The Churning of Your Equity
The farmer owns the cow. In exchange for feed and a field to roam, she gives her excess milk. Milk is churned into dairy products sold for profits that are reinvested, or used to fuel the farm economy. We thank the cows for sharing their excess milk.
Your homes produce a valuable resource too; home equity. You use equity to accomplish your life goals. Before you can use the equity, it has to be freed from storage. Milking is a good metaphor to understand what happens next. The real estate industry will absorb a heavy share of your equity in fees and sales costs. With a better understanding of how your equity is used, you might be eager to look for choices for better services at lower costs. I hope so.
You get what you pay for. Do you really?
To dissuade consumers from looking closely at commission rates, real estate brokers like to use the adage, You get what you pay for. In spite of all the examples that prove the cliche is a myth, some REALTORS say those six words are enough to end conversations about negotiating commissions.
There is no valid evidence to show a positive correlation between higher commission rates and better results. I contend, that when profits are not reinvested in improving the skill of agents and the quality of the delivery of essential real estate services, but instead invested in attracting more business, the results the consumer sees are not what they could be.
Home Equity is Churned Into Commission.
Of course, real estate firms can’t keep their lights on without cash flowing in. But how much light does a company really need? The flow arrives on the stream of commissions. When homes are on the market for hours or days instead of weeks or months, there isn’t much that can be done by brokers to advertise their new listings. The cost of attracting a buyer for your house is virtually nil. You have a right to know where your money goes.
Your Equity is Spent Buying Leads and Social Media Branding
According to ATTOM an analytics resource for research data, marketing dollars spent by real estate companies are invested in purchasing leads (56%) and Social Media and Branding (22%). Certainly, some money is invested in presenting your house to potential buyers. Right?
At Essential Real Estate we see things differently. Your equity is not an excess byproduct. You do not have excess equity. The more equity you keep, the more money you have to attain your goals. We do this by giving you better advice, structuring safer contracts, and showing you where you may choose to spend less of your equity on selling expenses. Call us to discuss ways to increase your profit through safer contract terms and lower selling costs. It’s your money to keep.