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An Elephant. A Room.

A lot is being written today about the lack of transparency in real estate. At issue is how agents are paid. Lack of transparency may be the case for other real estate companies, but from our start, Homebuyer Associates has explained, in writing, how agents are paid. Transparent from day 1.

What is the elephant in the room? The elephant, a metaphor for a topic that is obvious but no one wants to discuss: Money.

Bad financial advice takes on many forms. Sometimes it’s straight-up wrong. Other times, it’s wrong for the moment, circumstances, or person. The common theme is someone trying to persuade you into doing something that financially benefits them more than you.

Let’s take a look at the elephant:

1. An agent only makes money if you buy a home. Of course agents tell you to buy a home.

Answer 1.

John Bogle: Enough to me is one more dollar than I need.” We have enough that we can afford to be honest with our clients – even when we don’t make money.

In my last blog I recommended you (Sellers who want to sell and buy and buyers who want to buy.) should be active in the market now. It may be foolhardy to wait for rates to fall. When rates fall…demand will rise. Better to lock in an asset now and refinance if rates drop.

But we’ve also told people not to buy as they could not afford what they wanted where they wanted it. In one case the potential client was grateful and in the other offended. We just wanted to be honest and transparent.

2. The quicker you buy a home the more money agents make.(Time is money.)

Answer 2.

John Wooden: “Be quick but don’t be in a hurry.” Our goal is to have clients buy a home based on information, not emotion. That takes time. The record is 4 years and that doctor client remains a friend.

Now don’t misunderstand, we don’t waste time (ours or yours) by looking at homes you can’t afford or looking at homes for fun, but we do take the time to allow our client to make an informed choice.

3. The seller pays a commission which is split 60-40 in most cases with the listing agent keeping 60% and any other agent 40%. Industry discussion is questioning this practice.

Answer 3.

Michael Holloway: In my early years in the real estate business sometimes agents or for sale by owners didn’t want to share the commission to which I replied, “You’re doing a great job of not paying money to anyone, you haven’t sold your home.” The commission was eventually shared.

4. Commissions are negotiable.

Answer 4. Picasso: A man once interrupted the artist Picasso at his evening meal. Pulling a napkin from his pocket the man said, “Could you sketch something for me? I’ll pay you for it. Name your price.”

Picasso took a charcoal pencil from his pocket and made a rapid sketch of a goat. It took only a few strokes yet was unmistakably a Picasso.

The man reached out for the napkin but Picasso did not hand it over. “You owe me $100,000,” said Picasso. Annoyed, the man said, “$100,000? That took you no more than 30 seconds to draw.”

Picasso stuffed the napkin in his pocket. “You’re wrong,” he said, “It took me 39 years. (Homebuyer Associates has been in business 39 years.)

Ask:  Please forward this newsletter to at least one person who needs it.

Selling? We don’t list homes for sale so contact us for an objective, independent opinion on price and the process of selling in today’s market.

We’ll give you the inside scoop on the good and bad practices in real estate.

Having helped over 1,800 homebuyers you learn a lot about the selling side.  The goal: Make educated and informed decisions.

Thanks for reading,
Michael D. Holloway

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Homebuyer Associates
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Homebuyer Associates
1835 N. Riverwalk Way
Milwaukee, WI 53212
Phone: 414-254-4129