your equity. It’s that simple.
Don’t give your equity away!
Buyers: A web based home purchase cannot find you a lender with local knowledge that has a proven track record, a home inspector with the knowledge and experience to properly advise you on potential issues, a local title representative with knowledge potential title issues in individual neighborhoods and homes.
It cannot negotiate sale price, seller concessions towards costs and repairs, home warranty, HOA fees, etc. etc.
Your local real estate professional is in this for you. As a seller to make you more money for your sale, as a buyer to save you as much as possible.
Do we earn a commission for the service? Yes, absolutely. We EARN it through experience in the market. We are your neighbors, friends, and family. We are not “colluding” (there’s that word again) against you because WE NEED YOU to survive.
Some CEO in San Francisco doesn’t…he or she just wants your money. Let’s not turn real estate, the biggest most personal investment in your life, into Amazon.
Stop feeding the “Purple Monster”.
I have an awesome team of professionals in our corner to ensure a smooth transaction.
If you’re not ready yet, we can help you set a plan to get there with free advice and guidance.
I would be honored to earn your trust, your business, and your referrals. Give me a call, let’s get started today! (602) 818-6065 or Kevin@GiantAgent.com