Money Talks; Bullshit Walks

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STREET SMARTSTWENTY ONE years in the Real Estate Biz today.

I’ve gotten quite a few calls from people this year who don’t seem to have any “Street Smarts” about the value of money. Odd but true.

1) Had a buyer from out of state call me to complain that he made an offer on a house and a few days later he called the seller who told him he took an offer from someone else. The buyer was furious! I asked him how much Earnest Money he put down. He said NONE. He didn’t see why he should have to put up any money until closing.

Do you HAVE TO put down Earnest Money UP FRONT? No…no law says you “have to”.

BUT…Money Talks; Bullshit walks. An offer with NO EARNEST MONEY is…well, pretty darned easy to BEAT, don’t you think???

2) Was talking to an agent whining about POOR SERVICE from an escrow company. Asked him if it was the BUYER’S CHOICE of escrow. He said no, it was the bank-seller’s choice of escrow.

Did it close? YES! Was the service poor? YES! Why do you think the bank insisted on THAT escrow company? You don’ think they are paying the same as the average buyer or seller pays for escrow, do you?

Discounted Fee = “We will close it.”and they DID close it. They did what they were paid to do.

Money Talks; Bullshit Walks – WHY would you EXPECT to get the same service you “normally” get, if you agreed to the discounted service??? Pay less; get less. It CLOSED! You agreed to the discounted service and then what??? Wanted the better one? Get REAL!

3) Other people’s buyer clients are calling me. Had at least a dozen buyers call me in the middle of Real Estate Transactions this year.

ALL of them were having second thoughts about the value of the house they were buying. Worse…several others called me about a house they just bought!

a) They wanted my opinion of the price and value.

b) They ALSO wanted to know if I thought they were making a mistake buying that particular house.

c) They wanted advice regarding how to proceed in a negotiation of the home inspection. This relates to a) as they were trying to recoup at inspection mostly due to their 2nd thoughts about paying too much up front.

These are reasonable questions that my clients don’t even need to ask me. Why are OTHER PEOPLE’s clients calling to ask me these questions???

THERE IS SUCH A THING AS PAYING TOO LITTLE FOR A SERVICE!

NOTHING…IS TOO LITTLE. Seriously, having no one to second guess you is too little. You want someone who is going to say “Are you out of your freaking MIND? Do you know there are 75 sex offenders living within a mile of that house you “chose” to buy?”

I know how much is TOO LITTLE…because their clients are calling ME! Often when it is pretty much too late to do anything about it.

Saving Money is GREAT! I will often cut my price to the bone, because saving money is fabulous! But what I will not do is cut it to the point where you are going to get less than you need.

Lots of experiments with fees out there, and there is a LOT of room for lower fees. especially when the home price is over $500,000. But TOO LITTLE is usually not a good thing.

If you wake up in a cold sweat after your contract is accepted and want an opinion from someone you trust…and that person is NOT the person you hired. Well, then you paid too little.

Do I help the people who call me after hiring the wrong person? I think that’s against some rule or some law for me to do that…so I’m not telling. 🙂

Anyway…21 years in the biz. Didn’t want it to pass without saying a few words about some of the bullshit.

A special thank you to all of the many people who have hired me over the last 21 years. I appreciate the fact that you picked me, when there were so very many to choose from.

Related posts:

  1. Something EVERY home buyer needs to know BEFORE they step on an Owner’s Property.
  2. Do you want a “full service” real estate agent?
  3. Do “discount” Commissions = More Failed Pendings?
  4. Are you ready for BuzzRE???

31 thoughts on “Money Talks; Bullshit Walks”

    • Hi Carol! Thanks for stopping by. I was thinking this morning of an old saying , “he doesn’t have the good sense to come in out of the rain.” It doesn’t work here in Seattle, or we’d rarely get out. 🙂

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  2. Congrats on 21 years!

    For me its just been 16 years but I feel I have lived through a LIFE TIME!

    Real Estate is changing very quickly and what emerges in the next ten years will FINALLY be what we all have been waiting for. FAR LESS BS and MUCH MORE COST SAVINGS to Buyer and Seller.

    You don’t have to look very hard to find business models that are SOARING:
    http://finance.yahoo.com/q?s=pcln&ql=1

    From these successful business models we continue to see what the public demands and what services they will desire in the future.

    Real Estate will be even better for you going forward Ardell because you are already ahead of the curve on the 20k Agents remaining in the slowly-dying MLS system as we know it.

    Cheers and continue to adapt!

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    • Ray,

      Since I get so many calls from people wanting to “supplement” the service they hired, I was wondering if part of the changes should include a flat fee consultation, if needed, from another service. That may end up being part of the adaptation to lower fees. The demand is obviously there, and people do offer to pay me to talk about what they are having a problem with, or to come out and just take a look and fill in some of the blanks.

      There seems to be a rule against a “2nd opinion” service in our biz, yet so many seem to need it.

      Your thoughts?

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      • save your time…flat fee up front…or ANY up front fees is NOT accepted by the masses. The public is far to saavy now and they have been ripped-off too much to pay ANYTHING up front.

        From years of grinding it out at Puyallup Fair, Tacoma-Seattle Home Shows, Cornucopia days, and other events the public wants delivered:

        THE BEST DEAL
        Excellent Service
        and they want to get paid for their leg work looking for their home. Over and over All I have heard for years is: “I found my home anyway” “My Agent did nothing” “You guys get paid more then my Doctor” over and over…

        Adapt these 3 into your NEW model of real estate going forward!

        BTW Ardell..keep your overhead real low and its easy…

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  3. Number one congratulations on 21 years in the business.

    Second is that this post is the heart of the Real Estate debate about the value of Brokerage.

    To compliment you, there is no doubt that you do contribute. Your perspective is in the clients interest, it’s specific to your client. The other thing is that you express what your opinions may be, right, or wrong. People need to know. Even the stories of past experience are helpful to people trying to decide.

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    • Thank you, David. I do think that the problem was created by traditional brokerages and attorneys. The Alternative models sprung up as a result, and it may in fact be the best and only solution going forward.

      It started about ten years ago when Brokers started counseling and training agents based on their liability vs good service. The first event was telling agents not to attend home inspections. Literally told them not to listen, to bring work and sit out on the front step or use the time to do other business instead of paying attention to what was going on during the inspection.

      As you know, I touch just about everything in my clients’ homes. I move their furniture, sort through their crap, take down their pictures and bring some of my own. I’m all over it. But most brokers would think there is too much liability in touching other people’s things to get a home ready for market.

      Most agents just point and shoot at whatever the room looks like without making changes. Stick up the sign and go. Reduce the price of the home to accommodate the mess instead of “getting it ready for market” in the first place.

      By not only sponsoring bad work ethic, but encouraging it, they opened the door to services that do THAT for less, when what most people need is someone to roll up their sleeves and help them do what they need to do.

      Less and less is done within the commission structure and that is sanctioned by most every brokerage. The answer to THAT is lower fees, but it still leaves a gap in what is needed to get the job done well.

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      • Last week in two back to back meetings with Real Estate agents the difference was very apparent between the two of who had control, and who was looking for an answer.

        One agent was active, with the home owner, in the preparation of the property, the other had ideas that were unformulated.

        More agents ask us questions this year than in the past. More agents are untethered from the goal of making the sale happen. I think we can say they are hedging their bets, they are hoping a deal will happen, or come together.

        What I think you are saying, and what I hear from you, is that you are in control. People pay you to be in control. People need to rely on others to guide them. Right, or wrong people need to be focused on the goals of Real Estate.

        I think Brokerages just simply began to concentrate on getting as many Real Estate agents in the office to pay fees as they could. In that process liability became an issue. I blame the lawyers for the misguided indifference to the nuts, and bolts of the Real Estate transaction.

        What I harp on is that agents don’t know, or understand the product they sell. To me there should be more mentoring, more in house, in office support for how the over all process works, but that’s a topic for another time.

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    • Thanks Jillayne! We need to have a another face to face when the weather gets nice and everyone is done with school and graduations.

      LOVE what you are doing to help raise the bar in the lending industry. In too many ways both the lending industry and real estate industry were giving BS for the higher price. When 80% give inadequate…lower pricing is likely the best answer, coupled with some reforms.

      You do great work!

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  8. 21 years and still standing in this crazy business is a miracle. I learn something about real estate and myself everyday that we work together.

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  10. Ardell, I hope you’re still excited about heading into the office each day. I still am after 22 years even with the ups and downs in this industry! The idea of some kind of consultation fee is an interesting one. Is anyone charging flat fee for all the general inquiries and valuation questions we get on a regular basis. I typically provide the information I can within agency guidelines and usually just in the course of being helpful. Any other professional would be paid for advice and expert opinion which we are accustomed to providing for free. I like to provide the services, but that same time spent with clients results in paychecks so I need to make judgement calls on a regular basis regarding who I can help.

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  11. Happy 21 years Ardell! You’ve seen the good, the bad, and the ugly of real estate during that time – where are we at again? 🙂 Refreshing words in a time of bargain shoppers and reo housing contracts. Personally, I feel many people forget that a home ownership is a primary living residence versus an immediate investment.

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    • Hi Toby! Thanks for stopping by! Hope you are well.

      We are still in the ugly…sad to report. 🙂

      Much of that has to do with short turnover for some homes. People really need to set their timeframe at 7 to 10 years. Trying to see in the first 5 has historically created problems for the market. While that was not true in recent history for the decade of 1996 to 2006 as to selling, it is a long term principle to remember.

      There is such a thing as too little, as my post indicates…but there is also TOO MUCH, and while we don’t all agree with how much IS “too much”, the industry would be better served if more had a CAP on commissions in addition to a minimum as I do.

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      • Couldn’t agree more on the home ownership time frame. Living in a place for just 3-5 years, even more so in today’s market, is not financially feasible. I have friends that are now default thinking towards the long term idea of home ownership instead of the short term and immediate financial gain.

        I do think that living in the land of excess, it is doubtful that commission caps – minimums are already set by some brokerages – will ever be the norm. Now that I work under a brokerage – been a nice relief from being an independent – I just have to follow the rules, not make them 🙂

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        • Jerry,

          I prefer that my clients choose me for reasons other than price, so it’s not really an “offering”. I, like most traditional agents, don’t advertise discounted fees. Unfortunately that makes us targets for those who suggest that traditional agents never have a discount, especially on the buy side. It just isn’t true.

          But I think the lower commission should be the icing on the cake…not the reason a client chooses the person who is going to represent them. Based on my experience, that usually works better and best for the client.

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