Elizabeth RhodesSeattle Times Staff Reporter Re: Buyers’ new buddy
Sunday, February 5, 2006
Dear Ms. Rhodes: I have just finished reading your article and don’t even know where to begin. I am a licensed real estate agent with Windermere. My life has revolved around real estate since I was 6 years old and my mother became a licensed agent in the early 70′s and then I married a real estate agent before becoming an agent myself.After reading an article like this I always ask myself “Why us?” We are not the only industry that is paid on commission, but yet we are the only industry were people want part of our commission. I don’t go to Nordstrom and try on shoes and ask the salesperson for a kickback. When I buy a car, I don’t ask the salesperson to help me with my down payment, I don’t ask my insurance agent to pay for part of my insurance. “Why real estate agents?”
So after Redfin helps you write the offer – what do they do after that? Do they find you a home inspector? Attend the inspection with you? Counsel you on the findings? Help you negotiate through the inspection process? Counsel you on the many contingencies and time lines in a deal? Explain the difference between 5 days and 10 days? Is it legal to say you are putting 25% down when really your only putting 5% down and doing an 80-15? When is your earnest money due? And the list goes on. What now, hire a real estate attorney? But it’s Friday at 4:00 pm and the days are counting.
“A real estate agent can either make you or cost you thousands” Here are some examples:
The tale of two condos: There were to condos recently listed for sale in the Compass Pointe complex in Redmond Ridge. One was listed by a company I had never heard of (probably one of these discount brokerages) for $314,000 and sold in less than a week. One week later a similar condo in the same complex (same floor plan and square footage with some minor upgrades) was listed for $342,000 and also sold in less than one week. So, was saving 1 or 2% in commissions (approximately $3,000 – $6,000) worth giving up $28,000?
The One that Got Away: Last year we had a listing in Woodinville. A great house, but a fixer. This house was built in 1988, 3,700 sq. ft. on a large lot (.80 acre). With the repairs and some upgrading we estimated that the house could be worth $800,000 in the near future. We had bids totaling $80,000 for the work that needed to be done, so we listed the house at $569,900. Within the first week we had many showings and more than one offer. A potential buyer asked us to show him the house – we did. He and his wife loved the house, wanted the house. The first thing this buyer asked for was $10,000 from us as the listing agents. We explained to him that it would be an unfair playing field for the other buyers out there competing for this house and that he needed to get his own agent and present his offer with the others. We did eventually receive an offer from him which appeared to be prepared using the Redfin site, but he got beat by another buyer who had very good counsel and representation. He and his wife lost their dream house and the opportunity to earn instant equity because he was focused on that $10,000.
Really what is that $10,000 worth? On a 6% mortgage that’s savings of $50 a month or $600 a year. And since the average person keeps their mortgage for only 4.2 years, a savings of $2,520.00 over that 4.2 years. My feeling is that if you can’t afford $600 a year – you can’t afford a $569,000 house that needs $80,000 in repairs. He’ll probably spend that $600 in a bar trying to figure out where he went wrong.
The Repair that Didn’t Happen: I sold a house in September to a family moving here from California. Since they were out of the state, I handled the inspection and monitored the repairs for them. The biggest issue was water in the crawl space. The seller agreed to fix the problem and within a week we received a receipt for the work that was done. Good enough, most people would think. As well as being a licensed agent, my husband has had his general contractor’s license, has worked construction in Alaska, represented several builders our the course of 20 years and even built the house we live in today. He reviewed the invoice and had doubts. He went back to the house and for 2 hours tested the drainage system around the house and went into the crawl space and discovered that, in fact, nothing had been fixed. The first contractor merely cleaned up the mess, but fixed nothing. We went back to the seller and had him do the work correctly the second time by a reputable drainage contractor. That repair alone was over $4,000. So, was it worth it to my buyers to let me keep my commission?
In the end, you get what you pay for. Are you looking for a deal or a home. The right home can make you thousands of dollars and be one of your best investments, but a home can also cost you thousands of dollars.