Room for Tech Companies In Real Estate

I am going to open here by saying, there is room for the tech companies in real estate, we just don’t have room for their, we’ll call it, “Misleading Information”.

They are good if you are in a situation where you simply must sell, and losing money in the end is a non-factor. For example, maybe you inherited a home from a relative that passed and you don’t have the time, or don’t live locally to deal with it. Fine, quick sell it and move on.

Maybe you got a job out of state and have to get out fast, OK…sell it to them and move on.

Just understand, that they are in the business to make money, and that money comes from YOUR equity.

Recently, I saw a sign for Opendoor go up in my neighborhood. Being that this is my business, and that sign is on my neighbors house, I was very curious about the price they let the home go for. As it turns out they sold for about $5,000 below a recent comp on the same street (loss of money to the seller), and Opendoor is now asking $20,000 more than the same comp. Assuming they get their price, that’s a $25,000 LOSS for the seller.

But that’s not what caught my eye when on the Opendoor website.

Below is a chart that they put together comparing using them to buy a home with a “Discount Brokerage”  where in many cases you do all the work for viewing, negotiations, contracts, inspection, etc., and they simply file the documents.

The 3rd column is how they compare themselves to using a traditional agent, like me. The notes in red are my rebuttal, if you will, to their mis-information.

Here’s a summary:

1) They say that they “Give you a refund on a home purchase” and traditional agents do not.    

  • The Truth: Most lenders will not approve of a “Refund” to a buyer. They will, in many cases, allow a contribution to closing costs, likely NOT $3000.
  • Personally, I have contributed to closing costs many times where needed to ensure my client can get the home they want. For them to leave that blank, as if your agent will not contribute, is disingenuous to say the least.

2) They offer “Online support”.

  • Why is that better than “In-Person Support”? Need help? Call your agent…we are here to help, and happy to do so,

3) Free Property Reports!

  • I have never heard of an agent that would charge to give you information about a property. To pretend that we do, again, disingenuous.

4) Free On Demand Tours.

  • When you schedule showings with your agent, you not only gain access to the home to view it, you have an extra pair of eyes that have experience in looking for signs of issues that may be present, information to pass on to an inspector to further investigate. You have area information, neighborhood comps, offer price suggestions, the ability to negotiate with the seller, and someone who knows the contracts to review, advise, and protect you in your transaction.

5) They “Manage Offers Online”.

  • We manage your offer In-Person.

6) Top Rated Buying Agent.

  • They have the same Arizona State Real Estate License that we do. If you want to know how good your agent is, ask to speak to their former clients. Or, better yet, get to know your agent on a more personal level, have them buy you lunch!. That will determine how they will care for you. I guarantee it will be more personable than a computer.

7) Option to work Directly.

  • Why in the world is it an “Option” for you to work directly with the individuals that are responsible to protect you in your biggest life investment? You are spending Hundreds of thousands of dollars! Direct attention should be required, and expected.

8) Finally, did you see the disclaimer?

  • I have never used, nor will I ever use a disclaimer. My duties to you are clearly spelled out in the first disclosure I give you. They are Fiduciary. They are governed by Ethical Rules. No disclaimers, no surprises.

Bottom Line:

Whether you are buying or selling a home, you deserve the one on one, honest, ethical support of a traditional real estate agent.

Don’t be fooled when the tech companies try to make the word “commission” dirty. In the end, many sellers pay MORE in a lower sale price plus “Fees” than they would in commission. I can demonstrate that to you if you are interested in learning more.

You simply cannot beat the one on one, personal attention you get from a professional real estate agent. Technology is not always to your benefit.

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

Posted on July 15, 2019 at 7:30 pm
Kevin Jacobs | Category: Market Information, Real Estate Industry News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

The Monster is Feeding Itself

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.

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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.

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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

Posted on June 20, 2019 at 6:25 pm
Kevin Jacobs | Category: Market Information, Real Estate Industry News | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , ,