As any liberal arts major knows, “Do you want fries with your order?” is the phrase which makes or breaks your success. Adding on a $1.49 item where the raw materials cost approximately $0.08 is how McArches makes its big money. If you can add a soft drink, the profit margin becomes even greater, so the value meal is the best bang for buck, and the one the customer is encouraged to consider.
Real Estate traditionally has come packaged as a value meal menu item. For the bargain price of around 6%, you could have someone agressively market your property and other agents bring a flood of potential customers through your door. Items like paperwork, negotiating, coordinating, etc., which are not as much effort but make the commission check more worthwhile, come to the consumer at no extra cost.
Now, an insidious dessert menu item has wiggled its way onto the menu. You’re underwater and want to short sale? There may be a 1.5% fee for having an outside or expert team negotiate that sale, which comes via a purchase and sale addendum. Usually it is the buyer who must agree up front to absorb this fee because of course the seller can’t afford to even pay the commission; that is at the discretion of the lender.
If the buyer wants to purchase a short sale so listed, because it is not part of the price of the house, the buyer’s lender will not fund it; the buyer will have to up front that fee at the closing table. Just for an example, on a 1/2 million dollar home with a 3.5% down on an FHA loan, the buyer will bring $17,500 in downpayment and another $7,500 in short sale fees. The rest of their closing costs notwithstanding, that would be $25,000 in certified funds at the table. Does that give your customer pause? You betcha!
My issue with this? Shame on each and every one of you who call yourself “full service” real estate agents. When the public in general feels agents simply list a house on the MLS and wait for the check to roll in, this type of sloth only strengthens that belief. It is lazy and an indication you are not willing to take on the task of educating yourself on how to do a short sale. If you can list a short sale, learn how to do one. If you don’t care to exert the time and effort, refer the listing to someone who can. It should not encumber the consumer that you have to hire someone to do your job. Woe to the buyer who wants to purchase a house only to find that despite the lower price tag, the add on fee they must agree to before the contract executes, may have just tacked on enough of an additional price tag to kill the deal.
Every agent and broker needs continuing education hours. Take classes on how to become a well rounded agent. Set yourself apart from the armchair quarterbacks who delegate and charge. You will make money because you are a better agent and other agents will be pleased to do business with you.
If real estate were just about signing the listing agreement, then marching to the bank, everyone would be doing it. Take pride in your profession. Learn to do it well. End of soapbox.