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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Tips For Moving Day You Won’t Want To Avoid!

Tips For Moving Day You Won’t Want To Avoid!

Tips For Moving Day, man moving couch with boxes in background

Congratulations, your home is under contract! The stress is over right? Not so fast, you still have to pick up and move. Let’s face it, moving day is never fun and in many cases is the most frustrating part of selling your home. That’s why at Felix Homes, we’ve put together a list of the top ten tips for moving day to make moving day suck a little less.

PRO TIP: Buy your next home using a Felix Agent and we’ll pay for a local move within 50 miles of your current address!

1. If you’re planning on using a moving service or renting a moving truck, be sure to book a company a few weeks in advance.

Tips For Moving Day, man moving couch

2. Call your local utility company and arrange for service in your new home. This goes for cable and internet service too!

Tips For Moving Day, two utility trucks parked outside of a house

3. The third tip for moving day is to notify your post office, bank, doctor, vet, DMV, and insurance company of the recent change to your address.

Tips For Moving Day, mail stacked inside of a mailbox
Tips For Moving Day, newspaper and hot coffee on top of a wood table

5. To prepare for your moving day, sell or dispose of any items that you don’t need. The less you have to transport, the easier the move will be!

Tips For Moving Day, trashed piled inside of a garbage container in a driveway

6. Pack items by room for easy unpacking. Make sure to pack fragile items in their own box and wrap them with newspaper for safe transport.

Tips For Moving Day, moving boxes that are stacked and labeled

7. Tell your family and friends of your moving date a few weeks in advance so they can help!

Tips For Moving Day, woman packing a moving box while friends help

8. If you have small children, consider hiring a babysitter for moving day.

Tips For Moving Day, babysitter playing with small child

9. Host a moving party! Order a Pizza, buy drinks, snacks, paper plates, and plastic utensils in preparation for moving day.

Tips For Moving Day, people eating pizza around a table

10. The last tip, which actually occurs after moving day is to relax and start making memories in your new home. You’ve earned it!

Tips For Moving Day, couple relaxing on a couch

Let’s chat today.

 

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Felix Homes Guerilla Marketing In Nashville

Felix Homes Guerilla Marketing In Nashville

What Do Felix Homes and Toilet Paper Have In Common?

Guerrilla Marketing in Nashville, Felix Homes toilet papers

Think of all the ads you’ve seen today. Do any brands actually stand out? I bet you can’t name a single ad you remember? Facebook ads, Google AdWords, digital media ads, none of them are effective! In order to command someone’s attention in today’s tidal wave of content, you need to think outside the box to make an impact.

That’s why at Felix Homes, we ordered and deployed 10,000 rolls of toilet paper throughout the city of Nashville to promote the launch of our new service, the 1% listing fee!

PRO TIP: Learn how you can save $15,000 in Realtor commissions with our 1% listing fee.

Ideation Phase

Coming up with an effective guerrilla marketing campaign isn’t easy. The best ideas take time and a lot of creative juices. Let’s face it, we all do #2 and when we do, most of us are on our phones, checking Instagram, Snapchat, or even doing a little online shopping (I’m talking to you, Karen). So why not leverage the element of surprise during a time when our attention is focused on one thing…wiping our butts.

Planning Phase

Planning the toilet paper campaign was fairly simple. It consisted of creating an effective design and slogan that would be printed on 10,000 rolls. Once the design was approved, ordering the tp was as easy as making an Alibaba account, messaging 10 Chinese vendors to get the cheapest price, and hoping for the best. The toilet paper took about 2 weeks to produce and before we knew it, there were 10,000 rolls flying over our heads on their very own private flight to Nashville, TN.

The tp wasn’t the only thing that had to get to Nashville, our entire marketing team was headed there as well to do something they probably never thought was in the job description; deploying 10,000 rolls of toilet paper in hundreds of public bathrooms. There was still a lot of work to be done, such as coming up with a deployment strategy and figuring out how we sneak thousands of rolls into hundreds of bathrooms.

PRO TIP: Interested in joining the fastest growing brokerage in Tennessee? Click here to see our current job openings.

Execution Phase

Our team arrived in Nashville on May 6th. The sole goal, deploy all 10,000 rolls of toilet paper in one week. We started out in the suburbs focusing on strip malls. Our first few rolls went in a Walmart which was located in Mount Juliet, Tennessee, a suburb about 20 minutes from downtown Nashville. After the first day, we only got rid of about 200 rolls. We thought, are we in over our heads? Is it even possible to hand out 10,000 rolls in a single week? We had a long way to go and desperately needed a new strategy because going from strip mall to strip mall took way to long. We needed more density.

The plan for day two was to focus exclusively on large indoor malls, you know, the kind with a food court, stores like Abercrombie and hundreds of people. Folks were sure to use our toilet paper after eating at Burger King in the food court right? The plan was working, people started coming to our website in droves, one #2 at a time.

For day 3, we set our sites even higher, changing up the strategy once again after a late-night brainstorming session at one of Nashville’s finest establishments: Hattie B’s. The goal for day three was to deploy 2,000 rolls which may have seemed impossible after our subpar performance on the first day but we had a plan. What was the plan you ask? Where is one place you’re guaranteed to use the bathroom every day: at work. We headed to downtown Nashville to pay a visit to companies like Pinnacle, Bridgestone, Alliance Bernstein, Smile Direct Club, and Warby Parker. Going from skyrise to skyrise. The plan was coming together. By mid-day, we were on track to hit our goal and 2,000 rolls later, we finally did!

PRO TIP: Learn more about what we’ve been up to at Felix Homes.

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Felix Homes’ Guide To Selling In Nashville

Felix Homes’ Guide To Selling In Nashville

Felix Homes’ Guide To Selling: Prep List

Guide to Selling your Home, happy couple unpacking their stuff

You’re looking to sell your home but before you put it on the market, there’s some housekeeping that needs to be taken care of. Not sure where to start? Don’t worry because, at Felix Homes, we’ve come up with a checklist every seller should follow in order to get interested buyers to make top-dollar offers.

PRO TIP: Click here to see the top options for selling your home in Nashville!

Tips for Your Home’s Interior

  • 1. When a prospective buyer visits your home, whether it’s a private showing or an open house, you want to make sure your home has a certain flow, a ‘feng shui’ if you will. Keep it simple and avoid having too much furniture in one room. Consider renting a storage locker and eliminate any clutter so that each room appears open and spacious.

  • 2. There’s no need to pay for expensive staging, make your furniture work for you! Here’s a suggestion, choose a focal point in each room and set the furniture around it. For example, if you have a fireplace in the living room, make sure the furniture highlights it and makes it feel like the star of the room. This will not only make each room appear bigger but will give each room a purpose as well.

  • 3. Clear everything off the kitchen counter, clean out every cabinet and drawer and, put unused dishes, pots, and pans in storage. In addition to your kitchen cabinets and drawers, your closets should be de-cluttered and spacious as well. Trust me, you can never have enough storage space and a cluttered cabinet, drawer, or closet will not bode well when potential buyers visit your home.

  • 4. Brighten your rooms! I can’t stress this point enough because it’s something that every buyer will notice when they walk in your home for the first time. You want to allow as much natural light to brighten the house as possible. Make sure to keep your windows and screens clean and turn on the lights when potential buyers are looking at your property. You may also consider replacing old incandescent light bulbs for modern, natural-looking LEDs.

  • 5. Freshen up your rooms by adding fresh flowers and houseplants. Not only do they look great but they can add a wonderful smell to your home as well. I’ve found that lavender works great to eliminate unpleasant odors and does a much better job at masking odors compared to heavy perfumes which can be overpowering. There’s nothing that turns off a potential buyer more than a smelly house.

  • 6. Be sure to clean everything, especially the carpets. If you want to get top dollar for your home, I’d highly recommend spending $100 to shampoo your carpets and rugs. Over the years, carpets can trap bad odors, especially if you have pets. If this sounds like your carpet, not to worry. Most grocery stores allow you to rent professional carpet cleaners which will give a carpet in need of some TLC that brand new smell and appearance.

  • 7. Spend a weekend to do some minor repairs. There’s not a single buyer out there that would prefer to walk into a home where the faucets are leaking and the door squeaks. One weekend of repairs will produce a return on investment that makes any stock trader jealous. Take the time to repair any dripping faucets, squeaky doors, or burnt-out lightbulbs. While you’re at it, remember to check the windows and light fixtures to make sure they are clean and aren’t dusty.

  • 8. Typically, we wouldn’t recommend taking on a large renovation or project prior to selling your home because you’ll never see the return on your investment. That being said, if you have a little extra money lying around, consider replacing your carpets and drapes. Or, if your home has wood floors, make sure they’re polished and in good shape. These are a couple of examples of minor upgrades you can do that will add to the value of your home.

  • 9. Remember to remove personal items from rooms such as family photos. While achieving that warm at-home feeling is important, buyers want to picture themselves living in your home, without feeling your family’s presence. This would be a great time to rent a storage unit and pack up some of the more personal items around your house.

  • 10. The goal of these tips is to make a good first impression when a buyer visits your home. A great trick to make the entrance of your home feel larger is to add a large mirror near your home’s front door. This will create a feeling of spaciousness give your home the impression that it’s bigger than it may seem.

PRO TIP: Avoid these expensive home improvements that will actually lower your home’s value.

Tips for Your Home’s Exterior

  • This should go without saying but make sure to maintain and groom your landscaping, especially if it’s visible from the street. Your lawn and shrubs should look well maintained and well-watered. Curb appeal should definitely not be overlooked as it’s one of the first impressions a buyer will get when visiting your home.

  • Hire a power washing company to clean your home’s siding, driveway, and walkways. While you’re at it, hire a local handyman to repair small cracks in the foundation or walkways which make your home’s entrance look old and worn. No buyer wants to see that!

  • Clean the garage and remove as much clutter from your garage as possible! I know what you’re thinking, “potential buyers won’t be looking in my garage.” You’d be surprised. If you’re using your garage as storage, consider renting a storage locker and move all of your clutter there. The last thing you’d want is for a buyer to walk into a garage filled to the ceiling with boxes.

  • This should be obvious but I feel like I have to mention it anyway. Remember to replace any cracked windowpanes and check that your windows and doors open and close properly.

  • This one goes back to point number two but it’s so important that I figured I’ll mention it once more. If you have vinyl siding that is dirty, it’s imperative that you clean it using a power washer. There’s not a single buyer that looks at a dirty home and says “that’s the one for me”.

PRO TIP: Want to sell your home fast? It’s all about curb appeal!

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VA Loan – What You Need To Know

VA Loan – What You Need To Know

What You Must Know About VA Loans

VA Loan, veteran mum playing with her daughter

What is a VA Loan?

A VA Loan is a type of home mortgage available to Veterans, Service Members, and select military spouses that allows them to borrow money to purchase a home while receiving certain benefits, like a $0 downpayment, compared to a traditional mortgage. It was created in 1944 as a way to help returning service members purchase homes without needing a down payment or excellent credit.

How does a it differ from a Traditional Mortgage?

  • 1. Down Payment: VA Loans allow Veterans, Service Members, and select military spouses to put $0 down when purchasing a home. A traditional mortgage on the other hand typically requires a homebuyer to put down 20% of the purchase price.

  • 2. Private Mortgage Insurance: Since VA Loans are backed by the U.S. Department of Veterans Affairs, the borrower does not need to purchase private mortgage insurance. Traditional borrowers, by contrast, must purchase private mortgage insurance if they borrow more than 80% of the home’s purchase price.

  • 3. Cheaper Interest Rate: Since VA Loans are backed by the U.S. Department of Veterans Affairs lenders deem them to be less risky allowing them to offer cheaper interest rates which can save thousands in interest payments over the life of a 30-year mortgage.

  • 4. VA Loan Funding Fee: Most VA Loans come with a funding fee which goes directly to the Department of Veterans Affairs and helps back the VA loans of the future. Fees range from a little over 2% of the home’s purchase price for first-time VA loan recipients to 3.3% for repeat home buyers. The good news is you can roll this fee into your total loan amount. That said, not everyone has to pay the fee, such as military men and women with a service-related disability.

  • 5. VA Loan Funding Limit: It’s important to note that with a VA Loan, you can get a $0 down mortgage up to $484,350 which was a new limit imposed in 2019. That said, in some high-cost housing markets like Middle Tennessee, the limit actually extends up to $534,750!

PRO TIP: See the latest homes for sale in Nashville.

What are the qualifications I need to meet for a VA Loan?

To qualify for a VA Loan, you generally need to meet one of these qualifications:

  • 1. If you have completed at least 90 days of active service during wartime.

  • 2. If you have served at least 181 days of active service during peacetime.

  • 3. If you have at least 6 years of service either in the Reserves or National Guard.

  • 4. If you’re the spouse of a military service member who has either died in the line of duty or as a result of a service-related disability.

What’s the application process like?

  • 1. See if you are eligible for a VA Loan: In order to secure your VA home loan, you’ll need to produce your lending institution with your Certificate of Eligibility or COE. This shows that you’ve qualified for this military benefit.

  • 2. Find a VA Home Loan Lender: A common misconception is that the federal government is the one who is lending you the money. In actuality, it is actually private lending institutions that give you the loan. The Federal Government through the Department of Veterans Affairs does, however, guarantee your loan which allows the private lender to give you very favorable terms on the loan.

  • 3. Find your dream home: This is where Felix Homes comes in. You’ll work with one of our experienced Agents to find the right home for you. We’ll walk you through each step of the process and show you the latest inventory to hit the market. Once you find a home you love, we’ll leverage our technology to come up with an offer price and do all the negotiating on your behalf so you get the home for the best price. Once the paperwork is signed, we’ll provide you with a free local moving service so you don’t have to lift a finger.

  • 4. VA Loan Processing: Once the offer is accepted, your lender will conduct an appraisal of the home and double-check all of your loan documentation including your credit, debt information, employment records, etc.

  • 5. Closing: After the appraisal, all that’s left to do is close on your new home with the help of a title agent. Then, it’s time to sit back, relax and enjoy your new home.

PRO TIP: Need to sell before you buy? We’ve waived our 1% commission for veterans and active duty military.

Let’s chat today.

 

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