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Thursday, October 30, 2014

Saving that Real Estate Commission

Everyone likes to save money. So how can you save money in a real estate transaction? Find that new "e-Realtor" with a discounted commission? Or, better yet, don't even use a Realtor at all? A FSBO (For Sale by Owner) is bound to save you a bundle. Right?

The correct answers are No, No and No. Sorry, the old saying "There is no free lunch" is alive and well in real estate. Let's take a look at discounts and FSBO's and find out a few of the reasons why you might want to not go that way.
Discounts: "E-Realtors" who will rebate you something at closing seem to be the latest rage. You can even use their search engines and e-mail updates to find the home you want. It sounds good but did you know: It might be a problem seeing more than a few homes. It might be hard to schedule appointments. It might be difficult to get answers, advice and counsel. And your agent might be new and inexperienced. Why all these problems? The "e-Realtors" are all on a modest salary, not commission. They have little incentive to "go the extra mile" to get the job done for you. In order to make money (after paying the rebates) they need to deal in large volumes of customers, not in quality service, assistance and details. So, is a small rebate worth the chance of less than adequate representation? Probably not.

FSBO's: The biggest problem with a For Sale by Owner is that both buyer and seller think that they will be saving money by avoiding a Realtor's guidance, expertise and cost. Unfortunately, somebody usually gets burned. Lack of knowledge and information combined with greed, leads sellers of most FSBO homes to overprice them. Worse; buyers tend to be uninformed, unprepared and unqualified. For the seller this can result in the home not selling at all or an unqualified buyer trying to buy it (unsuccessfully) and wasting the seller's time. For the buyer it can lead to paying too much or buying a home with one or more unrecognized problems. In either case someone loses. Do you want to be that someone in the hope of "saving" a few dollars? Probably not.
So, if discounts and FSBO's don't work, how do you save money in real estate? The best way is to find an honest, experienced Realtor and follow her/ his sage advice and guidance. You will save in the long run because that Realtor will earn his commission the old fashion way: by working long and hard for it.

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