In real estate, I hear stories of how agents negotiate on their commission to win listings right now. I charge 6% + $395, and I do not discount. I understand this might cause me to lose some listings, but I have my reasoning for not discounting my rate. For the sake of argument, we will say I just listed a $200,000 house.
I don't actually receive 6% commission. Whoever brings the buyer gets 2.4% ($4,800), which they split with their company. My company and I split 3.6% ($7,200). The $395 is often used to cover the cost of the title services we receive to assist with the closing, so that usually does not go to my company or myself.
I have a contract with my company to receive 75% of the commission the company receives. So of the $7,200, my company receives $1,800 and I receive $5,400. We're not done though. My company is awesome and pays the overhead for my office, most of my office supplies, postage for my advertisements, and covers my website. Let me tell you that most companies do NOT do that. Not only do they take up to 60% of the commission split from some agents, most also charge dues between $120 - $200/month.
Yes, off of a $200,000 property, I do make about $5,400 in commission. As soon as I receive that check, 25% of that goes towards taxes that I have to pay for on my own since I am a 1099 employee. So, $1,350 goes to taxes and I receive $4,050. According to the National Realtors Association, the average (median) full-time agent had 11 transactions in 2017. My average home price last year was $172,093.75. Six of those were listings and 2 of them were buyers. That brings my average commission to 3.3%, which I split with the company I was at (which took 60% of that commission at that time). I was a part time agent last year, so after putting 25% aside for taxes, I made $13,630. That's not a bad part-time salary for a girl from the Midwest. Even if I would been with my current company with 75% coming back to me, I still would have only made $25,555.
Numbers aside, I am an agent that is loyal to my clients and the vendors I work with. I communicate regularly with lenders involved in the transaction and the title companies to ensure that once there is an accepted offer the transaction moves smoothly. I am responsible for the deadlines of the contract and will work to ensure that we stay ahead of the deadlines to be in compliance of the legally binding document. I also put your needs above my own. I understand I do not get paid until a closing happens, but I do not let my clients settle on buying a house if it isn't the right house for them or push them to accept an offer if I feel the offer is not as good as it should be. I always tell my clients that they are the ones that are making the long-term decision, and that I support them in what they decide. I believe in customer service.
Wednesday, May 22, 2019
Sunday, May 12, 2019
What does Market Inventory mean?
If you are looking for a house to buy or are thinking about selling, ask your Realtor about the Market Inventory. You will likely catch them off guard if they are not on top of things in the market, but a good agent will be able to tell you how many months of inventory are on the market at the moment. I currently have the market inventory broken down by county and either up to $300,000 or over $300,000. I'll be talking about a lot of numbers, but these are numbers your agent should be paying attention to.
As of today, there are 1,263 homes available with at least three bedrooms in Milwaukee County for up to $300,000. Within the past 30 days, 544 homes sold. The market inventory is calculated by the current number of homes available divided by the number of homes sold the previous month within the same parameters. That means there is 2.3 months of inventory right now for that category.
The market is generally a seller's market when the inventory is less than three months, neutral around 3-6 months, and a buyer's market if it is more than 6 months. We usually see some shifts as the seasons change in Milwaukee county, with summer being more active and winter being slower. The inventory can also change from price cutoff changes and from county to county. For example, the current market inventory for three bedroom homes in Milwaukee county at $300,000 or more is 3.5 months. The current market inventory for a three bedroom home in Waukesha county (one county to the West) up to $300,000 is 2.1 months, and for at least $300,000 is 4.6 months. An agent will know if it is a market where selling prices will probably go for over list price, around list price, or for less than list price based on the inventory as well. The misconception is that it is currently a seller's market in the area. For homes under $300,000 in the counties I mentioned, this is still a true statement, although you can see the shift is coming. For homes above $300,000, it is in the neutral market zone, but is creeping closer to a buyer's market. I would advise my buyers and sellers differently based on the price point of the house.
However, it is also important to take into consideration that the number of new homes on the market within the past 30 days that are still active on the market is 570 homes for the under $300,000 range for Milwaukee County. So more homes last month were added to the MLS than were sold in that price range. In Waukesha county, although 221 homes sold in the above $300,000 range, 405 homes were added that are still active. If the number of sales do not increase proportionately this month, then the inventory numbers will only get higher, and the inventory was already at 4.6 months in Waukesha county for that price range.
The shift from being a seller's market to a buyer's market is coming. It has already started to hit in other parts of the country, so if you are thinking about listing, you will want to strongly consider to not wait since you may not get what you want for your home one year from now if you are in the $300,000+ range. Even the up to $300,000 range is starting to steady out to where you may not get a full list price offer and your home may sit for a few weeks to a few months on the market if you are holding out for a higher price.
As of today, there are 1,263 homes available with at least three bedrooms in Milwaukee County for up to $300,000. Within the past 30 days, 544 homes sold. The market inventory is calculated by the current number of homes available divided by the number of homes sold the previous month within the same parameters. That means there is 2.3 months of inventory right now for that category.
The market is generally a seller's market when the inventory is less than three months, neutral around 3-6 months, and a buyer's market if it is more than 6 months. We usually see some shifts as the seasons change in Milwaukee county, with summer being more active and winter being slower. The inventory can also change from price cutoff changes and from county to county. For example, the current market inventory for three bedroom homes in Milwaukee county at $300,000 or more is 3.5 months. The current market inventory for a three bedroom home in Waukesha county (one county to the West) up to $300,000 is 2.1 months, and for at least $300,000 is 4.6 months. An agent will know if it is a market where selling prices will probably go for over list price, around list price, or for less than list price based on the inventory as well. The misconception is that it is currently a seller's market in the area. For homes under $300,000 in the counties I mentioned, this is still a true statement, although you can see the shift is coming. For homes above $300,000, it is in the neutral market zone, but is creeping closer to a buyer's market. I would advise my buyers and sellers differently based on the price point of the house.
However, it is also important to take into consideration that the number of new homes on the market within the past 30 days that are still active on the market is 570 homes for the under $300,000 range for Milwaukee County. So more homes last month were added to the MLS than were sold in that price range. In Waukesha county, although 221 homes sold in the above $300,000 range, 405 homes were added that are still active. If the number of sales do not increase proportionately this month, then the inventory numbers will only get higher, and the inventory was already at 4.6 months in Waukesha county for that price range.
The shift from being a seller's market to a buyer's market is coming. It has already started to hit in other parts of the country, so if you are thinking about listing, you will want to strongly consider to not wait since you may not get what you want for your home one year from now if you are in the $300,000+ range. Even the up to $300,000 range is starting to steady out to where you may not get a full list price offer and your home may sit for a few weeks to a few months on the market if you are holding out for a higher price.
Friday, May 10, 2019
How do we really price a house?
Whether you just want to know the value of your home or you are actually wanting to list your house, real estate agents can create a CMA of your property (Comparative Market Analysis). All too often, individuals turn to Zillow to get an estimate of what their house is worth. You are trusting an algorithm from a computer instead of a human being. I'd like to use two examples where Zillow may not be the best place to turn to.
Just out of curiosity, did you know that if you are the homeowner, you can actually change information about your own house on Zillow? I currently live in a home that is tax assessed as a three-bedroom house, even though there are technically four bedrooms. I do not know if the permits were pulled for it to be built as a fourth bedroom, or if it is classified as a mother-in-law suite since it has its own bathroom and exit. (I inherited it, so I did not have to pull title paperwork and research with the city how the fourth bedroom is labeled.) However, the city does not have it assessed as four bedrooms. As a four bedroom, two and one half bath home, 1434 sq. ft., and a one car detached garage, Zillow currently has it at $176,193. If I wait a year to list it, Zillow estimates I could list it at $184,421. It shows me properties that sold in the neighborhood to support their pricing. However, all of the properties they show sold over three months ago, and up to 10 months ago. If you pay attention to real estate, the market in Milwaukee, Wisconsin shifts with the seasons. What sold 4 months ago does not apply to the current market value, let alone 10 months ago.
The city has the house assessed at $146,600. Right now, city assessments are lower than what homes are selling for.
I entered the following information into my search:
0.5 mile range of my house
80% - 120% of the square footage of my home
Must have at least three bedrooms
Must be active on the market or sold within the past three months
This basic information turned up six properties.
From there, I adjusted the price by $10,000 per bedroom, $5,000 per full bathroom, $3,000 per half bathroom, and $100 per square foot. I also have access to all of the photos from the homes that sold to make a visual comparison of the interior of the properties. Through running the program, visually inspecting the properties, and knowing the market, it is suggested to list my house for $191,060 with the low side of the range being $164,600 and the high side of the range being $223,300.
Zillow doesn't know if I have granite counter tops, hard wood flooring, and modern light fixtures. They also don't know if I have five different types of flooring in my house that do not go together and haven't updated the house since it was built back in 1960. Either way, the Zillow price is still quite a bit less than what I was able to come up with by manually finding comparable properties in my neighborhood either active or sold within the past three months.
The flip side, a seller wanted to list their home at $315,000 because that was what Zillow supported. The agent involved felt that was too high to list, but the seller insisted. The home was gorgeous and attracted several potential buyers, but they all (including their agents) provided feedback that they felt the property was overpriced. I offered to look at the property and assess the value as well since the agent is a friend of mine and had a difficult time convincing his sellers that the property was overpriced. Zillow has since changed their "zestimate" to $304,999, but even with my search, I was only able to come up with a fair price of $290,000. In fact, there was almost an identical home in size and interior that sold for $290,000 down the street from them just a month earlier. The property is currently down to $300,000, but it has been sitting on the market for 52 days now.
Although the market is still strong for sellers, you should still be seeing offers come in within two weeks and definitely within 10 showings. As an agent, my first response to seeing the property on the market that long is that it is either overpriced or there is something wrong with the property. That is why it is so important to really trust your agent when they provide you an estimate of what your home is worth. I will also tell you that I am not an agent to boss you around or offend you. I will agree to list it at your price if you think my assessment is low, but if it doesn't get an offer within the first two weeks, or there just aren't a lot of showings those first two weeks, then I write it into the contract to lower the price by a specific amount. I want you to get the best possible offer for your home, but I also want to make sure the property will appraise out by the bank. If it doesn't, then you will either have to lower the price anyway, or you will have to state that the buyer will have to bring additional cash to closing in order to satisfy the financing requirement and meet your purchase price.
My buyer backed out, now what?
I recently had a listing where the buyer backed out after an inspection. The buyer wanted the seller to spend about $4500 to make the home immaculate, and the seller just wasn't willing to spend additional money since they had already invested significantly into the property. So now what?
As an agent, if my client does not invest additional money into the property after there is an accepted offer, then I (personally) do not give the buyer or the buyer's agent a hard time about returning earnest money. At that point, my seller's only loss is about two weeks of time on the market and just being discouraged that the sale did not move forward. From an agent standpoint, it is better to have friends in real estate than to make enemies, as you never know when you will cross paths again or if you might need something from them in the future.
I empathized with my clients for having to start over in open houses and showings, and then I talked with them about what is next. They had an offer on a property as well, so I talked with them about extending the close date for the property they wanted. It is important to know what the game plan is, so I jumped into action and began advertising on social media to let people know the property was available again. I emailed agents who had clients that I knew were interested to see if their client was still interested. I also talked with my office to see if I could get help with an open house for the following weekend. Within the two days of the property being back on the market, we had three showings and are waiting on an offer.
The big thing is to not get discouraged as a seller or as an agent. It does add a little stress, but you just keep moving forward. If something does come up in the inspection that you need to disclose, you amend the condition report and move forward. As an agent, it's a courtesy to share the inspection report with other agents, especially if the report came back pretty clean. Disclose why it is back on the market, because people are going to ask anyway. Ultimately, know that there is a buyer out there that will want your property and will do whatever they can to make sure they make it their new home.
As an agent, if my client does not invest additional money into the property after there is an accepted offer, then I (personally) do not give the buyer or the buyer's agent a hard time about returning earnest money. At that point, my seller's only loss is about two weeks of time on the market and just being discouraged that the sale did not move forward. From an agent standpoint, it is better to have friends in real estate than to make enemies, as you never know when you will cross paths again or if you might need something from them in the future.
I empathized with my clients for having to start over in open houses and showings, and then I talked with them about what is next. They had an offer on a property as well, so I talked with them about extending the close date for the property they wanted. It is important to know what the game plan is, so I jumped into action and began advertising on social media to let people know the property was available again. I emailed agents who had clients that I knew were interested to see if their client was still interested. I also talked with my office to see if I could get help with an open house for the following weekend. Within the two days of the property being back on the market, we had three showings and are waiting on an offer.
The big thing is to not get discouraged as a seller or as an agent. It does add a little stress, but you just keep moving forward. If something does come up in the inspection that you need to disclose, you amend the condition report and move forward. As an agent, it's a courtesy to share the inspection report with other agents, especially if the report came back pretty clean. Disclose why it is back on the market, because people are going to ask anyway. Ultimately, know that there is a buyer out there that will want your property and will do whatever they can to make sure they make it their new home.
Friday, April 12, 2019
Agent Courtesy
There are quite a few things in our industry that I have heard agents talk about. One topic that is often discussed is agent courtesy. As an agent, communication is so important. This applies not only to your clients, but other agents that you work with. For example, I asked an agent about a rented water heater that was shown in a condition report. Often, the water heater is owned and the water softener is rented. I sent the agent an email, and he responded the same afternoon. Apparently, I was not the only agent who asked, as I received an email the next day to notify all agents who have showings that the client had made a mistake and it was the water softener that was rented. Good communication.
I also have had agents notify as to when they have received an offer to give me the opportunity to show the property to my clients that day, or to give my clients the opportunity to write an offer if they have already seen the property. In my opinion, that is also the listing agent doing their due diligence to their seller. It allows multiple offers to come in, and it also gives all buyers the opportunity to write an offer within a specific time-frame. I have also had listing agents inform buyer agents that their seller will not even look at any offers until after the first weekend the property is live. This also drives interest and sends buyers the message to submit their best offer for the property. As a buyer, it can be frustrating to have to submit your highest offer right away, but at the same time it is even worse if an offer is accepted before you even had the chance to see the house due to work schedules.
It is also in good taste for agents to communicate right after an inspection. Since the buyer's agent is at the inspection anyway, they are privy to information at the inspection. Recently, I was at an inspection and it was brought to my attention that the foundation was in such bad shape that support beams would not even fix the problem. My clients decided to stop the inspection after that, and I immediately called the listing agent to let him know what was found and let him know I would forward the inspection to him as soon as I had the report. This way, the listing agent could communicate with his seller right away about the problem and start talking about their next move. It also doesn't blind-side the listing agent to receive a cancellation notice or an amendment with multiple requests and/or severe price adjustment.
I personally try to let other agents know if there are any other showings going on at the time they requested to show the property. It can get pretty awkward for buyers when there is more than one buyer in the home. Feedback provided to me is that they feel they are not looking at the home in private and cannot discuss the home openly. As agents, you also have the advantage of letting your buyer know ahead of time that there will be other people looking at the property as well. It's something buyers appreciate.
Some of the items that the Greater Milwaukee Association of Realtors has also brought to our attention is that some of the agents' biggest pet peeves are when buyer agents leave the lights on in the house, not locking the door, not leaving a business card, and not providing feedback after showings. Some are more obvious than others. Not locking the door is just a safety measure. Turning the lights off after a showing is a courtesy to let sellers know you did come to the property, and it also helps with their electric bill. If the home is vacant, it prevents lights from burning out or over heating. Leaving a business card also lets sellers know that the property was shown, and it also is a way for the listing agent to add to their database of agents. In our line of work, the more agents we can reach out to with new listings or buyer needs, the better. Feedback is also important to the seller and agent, as it will inform them of issues that may prevent an offer being written. This might include suggesting the carpet be cleaned, the price is too high, a broken window, etc. This is particularly important if the seller no longer occupies the property since they may not know of any issues that have happened since moving out.
I also have had agents notify as to when they have received an offer to give me the opportunity to show the property to my clients that day, or to give my clients the opportunity to write an offer if they have already seen the property. In my opinion, that is also the listing agent doing their due diligence to their seller. It allows multiple offers to come in, and it also gives all buyers the opportunity to write an offer within a specific time-frame. I have also had listing agents inform buyer agents that their seller will not even look at any offers until after the first weekend the property is live. This also drives interest and sends buyers the message to submit their best offer for the property. As a buyer, it can be frustrating to have to submit your highest offer right away, but at the same time it is even worse if an offer is accepted before you even had the chance to see the house due to work schedules.
It is also in good taste for agents to communicate right after an inspection. Since the buyer's agent is at the inspection anyway, they are privy to information at the inspection. Recently, I was at an inspection and it was brought to my attention that the foundation was in such bad shape that support beams would not even fix the problem. My clients decided to stop the inspection after that, and I immediately called the listing agent to let him know what was found and let him know I would forward the inspection to him as soon as I had the report. This way, the listing agent could communicate with his seller right away about the problem and start talking about their next move. It also doesn't blind-side the listing agent to receive a cancellation notice or an amendment with multiple requests and/or severe price adjustment.
I personally try to let other agents know if there are any other showings going on at the time they requested to show the property. It can get pretty awkward for buyers when there is more than one buyer in the home. Feedback provided to me is that they feel they are not looking at the home in private and cannot discuss the home openly. As agents, you also have the advantage of letting your buyer know ahead of time that there will be other people looking at the property as well. It's something buyers appreciate.
Some of the items that the Greater Milwaukee Association of Realtors has also brought to our attention is that some of the agents' biggest pet peeves are when buyer agents leave the lights on in the house, not locking the door, not leaving a business card, and not providing feedback after showings. Some are more obvious than others. Not locking the door is just a safety measure. Turning the lights off after a showing is a courtesy to let sellers know you did come to the property, and it also helps with their electric bill. If the home is vacant, it prevents lights from burning out or over heating. Leaving a business card also lets sellers know that the property was shown, and it also is a way for the listing agent to add to their database of agents. In our line of work, the more agents we can reach out to with new listings or buyer needs, the better. Feedback is also important to the seller and agent, as it will inform them of issues that may prevent an offer being written. This might include suggesting the carpet be cleaned, the price is too high, a broken window, etc. This is particularly important if the seller no longer occupies the property since they may not know of any issues that have happened since moving out.
Wednesday, October 17, 2018
Tidbits to start your home search
To anyone who has bought a home before, you know the drill. To anyone who is a first-time home buyer, hopefully this helps you get started with what you need.
As a real estate agent, one of the first few things I do when working with new clients is to ask them what part of town they are interested in, if they have a pre-approval, and what their "must haves" are with a home. I can tell you right now that if we don't find what is right within the first month, every client I have worked with has changed their mind about all of the above. It's OK to change your mind about things! This is going to be your home, and is going to be one of the biggest (if not THE biggest) financial obligation of your life! So what can you do to prepare?
Get a budget in mind. If you feel comfortable enough, reach out to a mortgage lender to talk about what you might be pre-approved for. Make sure you talk with them about what that means in terms of a monthly payment, since many of us do budget around what we know we take home per month.
Learn about the areas you are interested in! If you have children, look at the school district. Ask to observe or visit a class where your child will be attending. Look at the taxes! Many home buyers adjust what they are willing to spend in a given area due to taxes being higher. Drive by the neighborhood in the evening to see what the neighborhood dynamic is when most people are home.
Get an idea of how many bedrooms and bathrooms you MUST have in order to be happy in your home. If you are just starting out, do you plan on having kids? Consider that in your bedrooms. Do you have company over a lot and want a large entertaining space? Do you need it on the main floor, or would the basement work? Make sure to consider that too! Do you want something ready to move in, or are you OK with something dated as long as it is cared for?
Consider a remodeling budget. We are in the era of HGTV! Everything is remodeled and looks so chic and modern now! I have news for you... Most homes on the market are not remodeled. You will have to do some cosmetic work to get your home into this century if you want to buy an older home. Make a budget estimating what it might cost for new kitchen cabinets, new flooring, new vanities in the bathroom, or even a new tub. If you can put some money aside, and you go in with the mindset that you are prepared to get some work done, then it will be that much easier to find your home.
Decide how much money you are willing to deposit for earnest money. Earnest money is different than the down-payment. It is applied towards the down-payment at closing, but it is money placed into a trust account after an accepted offer showing your good faith in the interest of buying the home. Typically, buyers need to write a check within three days of an accepted offer and deliver it to the listing agent's office to show their good faith. This is called "earnest money". I have seen anywhere between $500 - $25,000 in earnest money. The average is somewhere between $1,000 - $3,000. It is important to understand that earnest money can be a risk as well. If you back out of the deal at any point, the seller does reserve the right to keep a portion or all of the earnest money if they believe there has been damages from losing out on another offer. However, you can always request to receive your earnest money back if you do have to back out.
It's also important to understand what the market is like. If it is a buyer's market, it's looking good for you. There are way more homes on the market than there are buyers looking, which means home prices will be lower. You have more power to negotiate the terms as to what is included or what the seller will pay for. If it is a seller's market, get ready to pay closer to asking price, if not over asking price. Home values will also be higher due to the shortage of homes on the market as well. You will not have as much room to negotiate financially, but I always say ask anyway. You never know what someone is willing to work with unless you ask. Be reasonable though.
Lastly, start looking at which real estate company you might want to work with. As a buyer, you will not pay a commission unless you sign a Buyer Agency Agreement and end up trying to buy with a different agent or find a for sale by owner. Before you sign anything, make sure this is someone you want to work with! You may find your dream home in one showing, or it may take almost a year. Is this a person you would be able to work with for a long period of time if needed? Create a few questions asking about the real estate agent's personality and experience. Keep in mind that even if the agent does not have a lot of experience in the industry, they probably work with people who do and need someone to take a chance on them too. If your personalities match, give them the opportunity to show you what they can do, but ask how they plan to handle questions you'll have that they might not know the answer to.
Hopefully this has provided any first-time home buyers with some good guidance to get you started!
As a real estate agent, one of the first few things I do when working with new clients is to ask them what part of town they are interested in, if they have a pre-approval, and what their "must haves" are with a home. I can tell you right now that if we don't find what is right within the first month, every client I have worked with has changed their mind about all of the above. It's OK to change your mind about things! This is going to be your home, and is going to be one of the biggest (if not THE biggest) financial obligation of your life! So what can you do to prepare?
Get a budget in mind. If you feel comfortable enough, reach out to a mortgage lender to talk about what you might be pre-approved for. Make sure you talk with them about what that means in terms of a monthly payment, since many of us do budget around what we know we take home per month.
Learn about the areas you are interested in! If you have children, look at the school district. Ask to observe or visit a class where your child will be attending. Look at the taxes! Many home buyers adjust what they are willing to spend in a given area due to taxes being higher. Drive by the neighborhood in the evening to see what the neighborhood dynamic is when most people are home.
Get an idea of how many bedrooms and bathrooms you MUST have in order to be happy in your home. If you are just starting out, do you plan on having kids? Consider that in your bedrooms. Do you have company over a lot and want a large entertaining space? Do you need it on the main floor, or would the basement work? Make sure to consider that too! Do you want something ready to move in, or are you OK with something dated as long as it is cared for?
Consider a remodeling budget. We are in the era of HGTV! Everything is remodeled and looks so chic and modern now! I have news for you... Most homes on the market are not remodeled. You will have to do some cosmetic work to get your home into this century if you want to buy an older home. Make a budget estimating what it might cost for new kitchen cabinets, new flooring, new vanities in the bathroom, or even a new tub. If you can put some money aside, and you go in with the mindset that you are prepared to get some work done, then it will be that much easier to find your home.
Decide how much money you are willing to deposit for earnest money. Earnest money is different than the down-payment. It is applied towards the down-payment at closing, but it is money placed into a trust account after an accepted offer showing your good faith in the interest of buying the home. Typically, buyers need to write a check within three days of an accepted offer and deliver it to the listing agent's office to show their good faith. This is called "earnest money". I have seen anywhere between $500 - $25,000 in earnest money. The average is somewhere between $1,000 - $3,000. It is important to understand that earnest money can be a risk as well. If you back out of the deal at any point, the seller does reserve the right to keep a portion or all of the earnest money if they believe there has been damages from losing out on another offer. However, you can always request to receive your earnest money back if you do have to back out.
It's also important to understand what the market is like. If it is a buyer's market, it's looking good for you. There are way more homes on the market than there are buyers looking, which means home prices will be lower. You have more power to negotiate the terms as to what is included or what the seller will pay for. If it is a seller's market, get ready to pay closer to asking price, if not over asking price. Home values will also be higher due to the shortage of homes on the market as well. You will not have as much room to negotiate financially, but I always say ask anyway. You never know what someone is willing to work with unless you ask. Be reasonable though.
Lastly, start looking at which real estate company you might want to work with. As a buyer, you will not pay a commission unless you sign a Buyer Agency Agreement and end up trying to buy with a different agent or find a for sale by owner. Before you sign anything, make sure this is someone you want to work with! You may find your dream home in one showing, or it may take almost a year. Is this a person you would be able to work with for a long period of time if needed? Create a few questions asking about the real estate agent's personality and experience. Keep in mind that even if the agent does not have a lot of experience in the industry, they probably work with people who do and need someone to take a chance on them too. If your personalities match, give them the opportunity to show you what they can do, but ask how they plan to handle questions you'll have that they might not know the answer to.
Hopefully this has provided any first-time home buyers with some good guidance to get you started!
Saturday, August 12, 2017
Becoming a Realtor
In the state of Wisconsin, we only need to take a 72 hour course. You can take it online through the state, or what many others choose to do is to take it through an approved class. I chose to take it through Shorewest, but pay the extra money to purchase the class on a USB drive. It was about $300. I was given the textbook that the course uses and the Wisconsin law book for real estate. The textbook had quizzes at the end of each chapter and had two practice tests at the end. I'm a pretty good study, so listening to each class and following along in the books was just fine for me. In fact, I would multitask by listening to the classes in the car when I was driving somewhere, cooking, or doing laundry. It was very convenient for my lifestyle and learning style.
I took the test when I finished the course and was so nervous for the test. I'm a math person, and I actually calculated the number of questions I knew the answered correctly, calculated the probability of me guessing correctly on the others, added those together, and repeated until I felt I had a score comfortable enough to pass. In order to pass, you need to score at least a 75%. They do not tell you a grade. They just tell you if you passed or failed immediately after taking the test. The test itself was about $75.
Then I had to apply for a license with the state. That was about another $90 or so. Here's the great thing about having a license in real estate. You don't have to work for a broker in order to get paid. As long as you hold a license, it doesn't matter where in the United States you are, you can collect referral fees. For example, I have a bunch of friends in Texas since I lived there for half of my life. If my friends in Texas told me they wanted to find a real estate agent, and I called one in Texas and referred my friend to them, once my friend closed on a house I would get paid a referral commission from that agent. It would work the same if I was in Wisconsin referring a friend to another agent in Wisconsin. There is no standard rate for anything in real estate. Everything is always negotiable. However, if I were to put a number on the average referral commission, it's 25% of the commission. That being said, if a home sold in Wisconsin for $250,000 and the agent split their fee with their broker, the agent would get around $3,000 for the commission. If I referred the family to that agent, I would get $750 once the closing took place. Not bad for just giving up a name and phone number to someone else.
However, if you want to be licensed and practice, then you need to look at an agency. I chose Shorewest because of their training programs and the fact that they won't just let me sink or swim. They have a multitude of services that they provide their clients as well, making the buying/selling process easier on the clients. Here are some expenses that I had to also pay. There is E&O insurance. This basically is a cover your *** insurance policy so if you get sued by a client you have some representation. That costs $595 per year. I also had to pay to be a member of the GMAR. That stands for the Greater Milwaukee Association of Realtors. This in turn also allows me to be in the national association. That was much more expensive. My expenses were pro-rated, and if I recall correctly I paid about $700 for the membership. So it is expensive to start up, and truthfully, I haven't made a penny back yet. I'm only in my first month of officially hosting open houses and canvasing the neighborhoods in hopes of getting a listing. My co-workers assure me that I will do well in the industry though, because I remember things about people, and I'm personable. Fingers crossed!
If you're considering becoming a Realtor though, it's easy enough to do. You just have to take that first step and enroll in a class!
I took the test when I finished the course and was so nervous for the test. I'm a math person, and I actually calculated the number of questions I knew the answered correctly, calculated the probability of me guessing correctly on the others, added those together, and repeated until I felt I had a score comfortable enough to pass. In order to pass, you need to score at least a 75%. They do not tell you a grade. They just tell you if you passed or failed immediately after taking the test. The test itself was about $75.
Then I had to apply for a license with the state. That was about another $90 or so. Here's the great thing about having a license in real estate. You don't have to work for a broker in order to get paid. As long as you hold a license, it doesn't matter where in the United States you are, you can collect referral fees. For example, I have a bunch of friends in Texas since I lived there for half of my life. If my friends in Texas told me they wanted to find a real estate agent, and I called one in Texas and referred my friend to them, once my friend closed on a house I would get paid a referral commission from that agent. It would work the same if I was in Wisconsin referring a friend to another agent in Wisconsin. There is no standard rate for anything in real estate. Everything is always negotiable. However, if I were to put a number on the average referral commission, it's 25% of the commission. That being said, if a home sold in Wisconsin for $250,000 and the agent split their fee with their broker, the agent would get around $3,000 for the commission. If I referred the family to that agent, I would get $750 once the closing took place. Not bad for just giving up a name and phone number to someone else.
However, if you want to be licensed and practice, then you need to look at an agency. I chose Shorewest because of their training programs and the fact that they won't just let me sink or swim. They have a multitude of services that they provide their clients as well, making the buying/selling process easier on the clients. Here are some expenses that I had to also pay. There is E&O insurance. This basically is a cover your *** insurance policy so if you get sued by a client you have some representation. That costs $595 per year. I also had to pay to be a member of the GMAR. That stands for the Greater Milwaukee Association of Realtors. This in turn also allows me to be in the national association. That was much more expensive. My expenses were pro-rated, and if I recall correctly I paid about $700 for the membership. So it is expensive to start up, and truthfully, I haven't made a penny back yet. I'm only in my first month of officially hosting open houses and canvasing the neighborhoods in hopes of getting a listing. My co-workers assure me that I will do well in the industry though, because I remember things about people, and I'm personable. Fingers crossed!
If you're considering becoming a Realtor though, it's easy enough to do. You just have to take that first step and enroll in a class!
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