I’m starting to see some pretty motivated Sellers. Of the 6 residential properties in SLO County that closed escrow today, 4 of them had significant price drops from the List Price:
- An Arroyo Grande home that originally listed at $1,750,000 sold for $1,260,000.
- Another Arroyo Grande home on the market for 104 days was listed at $799,000 and sold for $650,000.
- An Atascadero home on the market for just 79 days was listed at $729,000 and sold for $580,000.
- Even mobile homes are feeling the price pressure. A Cambria home listed at $257,000 sold for $138,000.
I read that Ellen Degeneres has a new segment on her show where she takes real photos of Realtors and makes fun of them. Here’s the page where you can send in a photo of a Realtor. I wonder if I should send in my favorite area real estate agent…Bucky Buthman?? http://www.pismohometours.com/
I really need to do some additions to Bucky’s site since I haven’t changed it for awhile. Someone emailed me some photos for the site that I haven’t got around to putting on. Maybe I’ll get to it soon…
Ryan’s Mortgage Blog:
I am hoping to get some feedback from readers today on a new program. Our company was asked to help promote a new product which is supposed to be the answer to a Reverse Mortgage. I will present it to you like it was presented to me and please let me know what you think about it. This new program gives approved candidates 15% of the current value of their home in debt free cash, in return for half of the future equity in the property. There are no closing costs, just a small application fee. Approved candidates must be over the age of 65 and meet certain heath guidelines. Primary, secondary, commercial or investment properties are all ok. The property can still go to your heirs. Here is an example: 70 year old Mary owns a home valued at $1 million. With this program she will be given $150,000 cash (no interest) all at once. 10 years later she decides to sell her home and it is now valued at $1.5 million dollars. Mary will be able to sell her home and keep $1.25 million, but she will have to give $250,000 back to the mortgage company. The $250,000 is half of the equity built up during that 10 years after she made the deal with the mortgage company. The numbers are very optimistic in this scenario, but it makes it easy to see where the money goes. If Mary happens to pass away, her heirs would still get the property but would have to give 50% of the equity built up after her deal. What do you guys think of this? Basically the lender is banking on home values going up over the next 10-15 years and will give you money up front in return for the future profits of the house. This way you still keep the equity you have built up prior to this date. Another scenario would be to take this 15% and invest it else where if you know a thing or two about investing. This may make you more money in the long run versus the appreciation on your house.
Feel free to ask any specific questions, but I was just hoping to see if you thought this was something that could be a better alternative to a reverse mortgage. RBaker@PeregrineLending.com or 805-540-0866.
I updated the Single Family Home Inventory Reports for individual cities on the http://www.slowatch.com/ page. Scroll down to “City Stats” and then choose “Inventory Report” under a city name.
I also added the updated Sold Graphs from First American Title at the bottom of the page. In addition to a SLO County chart, now there are charts for different areas in the county.
The Tribune reported today that the bar/grill that opened in the old Tortilla Flats location is up for sale. The current business purchased Tortilla Flats in 2006, spent around $300,000 in upgrades, and opened as Doc’s Karaoke Bar & Grill. The asking price is $480,000.
I remember the days when Tortilla Flats had a long line of college students waiting to get in on Friday and Saturday nights. Let’s hope the new owners have better success at this location.
I haven’t blogged about the “C-word” for awhile…Commission…so I thought it was time.
Some home owners/buyers still don’t understand how real estate commissions work. Some still think that a listing agent gets paid 5-6% while forgetting that the agent representing the Buyer gets some of that (usually half but that isn’t always the case).
Here’s something else that you may or may not know about.
Let’s say there are are 2 homes each priced at $500,000. The Listing agreement says that the Listing Brokerage will get 6% total commission and split it 50/50 with the Brokerage that brings the Buyer. So that means 3% for the Listing Brokerage.
So how much will each Listing Agent receive when they sell the home?
The answer is that it varies. Here are two possible amounts:
- Real estate agent A gets a a check for $14,700
- Real estate agent B gets a check for $6,600
Why does real estate agent B get half as much as the other agent?
It’s because a large piece of the pie goes to the Brokerage. Real estate agent B gets a cut of the gross commission depending on their arrangement with the owner of the Brokerage. If the real estate agent works for a franchise (a name brand), there is also a franchise fee that is deducted from the commission too.
In the above example, real estate agent A is a Broker that has their own independent brokerage and works out of their home. Real estate agent B works at franchise of a name-brand nationwide brokerage. Real estate agent B gets a 50% cut of the net commission (after the franchise fee is deducted).
The calculation is as follows:
Real estate agent A
$15,000 gross commission
$ 300 Errors and Ommission insurance
———
$14,700
Real estate agent B
$15,000 gross commission
$ 1,200 8% franchise and advertising fee
$ 6,900 Broker’s cut
$ 300 Errors and Ommission insurance
———-
$6,600
So, when you list your home and the agent tells you how much commission they charge…it’s not always an apples-to-apples comparison to other agent’s proposals. In the above example, the independent Broker won”t provide you with a recognizeable brand name for your yard sign, people in their office to back them up, and other things the other agent can offer but they will be making over twice as much as the other agent.
If you want to do an apples-to-apples comparison, ask the agent how much they will make and where the rest goes. Don’t be suprised if some agent’s seem shocked when you ask as this isn’t something that is normally discussed. Also, don’t assume that if an agent gets a 50% cut in an office that everyone in the office is the same. The cut an agent makes varies just like salaries do in a company.
