I mentioned in a previous post about how loan professionals are paid that I would write about how Realtors are paid. 

Of course, the seller who lists his house with a Realtor knows how it is done because he or she signs the contract to pay a certain amount to the Realtor.  The listing contract specifies that when the house is sold, the real estate broker will be paid a certain percentage of the sale. 

The agreement is between the seller and the listing real estate broker.  The buyer is not a part of this agreement at all.   It is generally left to the listing licensee to decide how much to pay a cooperating real estate broker for finding a buyer.  This amount is then posted on the listings that is seen by the Realtor. 

When the buyer’s Realtor looks at the listing they can tell exactly the percentage they will receive if they sell a house.  They may be paid 2% on the sale of one house and 3% on the sale of an identical house down the street.  Some people feel that a licensee will show the house with the higher commission and ignore the other. In my opinion that may be true but it is not common.  Most buyers representatives look out for the benefit of their buyer regardless of the commission amount. 

It is expected among many Realtors that the listing broker will share the total commission equally with the buyer’s licensee.  They feel that they should get an equal share of the commission because the transaction would not happen without a willing buyer.  However, it is not necessarily the case that the commission is shared equally. 

While an equal share of the commission may be an expectation, that is not necessarily what is done.  Nor is true that the commission should be shared equally.

Some local listing licensees will give the buyer’s realtor less than 1/2 the commission, and some will give more than 1/2 the commission to help attract a buyer.  It would be in the interest of the seller to know how the commission is being shared.  If the seller knows and is in agreement with the method that their licensee is using than everything is cool. 

Buyers should also know how, and how much, their representative is being offered to sell a particular house.  In todays slower market we are seeing more and more ‘BONUSES”,  offered to buyer’s representatives if a particular house is sold.  I wonder what a buyer would think if their Realtor showed them a house in which he was being paid 3 1/2% commission but did not show them a similar house that only had a 2 1/2 percent commission.  

Let’s have a little transparency here…it will help all of us in the long run.

If you want to work with a Realtor who gives you many options on how to pay, and how much to pay…check out my consulting articles. And if you want specific numbers where I have a sliding scale from $150 all the way to a 7% commission, give me a call.  My cell is 907 232–7900

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Back in the early 90s when I first started in real estate someone thought it would be a great idea to train real estate agents as mortgage loan brokers as well.  The thought was to have a one stop office.  Lets just have them find a house and get their loan from the same person.

I was brand new in real estate and the obvious conflict of interest didn’t even occur to me so I signed up.  I took the training and learned a lot about how mortgage brokers work and how they make money.  It was the making money part that made me decide to step back out of it. 

But I did help two friends refinance their home.  They got unbeatable loans because I personally and purposefully didn’t make a dime on the deals.  I did not charge them any loan fees and priced their loan at par, which was the lowest interest rate quoted to me by the company.  Basically, they got the wholesale rate.

I learned that mortgage brokers have a lot of control over how much money they make on each loan.  They can charge fees to the borrower that are shown on the good faith estimate and on the settlement statement AND they can make money on the “back side” of the loan that is not disclosed anywhere. 

It is very possible that a mortgage broker could charge no up front fees at all on the loan and still make more money that another lender who charged a 1% loan origination fee.  According to Karen George in Arizona it is possible to make as much as 5% on a conventional loan.  In fact even more can be charged for a sub-prime loan.  Most of the local lenders don’t make anything close to this amount, but they should still tell you how much they are charging.

Why is it important to know how much your lender is making?  Because YOU are paying the bill.  The money that is going into the lender’s pocket is coming out of yours even if you don’t know it.  I think people should be paid for the work they do, and they should be paid fairly.  But I think it’s fair that we know how much we are paying for a service.

Most but not all of the local lenders I talked with were very defensive when I asked them how much they made on their loans.  Apparently most of the local mortgage officers, (as opposed to mortgage brokers), don’t have much control over how much they are paid.  But they still didn’t like talking about it. 

There were three people that did seem open about discussing this with their clients.  These were Tara Murdoch-Barnes and Jo Oxentenko of Wells Fargo Home Mortgage,(376–2308), and Kirsten Forbess of Alaska USA Mortgage, (352–8306).

If you have read this far, it means you are interested in this subject.  If so, check these two websites out that were recommended by a local loan officer friend:

• http://www.searchlightcrusade.net/ 
• The Mortgage Professor

Some may say ‘what’s good for the goose is good for the gander”,  how much are real estate licensees paid?  I’ve discussed that before in commissions.  But there are some things most people don’t know about how Realtors are paid and that is a subject for tomorrow’s blog post. 

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For years I have tried to think of ways to give people more options on how to accomplish their real estate goals. I have experimented with different approaches over this time but only recently discovered ACRE.

ACRE, (Accredited Consultant in Real Estate), is a new organization of Realtors whose goal is to provide a more transparent relationship between the consumer and Realtor. Take a look at the Consulting Times so that you can understand more about this new real estate model.

It was started by a group of Realtors that included Mollie Wasserman who wrote the book, Ripping the Roof Off Real Estate.

It seemed to fit the way I want to work and so I signed up and now am the only Accredited Consultant in Real Estate in Alaska.

My brother Jay and I have been discussing our fee schedules and now can give options to our clients. There are many different scenarios where you might need a real estate consultant rather than a full blown commissioned Realtor.

For example, perhaps you want to market your home yourself but just need some coaching along the way?we can help.

Or maybe you and a co-worker have already agreed on the basic terms of a sale but would like some guidance to put together a good contract?we can help.

Perhaps you are interested in a home that is for sale buy owner and would like some assurance that the asking price is reasonable?we can help.

If you want your house on the MLS and help in negotiation and management of a transaction, but can handle the rest yourself?we can help.

In fact, we can provide a full blown marketing package with price research, MLS, representation, and transaction management on a consulting basis that will still cost much less than a normal commission structure.

Jay and I have over over 26 years of combined real estate experience in the Matanuska Valley. We know how it works and do this full time.

You will NOT hear any canned sales lines from us. We don?t spend our time practicing sales scripts and role playing them on each other so that we can manipulate you into doing what we want you to do. We do not pressure or manipulate you to do anything.

We feel that our role is to LISTEN to you, and then to try to help you meet the need that you have.

In other words?we ?CONSULT WITH YOU, NOT SELL YOU?.

Give us a call at 907 373?0999 or drop us an email in you are interested in hearing more.

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I have written several articles about real estate commissions and how much licensees do for free. In those articles I didn?t even come close to exhausting all the services that real estate professionals provide free of charge.

Because of these free services the licensees have to charge fairly high commissions for people that do sell or buy. So what is really happening is that sellers and buyers who actually buy homes are making up for the time Realtors spend with sellers that do not sell and buyers who do not buy.

My brother Jay and I have discussed in length some ways to help people with their real estate needs while charging reasonable rates that make it worth our time and theirs.

Recently, I completed the Accredited Consultant and Real Estate training and intend to offer a different way for consumers to pay for their real estate services. The consulting model will give buyers and sellers options on how they pay for real estate services. In all cases, buyers and sellers will pay less for the real estate services that they need unless they opt for the normal commission.

The advantage of using a commission is that the seller doesn?t have to to pay anything unless their home sells. The Realtor carries all the risk. The disadvantage is that they have to pay a much higher price for that service. If the Realtor knew they were going to be paid for the service whether the house sold or not, they could do the work for less money.

We will also be offering these consulting services to people who are marketing their home on their own. Often when a For Sale By Owner seller finds a buyer he/she is at a loss of just how to evaluate an offer. This is the stage where an experienced Realtor is worth hiring. We have been through hundreds of these transactions and we are willing to consult with a For Sale By Owner for a reasonable fee.

Sometimes a buyer and seller are already in agreement verbally and want to complete a transaction but don?t know how to begin, a consultant can be of help there as well.

Coordinating a transaction from contract to closing is another place that an experienced Realtor is worth the money, as is troubleshooting a stalled transaction.

Anyone can put a sign in their yard, put an ad on Craigslist or the newspaper and wait for the phone to ring. It?s when they get an offer that they need experienced help. Often they will bring their deal to an attorney for help. While an attorney will definitely help get the contract completed correctly they do not do real estate transactions every day of the week. They are are not going to bird-dog the transaction through to a successful close within the time frame of the contract. That is where a real estate consultant can be worth their weight in?well not in gold?but maybe in copper.

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In a previous post in the Wasilla Real Estate News I discussed what we do for FREE! But I was only half finished. That post only covered the work we do up until the time you get an offer. 

After the offer I will help you negotiate the tricky path toward closing.  We will need to respond to inspectors, engineers, appraisers, underwriters, loan officers, title officers, the buyer and their realtor between the date of the initial offer and recording.

•  After an offer comes in we will usually put together a counter-offer.  In fact, even if the offer is pretty crummy, I recommend countering back with something that would work.  This means that occasionally we counter back with full price and terms…but still counter
• Sometimes it takes several counters to finally arrive at an agreement.  I think my record is six counters over a three week period.  But hopefully we do finally go into contract.
• The inspection is the usually the first hurdle.  The buyer normally hires a qualified inspector to look at the house for them.  The inspector ALWAYS finds some issues that he thinks should be addressed.  I help you determine what really needs to be done and what is often just a desire of the buyers.  For example, if the house doesn’t have gutters, the inspector almost always suggests that they be installed.  Gutters are a great idea and often help prevent damage to a home, but are not a code item and won’t be required by an appraiser or underwriter.
• An engineer will inspect the septic and perhaps the house.  Occasionally an inspector asks that an engineer inspect the structure of a home.  A structural engineer might inspect the foundation or another part of the house.  The septic system will almost always need to be inspected and approved by an engineering firm.  If an engineer discovers an issue you have a real problem.  I will help you determine the best way out.
• The appraiser will determine value.  The appraiser works for the lender,  but their fee is paid by the buyer…or seller.  The appraiser is NOT an inspector and cannot be depended upon to find hidden defects in a house.  But if the appraiser does call out a safety problem the issue will almost always have to be addressed to keep the transaction from falling apart. And if the appraisal comes in below the sales price, you have a big issue, however, we can usually find a way to work through it.
• The loan is in process.  While the inspection, appraisal, engineer reports, and title work is progressing the loan is being processed.  This work is done by a loan processor that takes the file from the loan officer.  The loan officer is usually the person who takes your loan application.  The processor verifies your employment, checks the credit, and generally makes sure that everything you need for your loan is gathered together.  It generally takes some time to get the whole loan package together.  Part of our job is to check with the loan officer and loan processor during the transaction to see if we can help get anything done. 
• The title company makes sure the title is clean. There are often issues that need to be cleaned up on the title before we can close.  Sometimes there are liens that need to be released.  Occasionally there are mineral leases, easements or other items that need to be disclosed to the buyers.  We have a title search done right after we list your property to head these issues off at the pass. 
• By this time I have made ….ZILCH. 
• Almost every day we talk to the buyer’s realtor about the transaction.  Often we talk several times a day.  And there are many emails and faxes back and forth.  Communication is very important during this time and it is also important to be able to handle stressful situations without losing your cool.  We always have to remember the our purpose is to help you toward your goal of a successful transaction, not winning our personal argument.
• Schedule closing at a time and place convenient to you.  Often we will pick up documents in Anchorage to expedite a closing for you in a place that works best for your needs.  The next business day after closing the title company will normally record the transaction. 
• YOU GET YOUR PROCEEDS CHECK !  And we finally get paid. 

I actually enjoy working by commission because I feel good about being paid for accomplishing a goal.  But in one way, it is the commission system that increases the cost of selling a home.  If Realtors were paid for the work they did whether or not the house sold they could afford to charge lower fees. 

I have toyed with the concept of working on a consulting basis for years.  In fact, I have done it a few times.  Recently I discovered the Accredited Consultant in Real Estate .  I am seriously considering this training with a goal to lower Realtor fees for house sellers and buyers. 

Stay tuned. 

Until then, I still charge 5–7% commission rates depending on the level of service and marketing you feel that you need.

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In a previous posting on the Wasilla Real Estate News I introduced a discussion of commission rates. I just barely talked about the fact that I offer commission rates between 5%-7%. I am willing to also discuss rates and fixed fee contracts at lower and higher rates?but not in this post.

First, let me tell you what I do FREE OF CHARGE !

• Make an initial visit to your home. I visit your home for a quick tour so that I know what I?m going to research.
• Complete one to four hours of research. The amount of time depends on the uniqueness of your home. After determining the price I call 2?3 other experienced realtors to get their perspective about the market value.
• Meet with you again about the price. This can be done over the phone or by email. If you are ready to list at this point we will meet in person to complete the listing documents.
• Review listing documents with you. I need to have the listing contract, Alaska Real Estate Consumer form, and property disclosure forms completed and signed in order to have a complete listing. Once they are complete we begin working on the active listing. So far I am still working for nothing.
• Take photos of your property. I need your help here to make your house shine. Photos are extremely important and interior photos need to show a clutter free house with furniture tastefully arranged.
• Enter the listing on the MLS, (multiple listing system). I belong to two MLS systems, the Valley MLS and the Alaska MLS. The majority of properties in the Mat-Su Valley are sold by Valley Realtors, but a growing amount of Anchorage licensees are selling Valley property so it is important to belong to both MLS systems.
• Order title search. At this point Jay Van Diest becomes involved. He is also working for you for free since he is also paid on commission. The title search will determine if we need to clean up any title issues before closing.
• Check at DEC, (department of conservation), for well, septic, and asbuilt survey. Now Rochelle Peterson is also working for you. Except she doesn?t work for free, I pay her by the hour ? but you don?t! She physically looks through the DEC files to see what is filed on your property. Hopefully she finds something there, if not it will complicate things on the sale of your home and cause us more work. It is surprising to note that between 1/3?1/2 the homes are missing files at DEC.
• Post your property on my website. I try to put some additional info on my website about your property. This can include your disclosure forms, asbuilt survey, well log, and covenants. It depends what we have gathered so far. I will often post your property soon after it is listed and the add these documents later after we get them from you, the title company and DEC. I urge you to read this post and help me with the accuracy as well as elucidating the features of your property for potential buyers. I?m not proud, I?m happy for the help.
• Put up a sign on your property. This is usually done by Rochelle but Jay or I may do it as well. Other than the internet, this is the most important marketing tool.
• Install a lockbox. This is a Realtor lock box with your key in it so that other Realtors can access your home to show it when you are not home. This is an electronic lock box that I can read to see who has accessed the key and when.
• Review the online sites. By this time your house is in front of at least 97% of the potential buyers. It is on the Valley MLS and AKMLS which are internet based sites for Realtors only. It is also on matsumls.com and alaskarealestate.com as well as realtor.com, valleymarket.com, and a myriad of other sites across the internet that pick up listings from these sites. In addition, links to these sites from hundreds and hundreds of other realtor based websites drive traffic to your property.
• Put it in the Homes and Lands Magazine. This is where the 5% listing starts to differentiate from the 6?7% listings. It will go into at least one Homes and Land magazine at 5% but will usually run continuously at the higher rates. I may also use other print media for the higher commissions. Honestly though, it is the rare buyer who only finds their home through print media these days. Regardless of where it runs, I?m still working for free. Although, by now, I have spent a lot of time and money.
• Arrange showings. Depending on how your property is shown, I will be talking to potential buyers and other realtors about your property, giving them information and arranging showings on your property.
• Follow up on showings. I follow up with other realtors on the showing of your property. This is extremely important in a constantly changing market. We set your initial asking price based on what we could see in the market. But the market is talking to us during the marketing period and we need to listen. Sometimes it isn?t just talking to us, sometimes it is SCREAMING at us. We need to listen and respond.
• Review offers with you. This is where the rubber meets the road and experience helps. I will advise you on the merits of the offer and help you put together a response. I will talk with the Realtor who made the offer, talk with their loan officer if possible, and guide you on the best way to make the transaction work.
• I?m still working for free ? but this post is getting too long so I will continue it later. The next post about working for free will be at least this long.

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Sixty Minutes recently did a piece on real estate agent commission rates. I didn’t see it because I don’t watch TV but I heard and read a lot about it.

In my old website I had a page specifically devoted to my marketing plans and the amount I charged for each plan. I want to begin to reproduce that with this article as an introduction.

I believe that the consumer should have a choice so that they only need to pay for what they need. To that end, I am constantly thinking about and revising the way I do business to help meet consumers choices.

I offer commission rates from 5%-7% for different levels of full listing services. In addition, I have certain fixed fee plans where I will help people with their real estate needs to just help write up a contract, solve a problem, or give marketing advice. I will also work by the hour as a consultant. I will expand on the details in future posts to this website. Stay tuned.

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