Are Realtor Commissions Negotiable?

Are Realtor Commissions Negotiable?

Are Realtor Commissions Negotiable?

the impact of coronavirus on the real estate market and home prices, home value estimate app

There are a lot of costs associated with buying or selling a home. In particular, closing costs like legal and home inspection fees get a lot of attention and for good reason. The average homebuyer in the U.S pays $4,876 in closing costs. While it’s important to be aware of closing costs, the largest cost associated with any real estate transaction is the commissions paid to the real estate agents. Many people believe realtor commissions are set in stone. What your realtor does not want you to know is that these commissions are negotiable.

What is the standard real estate commission?

Real estate agents get paid a commission when the sale of a home is finalized. Typically, this commission is 6% of the sale price of the home. This commission is paid to the agent representing the seller, who then splits the commission with the agent representing the buyer.

The realtor commissions on the sale of a $500,000 house would typically be $30,000. This $30,000 comes off the $500,000 sale price leaving the seller with $470,000 after commissions are accounted for.

Since the commission is taken from the sale price of the home there is a common belief that the seller pays the full cost. However, realtor commissions are factored into the sale price of a home. This drives up the price that the buyer must pay for the home. In this way, buyers indirectly pay for realtor fees even if it is the seller who signs the check.

Realtor fees rise with home prices

Since most realtors collect a flat 6% commission, their compensation rises and falls with the price of real estate. As you are probably aware real estate prices have been rising dramatically over the past 10 years. The hotter the market, the more you pay in realtor fees.

If you bought a house in Nashville in 2012 you would have paid about $10,000 in realtor commissions. If you sold that same house today, you would pay nearly $21,000 in realtor commissions. The realtor does the same amount of work on the deal today as they did in 2012, but they collect over twice the commission.

If you are happy paying that amount of commission when you buy or sell a house, then read no further. If you want to discover an easy way to save thousands of dollars in realtor commissions, keep reading.

Real estate commissions are negotiable

The standard 6% commission has become so ingrained in society that many people believe that there is some sort of law mandating a 6% commission fee. This is not true! No law says that real estate commissions need to be 6% of the selling price. All real estate commissions are negotiable.

Just because realtor fees are negotiable does not mean realtors are compelled to lower their commission below 6%. It is your legal right to ask a real estate agent to lower their commission. The realtor is free to refuse your request–which most do.

Are there any other options?

A model that is quickly gaining popularity is the 1% commission. Under this model, the listing agent only charges a 1% commission fee instead of the typical 3%. With the 1% model, it is still recommended that you offer a buyer’s agent a 3% commission to incentivize them to show your home to their clients.

This model is made possible due to technology which has made the job of a real estate agent much easier. Since technology has made the listing process more efficient, many real estate firms are passing their savings onto the consumer.

How much can you save with the 1% model?

Let’s say you wanted to sell your house for $500,000. If you used a real estate agent at a traditional brokerage, you would pay $30,000 ($500,000 X 6%). This $30,000 would then be split between the listing agent and the buyer’s agent.

If instead, you decided to use Felix Homes, you would pay $20,000 ($500,000 X 4%). Of this $20,000, $5,000 would be paid to Felix Homes and $15,000 would be offered to a buyer’s agent. By using Felix Homes, you would save $10,000.

What could you buy with $10,000?

If you want to have your mind blown, consider this. If you took $10,000 and invested it, after 30 years you would have more than $100,000 assuming an 8% average rate of return on your investment. If you don’t think that is a life-changing amount of money, consider the fact that the average 401k balance of Americans between the ages of 60-69 is $195,000. If a 35-year-old invested the $10,000 in savings and never saved another dime, they could have more than half the amount of money in retirement savings than the average American.

When it comes down to deciding whether to use a Traditional agent or Felix Homes, think about the true cost of those commissions and ask yourself if your realtor is providing enough value to justify those commissions. If they aren’t perhaps it’s time to consider another option.

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Why Realtors are Lying when they say using a Buyer’s Agent is Free

Why Realtors are Lying when they say using a Buyer’s Agent is Free

Why Realtors are Lying when they say using a Buyer’s Agent is Free

the impact of coronavirus on the real estate market and home prices, home value estimate app

In economics, there is no such thing as a ‘free lunch’. In other words, goods or services cost money. No one is willing to work without compensation. So, why do realtors tell potential clients that using a buyer’s agent is free?

First, understand how real estate commissions work.

In the United States, it is customary for a home seller to pay a total of 6% in real estate commissions when they sell. Of this 6% commission, 3% is paid to the seller’s agent and 3% is offered to a buyer’s agent.

It’s important to note that all real estate commissions are negotiable by law and even though many realtors won’t budge from the 6%, it doesn’t hurt to ask. There are some firms that are willing to offer their services at a lower rate. Unsurprisingly, these modern-day brokerages are growing the quickest in most markets.

If the seller is paying for all of the realtor commissions, using a buyer’s agent is free, right?

Absolutely not! While most agents may try to convince you that their service is free, you are paying for it indirectly because their 3% commission is factored into the price of the home. Home sellers know that if they have to pay 6% in realtor fees when they sell, then they will make sure to take this into consideration when determining a list price and accepting any offers.

What’s the solution?

At Felix Homes Realty, we’re continually changing the status quo because we believe it’s important to offer clients a better solution. We brought you the 1% listing fee and now we are proud to announce our Buyer Savings Program. With our Buyer Savings Program, you can save up to 1.5% off the price of your dream home!

How does the Buyer Savings Program work?

When you work with a Felix Buyer’s Agent, we only charge the seller a 1.5% commission instead of the typical 3% commission. We can do this because our proprietary software makes the work easier and faster, reducing our own costs. We then reduce your offer price by 1.5%. This results in you getting your dream home for 1.5% off. Meanwhile, the seller still ends up with the same net proceeds after realtor commissions. It’s a win-win!

For example, let’s say you are interested in buying a $500,000 home. When you buy with Felix, we will offer the seller $492,500 and specify that as your buyer’s agent, we are only charging the seller a 1.5% commission instead of the traditional 3% commission most buyers’ agents charge. You are happy because you just saved $7,500 off the price of your new home. The seller is happy because they ended up with the same net proceeds as they would have gotten in the traditional scenario.

Is there a catch?

At Felix, we can provide this innovation because we specialize in leveraging the power of technology.

Today, over 92% of buyers start their home search online. You can view the latest listings on our easy-to-use home search platform. Once you find a home you love, you can schedule an in-person tour on our website, or you can see when the listing agent is holding an open house.

If you are someone that prefers to be chauffeured around by your realtor in their new Mercedes, then this program is not for you.

How will I make an offer?

Ready to make an offer? Great, click the ‘Start an Offer’ button on our website and fill out the necessary information.

Not sure what price to offer? Not a problem, request a custom home value report from one of our valuation experts. If you have any questions throughout the online offer process, you can click the ‘Chat’ button to instantly connect with a local real estate agent.

Is this offer final or legally binding?

No. This starts the process. Once you submit your offer, an experienced Felix Buyer’s Agent will reach out to you to set up a Zoom video call. During the video call, your dedicated buyer’s agent will review every step of the buying process and confirm the details of your offer. Once the details are confirmed, your agent will send you the official offer agreement for you to sign via DocuSign. After you sign the offer, your agent will send it directly to the seller’s agent. At this point, it becomes a legally binding offer.

What happens after the offer is sent to the seller’s agent?

Once your offer is sent to the seller’s agent, the seller can either accept, reject, or counter your offer. We’ll notify you as soon as we hear from the seller’s agent and help you create a counteroffer if necessary. Assuming your offer was accepted, we’ll walk you through every step of the closing process just as a traditional buyer’s agent would.

What should my first step be?

Your first step as a buyer should be to get pre-approved for a mortgage. This will help determine your budget. This is an important step to understand your buying potential and an easy way to narrow down your options. If you have any questions throughout the process, you can call us or send an email to contact@felixhomes.com.

Let’s chat today.

 

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Save money when you buy or sell.

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Do I have to pay my mortgage during the Coronavirus pandemic?

Do I have to pay my mortgage during the Coronavirus pandemic?

Do I have to pay my mortgage during the Coronavirus pandemic?

Do I have To Pay My Mortgage During The Coronavirus Pandemic, small house and a calculator

There is no doubt that the economy has taken a hit from the Coronavirus pandemic. Nearly ten million people lost their jobs in the last two weeks of March. While they might not be facing foreclosure yet, they are struggling to make their mortgage payments and their savings are dwindling each day.

Does my lender still require I pay my mortgage?

Thanks to the recent actions made by some of the largest banks, you can likely breathe a small sigh of relief. Banks are working with their clients to offer flexible solutions such as mortgage assistance programs and home equity lines of credit (HELOC).

Below is a list of banks and the associated mortgage assistance program they are offering due to the COVID-19 pandemic.

Ally Bank: Offering payment deferral for up to 120 days with no impact to your credit on home loans for customers affected by COVID-19.

BB&T: Offering mortgage forbearance for a minimum of 90 days for customers impacted by the current crisis.

BMO Harris: Offering payment relief options on mortgages, home equity, loans and credit cards. Contact BMO Harris directly for more information.

Charles Schwab Bank: Offering customers with mortgages or home equity lines of credit through Charles Schwab Bank and Quicken Loans can request payment relief for up to 90 days.

Chase: Offering assistance with mortgage payments. You must call 800-848-9380 for more information.

Citi: Offering various hardship programs for eligible mortgage customers. Call 1-855-839-6253 for more information.

Comerica Bank: Offering loan deferrals on various lending products. Call 888-444-9876 to discuss options for residential mortgage loans.

East West Bank: Offering temporary mortgage payment relief options for those who are unable to make their mortgage payments due to a disruption of income related to COVID-19.

Fifth Third Bank: Offering 90-day payment forbearance with no late fees on mortgages and home equity loans.

HSBC: Offering financial assistance programs to help with customers’ mortgage or home equity loan payments who have suffered financial hardship. Call 855-806-4657 for more information.

Huntington National Bank: Offering up to 90 days of payment deferral on all consumer loans, including residential mortgages, for those experiencing financial hardship as a result of COVID-19.

M&T Bank: Offering mortgage and home equity repayment assistance to customers whose income has been reduced due to COVID-19 impact.

New York Community Bank: Offering 90-day residential mortgage payment forbearances for customers whose income has been negative impacted by events linked to COVID-19.

PNC Bank: Offering to postpone payments for up to 90 days with no late fees for customers with mortgages or home equity loans, among other lending products that are eligible.

Regions Bank: Offering consumer mortgage payment relief upon request for 90 days for those negatively impacted by COVID-19.

SunTrust: Offering mortgage forbearance for a minimum of 90 days for customers impacted by the current crisis.

TD Bank: Offering payment deferral program for mortgages and home equity loans or lines of credit, as well as waiving late payment fees on each type of home loan product.

Union Bank: Offering assistance with your mortgage or home equity account. For more information, called 800-237-0561.

U.S. Bank: Offering a payment forbearance up to 90 days with no late fees on mortgages for those negatively impacted by the current crisis.

Webster Bank: Offering options for payment deferrals on mortgages, home equity or personal loans, and small business loans, based on need. Webster is also putting in place a 90-day moratorium on foreclosure of residential loans.

Wells Fargo: Offering payment deferral plans for customers with mortgages, credit cards, auto loans, small business loans and personal loans who have been impacted by COVID-19.

What if I’m already at risk of missing a mortgage payment?

If you think you are at risk of missing your mortgage payment, you should call your lender today. They can work with you to develop a personalized gameplan that fits your situation.

Most lenders are willing to be flexible and many have suspended foreclosures and evictions during the coronavirus outbreak.

Why? They know that they will be helped out by money made available through federal legislation. Also, during these tight times, they would rather stay with an existing client than try to find a new buyer. Use this circumstance to your benefit, to give yourself space and time to get back on your feet without losing your home.

Let’s chat today.

 

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Protect Your Home from Foreclosure during Coronavirus

Protect Your Home from Foreclosure during Coronavirus

Protect Your Home from Foreclosure during Coronavirus

Foreclosure During Coronavirus, legal notice of foreclosure

With the number of cases of the coronavirus skyrocketing in the U.S., we all have been affected by this pandemic. You may not have gotten sick.You may not even know anyone who has the virus. But you have felt the economy grind to a screeching halt.

Just about every industry has been impacted and mass layoffs have already taken place. In fact, U.S. unemployment spiked 1,100% to 3.2 million on March 24th, and that number doubled again to 6.6 million on April 2nd. It is sure to continue to rise over the next couple of months.

With so much economic uncertainty, you may be wondering if your job is safe. If you do lose your job, will you be able to pay your mortgage? Will you lose your home?

You need to know your rights as a homeowner and what options you have. This guide can help you keep your home.

What exactly is a foreclosure?

A foreclosure is a formal ending of the mortgage contract where a homeowner is unable to make their mortgage payments. In foreclosure, the lender legally seizes the property, evicts the homeowner, and sells the home.

Can my home be foreclosed on during the COVID-19 pandemic?

Many homeowners have at least 60 days of mortgage relief due to the coronavirus.

On March 18th, an eviction and foreclosure moratorium went into effect for single family loans backed by the FHA, Fannie Mae or Freddie Mac, and the USDA. During this time, homeowners will not be charged any late fees nor will they be evicted from their homes. In addition, lenders will not initiate foreclosure proceedings and any proceedings already in process will be suspended.

Many major banks have also announced similar measures. While some banks have announced the suspension of foreclosures for 30 days or even up to 90 days, others have only announced the suspension but have not specified a timeframe. Here is a list of banks that currently have a foreclosure suspension policy in place as of 4/2/20.

Ally Bank: Evictions and foreclosure proceedings are suspended until July 30.

Associated Bank: Foreclosure actions on residential properties are suspended for 60 days, unless required by federal or government agencies.

Bank of America: Evictions and foreclosures are suspended for at least 90 days.

Citizens Bank: Home foreclosures have been automatically suspended for up to 60 days.

Fifth Third Bank: All foreclosure activity is suspended for the next 60 days.

First National Bank: New foreclosures are suspended for customers directly impacted by COVID-19.

First National Bank of Omaha: Foreclosure-related activities have been temporarily paused.

Flagstar Bank: All foreclosure, eviction and repossession activity is suspended through the end May 2020.

Huntington National Bank: Foreclosure-related activity specific to residential properties are suspended through the end of May 2020.

KeyBank: Residential property foreclosures have been paused, unless required by a federal or government agency.

Regions Bank: New efforts to start property foreclosures on consumer real estate loans are suspended for 30 days.

Santander Bank: Foreclosures on mortgages and home equity lines of credit are suspended.

TCF Bank: All new residential property foreclosure actions have been suspended through the end of April 2020.

Webster Bank: Foreclosure on residential loans has been put on a 90-day moratorium.

Wells Fargo: Residential property foreclosures sales and evictions have been suspended.

How can I avoid foreclosure?

If you believe you are at risk of not being able to pay your monthly mortgage payments, the first thing you should do is contact your lender and tell them about your financial difficulties. By notifying your lender about your personal situation, they can work with you to create a plan. In some cases, they are obligated to work with you if you indicate a financial need.

You should not stop paying your bills, and do not wait until you cannot afford to make payments before you contact them. You may feel scared or embarrassed, but if you immediately begin to work with your lender on a solution, you have a better chance of avoiding foreclosure. Remember, the person you call has these conversations every day. It is not embarrassing for them, and it should not be for you either. They WANT you to be okay and make your payments, and they want to help.

Who can I talk to in order to get advice?

You can contact the government program MHA which stands for Making Home Affordable. This program grew out of the TARP relief fund passed to help America recover from the great recession in 2008-2009. Their website explains what options are available and they have a hotline that you can call 24/7 at 1-888-995-4673.

If you have an FHA loan, then you should call the FHA National Servicing Center at 877-622-8525. It is also a good idea to reach out to the Tennessee Housing Development Agency for state specific policies.

If you or an immediate family member has a COVID-19 diagnosis from a physician, mention this early in the conversation. It may open up access to newly available funding passed in response to the pandemic.

Let’s chat today.

 

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Are Realtor Commissions Negotiable?

The Impact of Coronavirus on the Real Estate Market and Home Prices

The Impact of Coronavirus on the Real Estate Market and Home Prices

the impact of coronavirus on the real estate market and home prices, home value estimate app

The coronavirus has ground the American economy and way of everyday life to a halt. States such as California and New York have instituted shelter in place policies and once-bustling city centers have become barren wastelands. We all know that the economy is feeling the negative effects but what about the relationship between coronavirus and home prices?

the impact of coronavirus on the real estate market and home prices, important stats

The Effects of Coronavirus in the Real Estate Industry.

The real estate industry was partially to blame for the last economic recession. Will the effects felt by the coronavirus have a lasting impact on home prices this time around? According to data collected by ShowingTime, the real estate industry’s leading showing management provider, showing activity has suffered a sharp decline in recent weeks. In fact, the number of home showings booked in a given week has fallen close to 70% and is expected to continue to decline.

Will My Home Lose Value due to the Coronavirus?

Home showings are suffering a decline but does that have an impact on the value of my home? Not exactly, at least in the short term. The slowdown in home showings will cause a slowdown in sales during March and April. The best-case scenario is that a home buyer who was previously anticipating purchasing a home in March or April has simply delayed their timeline by a month or two.

Keep in mind that there is a lot of uncertainty in the world right now and deciding to purchase a home is a major life decision. There are still many questions that must be answered about the coronavirus let alone the impact it will have on the job market and the economy. The declines in the stock market will also have a negative effect on a buyer’s appetite for purchasing a home as they see their savings diminish.

Some of the hardest-hit industries such as the hospitality industry are already feeling the economic impact and laying off employees. A rise in the unemployment rate and home prices have an inverse relationship meaning if unemployment continues to rise, the value of homes will decrease.

What are the Long Term Effects of Coronavirus on Home Prices?

While it does not look like the coronavirus will have an impact on home prices over the short term, it is important to be aware of long term market forces. If we cannot contain the virus and the economic impact that results from it, there will likely be a lasting effect on home prices. To make sure this does not happen, government officials are attempting to stimulate the economy with monetary and fiscal stimulus programs. Interest rates are already at historic lows and Americans need to be reassured that if they do get laid off for a period of time, they will not have to suffer the same fate as so many did in 2008 with unforeseen foreclosures.

Is it a Smart Idea to Buy a Home when there is so much Uncertainty Surrounding Coronavirus and Home Prices?

At Felix Homes Realty, we look at the buying process like you would any investment decision. After all, for most families, their home is their largest investment. Ask Warren Buffett or any successful investor and they will tell you to buy when others are scared. If you are financially secure and do not believe you are at risk of being laid off, then it is a great time to buy a home. Interest rates are at historic lows and as a buyer in this market, you will have the benefit of commanding the upper hand in negotiating a great deal.

the impact of coronavirus on the real estate market and home prices, man under quarantine

Is there a way to view homes without having to see them in person?

Felix Homes is a technology company first and a real estate brokerage second. We incorporate technology into everything we do from our complimentary drone photography to our digital marketing expertise. Last week, we announced that we will be offering virtual open houses and virtual showings for any listing in Middle Tennessee.

How can I Follow the Effects of Coronavirus in the Real Estate Industry?

Whether you are a home buyer, potential seller or just someone who is generally interested in following the correlation between the coronavirus and the real estate market in Nashville, send an email to contact@felixhomes.com and let us know your opinion of the effects of coronavirus in the real estate industry.

Let’s chat today.

 

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