Another episode of Ask the Colorado Dream House Team with broker/owner Dan Polimino. Dan covers flat fee brokerages, the second selling season and whether or not agent bonuses are worth it.
- How flat fee brokerages work
- Whether or not offering agent bonuses sells your home faster
- Earnest money best practices
- The second best time to sell your home
Hi, everyone. Welcome to Ask the Colorado Dream House Team live from Denver, Colorado. I’m your host, Dan Polimino. Good to be with you today. We had last week off, so I’m sorry I missed you, but we got lots of great information to share with you this week. If you’re new to the program, welcome. It’s all about real estate and asking us your questions about real estate. We’re here to answer them. You can email us, you can phone call us, or you can leave a comment here on Facebook. Bottom line is we want to hear from you. The advice we give out on a week-to-week basis works in any market. You don’t have to be in Denver, Colorado. This is just good, database-driven, and lots of experience. Handing it over to you to help you navigate the real estate world. Two things we like to accomplish each show. We like to give you a little market information or update, and then we like to answer your questions.
I also want to remind you that a lot of people have been telling us, who are on Facebook, that they are seen our ads for the How to Buy a Home in Colorado. It’s the Home Buying Guide. A lot of people are seeing them. A lot of people are clicking on that ads, and they’re downloading that How to Buy a Home in Colorado. It’s absolutely free. It doesn’t cost you anything. It’s 22 pages of information that you will absolutely love. If you’re seeing it on Facebook, click it. If you want a copy, you want us to send you one, you can email us or call us and we’ll send you one. Mike, our director of marketing, Mike Rush, he tells me that the How to Sell a Home in Colorado guide is going to be out maybe as early as Friday. On Thursday’s show, we will talk to you about that and let you know if, in fact, that’s ready to go on Friday, so be looking out for that.
All right. What are we talking about in the market today? We’re talking about flat-fee brokerage firms. You know, “We’ll sell your house for 1,000 bucks. We’ll sell your house for 2,000 bucks.” Flat fee, you don’t pay any commissions, that whole thing that what I call sounds too good to be true. You know, like your dad used to say, “If it sounds too good to be true, it probably is.” Well, here’s what we found out. We had an agent that worked for one of these brokerage firms. I’ll leave the firm out, but they all operate the same way. The agent was here at my office telling me how things go, and here’s how it goes.
The agent in one of these flat-fee brokerage firms is supposed to go out and meet with the client and get them to sign the listing agreement. Past that, that’s it. You actually, as the consumer, never speak to that agent again. You don’t meet with them. You don’t talk with them about the sale of your home, nothing. You get nothing from the agent. Your file then goes on the desk of a transaction coordinator. This guy or gal probably has 30 or 40 of these files sitting on her desk, and she gets paid $50 a file. That’s it, 50 bucks a file. Now you, as the consumer, are banking that this gal with 30 or 40 files on her desk at $50 per file is going to negotiate you the highest price on your home, and you’re banking that she’s going to negotiate a terrific inspection resolution for you, and you’re banking on that she’s going to get you through appraisal. That seems really far-fetched to me. I mean if I were getting paid 50 bucks a file and I had 30 or 40, what would differentiate you from any of the others? How much care, time, and attention would your house and your file get at 50 bucks a file?
I just don’t know why people would do this. I mean I understand the whole concept is, “I’m gonna save a few thousand dollars,” but do you really save anything if she doesn’t get you a high price, if she doesn’t really negotiate a great inspection resolution for you, and if she doesn’t get it to appraise? That’s how all of these flat-fee brokerage firms are working, and they’re okay with turning and burning. You’re not happy with them, you don’t get to call the agent and tell them you’re not happy. They’ll let you out of it, but they’ll just move on to the next file. I hope that gives you some insight on how this works. All right?
Let’s get to today’s questions. “Dear Colorado Dream House Team, I’ve heard you talk a lot about the topic of earnest money, and one of the things you said was it’s really hard to keep a buyer’s earnest money. How come that is?” Well, in Colorado, the contract to buy real estate is heavily in favored of the buyer, not the seller, so there’s at least, four, five, six different outs that they buyer has in the contract to get out of the contract and keep their earnest money. They would have to violate all of these, or let those deadlines pass on all of these conditions, in order for you to keep the earnest money. Even then, it’s not a guarantee. In most cases, if there’s a dispute over the earnest money, you’re going to arbitration. However, arbitration is non-binding, which means you could rule in favor of one or the other. They still don’t have to perform, which means then you have to take it on to court and start incurring legal expenses. I got news for you, the courts in Denver, you’re not hearing an earnest-money case inside of six months. It’s really, really hard to keep somebody’s earnest money. Just keep that in mind.
Number two, “Dear Colorado Dream House Team, I fear I may have missed the peak of the market, or at very least, the peak of the selling season. I would still like to sell. However, I’m wondering if it’s just too late. Your thoughts?” You did miss the peak of the selling season. That usually happens, right, starting at the end of March. April and May are the two hottest months of the year. All of those properties close in June and July, and then the market starts to slow down right after the fourth of July. It’ll be slow in July. It’ll be slow in August. The good news is, is we’ve got what we call the second selling season coming up. That happens right after Labor Day in September. This is the second-best time to sell a home in Colorado, from that second week of September all the way through Thanksgiving. A lot of the conversations that we’re having with sellers right now are, “Hey, go enjoy your summer. Go have some fun. We’ll put your house on the market right after Labor Day.” All right?
“Dear Colorado Dream House Team, we’re having a hard time selling our home. Our agent suggested giving the buyer’s agent a selling bonus on top of the 2.8% commission. Do you think that will work?” No. I’m not saying it’s never worked, but I’ll be honest with you. If some agent is advertising that they’re going to give me a $10,000 bonus if I sell that house over another one, it doesn’t motivate me. The reason why it doesn’t motivate me is because I want to do what’s best for my client, not what’s best for me. If the house with the $10,000 bonus is in a community and there’s five other houses for sale that match the buyer’s criteria, I’m going to show him all five, including the one with the $10,000 bonus. If they like that one best, hey, great, but if they like the other one down the street better, we’re going to write an offer, and I’m going to try to help them get that house. The bonus doesn’t ever motivate me to show a house, or push a client in that direction, or convince them to take that, because that really wouldn’t be in my client’s best interest. Make sense? I hope it does.
All right. That’s the questions. Don’t forget about the Colorado Home Buying Guide, and we’re back again on Thursday. Everybody have a great week.