Southern Indiana Real Estate Blog

I've been selling real estate for three years now and I have to say it is surprising to me how many people misunderstand how Realtors are paid. I think that sometimes it evens affects their decisions on who to work with. This blog is meant to clear up some of the myths and give you as the consumer a clear picture on how the process works.

Basically, the people selling the house pay a commission to their listing broker based on a percentage of the selling price. The listing broker then splits this commission with both the buyer's broker and their respective agents.

Seller pays 6 - 10% commission to listing broker

3.2 - 5% retained by listing broker

2.8 - 5% paid to the selling broker

listing agent and selling agent are paid by their respective brokers

For Example:  Let's use $100,000 dollars because it is an easy number to work with.  Let's say you sold your house for $100,000 and you were paying Broker 1 a 7% commission.  Broker 1 would receive $7,000.  But Broker 2 sold the house so Broker 2 would get (let's just say half) 3.5% or $3,500.  Then each broker would split their side of the transaction with their respective agents.
 

Did you know...

• Sales associates are self-employed, and recieve no salary or benefits. We get no paid vacation time, insurance, company cars or expense accounts from the firms we work with.
  
• Sales associates are only paid for results - if and when we successfully complete a property transaction.
  
• We are paid the same whether a buyer purchases a home listed by my own company or another broker.
  
• As independent contractors, sales associates have ongoing out-of-pocket expenses similar to those of any small business.

Some of those business expenses include:

• Property advertising
  
• Advertising and marketing my services
  
• Marketing materials and direct mail
  
• "For Sale" signs, "Open House" signs, "Pointer" signs
  
• Lock boxes
  
• Total inventory marketing fee
  
• MLS access fees
  
• Computer hardware and software
  
• Long distance, cellular and/or paging service
  
• Postage and courier fees
  
• Business cards, stationary, office supplies
  
• Business insurance, self-employment tax
  
• Continuing education courses
  
• Personal assistant (salary, taxes)
  
• And, some pay monthly office rent
  

Yesterday I received an email from a friend of mine that had a movie attached called 212* - The Extra Degree.  My friend knows I love to read (or watch) things that help to motivate and inspire me and thought I'd really like this short movie.  He was right.  This was a great movie that talks about the difference in being good and being great.  Many times people are so close to becoming great, but don’t make that last extra effort to push them over the top.

My favorite quote from the film was “To get what we’ve never had, we must do what we’ve never done”.  This is a great line for new agents especially.  You need to do things you’ve never done before or things you aren’t comfortable with to take it to the next level.  Don’t be afraid to try new things.  If it doesn’t work, try it again and again.  If it still doesn’t work, scrap it for something different.  At least you’ll know it doesn’t work.  The point is you tried something new and something you might not have been comfortable with.  The next time you try something new, it will be a little easier.

The web site that the movie came from was called simpletruths.com.  It is a great site for anyone looking for that extra push or anyone trying to give a push as well.  There are items you can purchase for yourself or buy them as gifts if you like.  There is free newsletter that you can sign up for.  I signed up, but haven’t received one yet, so I’m not entirely sure what it will contain.

There are a few other free movies as well that are definitely worth checking out.  I think my favorite was The Dash by Linda Ellis.  It is a very touching piece that reminds us not to overlook or ignore what is really important in life.  I would encourage everyone to watch it.

It seems like every time I turn on the television there is a new "reality" show about real estate. There are a couple of shows that stand out as shows dealing with buying run-down properties, fixing them up and then selling them for a profit. If you haven't already guessed, I'm talking about Flip This House on A&E or Flip That House on TLC. Both of these are usually excellent entertainment as I find myself anxiously waiting to see if they are going to make the deadline or keep it under budget or how much money they make.

Notice I used the word "entertainment". That is because that's what they are. These shows should NOT be used as guides to investing in real estate. I talk to more and more people who say "I'd like to start investing in real estate". I normally respond with "Great. Real estate can be an excellent investment. Have you put together a plan or strategy yet?". Then I normally get "Plan? Well no, I haven't really thought about it." This is a problem.

Flipping houses is only one of the ways you can invest in real estate.  There are numerous others.  Flipping can be very rewarding if done correctly. One problem that we face here in Kentuckiana though, is that we don't live in the type of market they portray on TV. The money you put into a house here will not get the same return as it would in California or on the East Coast. I'm not saying opportunities don't exist here, because they do. There just aren't as many and you need to be very careful choosing which properties you're going to flip.

Flipping houses is a business, not a hobby. One thing the shows do portray is that the most of the people doing the flipping do this for a living. Well, the serious ones anyway. The first season of Flip This House featured a businessman in South Carolina, Richard Davis, of Trademark Properties. This is a full-time full service real estate company. Flipping houses is their business.  It's what they do.  They have a plan and a strategy.

As I said earlier, flipping houses can be very rewarding if done correctly. All I am asking is that you look past all the glitz and glamor (like Richard flying away in his helicopter) and focus on the reality, hard work.

Edit - Kaushik Sirkar wrote another blog that pertains to flipping and how the market has changed.  Check it out. 

Earlier this week I contacted Broker Bryant about an expired letter he had metioned and asked him if he minded sending it to me so that I could use it to help me create a letter of my own.  Being the wonderfully generous person that he is, he said no problem.

Well after creating my expired letter, I decided to use it to help create a FSBO letter as well.  BB was extremely helpful as we emailed it back and forth until we came up with an awesome finished product. 

In some of the responses to his blog, people were asking about the "Help Kit" so I decided to share some of the things that I use and see if we could come up with some other ideas for items to put in.

The first thing (after the initial letter of course) that I'm going to send will be a checklist along with maybe one or two pieces from the kit.  The checklist is nothing more than what it says it is, a list of all the items that are in the kit.

Here are a some of the items I use in my kit:

• Writing Effective Ads - A sheet with tips and advise on how to make the phone ring and help generate more inquiries.
• Answering Inquiries - How to covert some of those phone calls into showings.
  
• Guest Registry - I advise them how important it is to know who was in thier house not only so they can follow up, but for security reasons at the very least.
• Preparing Your Home for Showings and Sale - Tips on how to present the home in the best light; and information to have ready to answer prospective buyers' questions.
• Caveats - A list of things to help avoid legal entanglements.
  
• Advertising Budget Planner - Rate sheet for planning local advertising and how to calculate total ad costs based on market time and weekly rates.
• Forms - I put in a blank Sellers' Disclosure as well as a Lead Base Paint Disclosure and pamplet(if needed).  I also will put in a SAMPLE Purchase Agreement as well as a SAMPLE Listing Agreement.

I've had pretty good response from giving out the kit in the past, but I think now that it will be coupled with the initial intro letter, it will be even more powerful.  Another thing I'm going to try is, in the past I would give them the whole kit and not have anything to give them the following week.  I'm going to change and only give them a little, but let them know there is more.  I want to try and create anticipation for it's arrival.

The most important thing to remember when dealing with FSBOs is that they do NOT want to be sold.  They want to feel like when they decide to list, it's because they WANTED to, not because you talked them into it.  WHATEVER, as long as they list.  And even if they don't list, they may still refer you for being so helpful while earning nothing.  Or they may have not enjoyed the experience and will use you the next time.

It's funny, no matter what we do or how we do it, it all comes back to being about creating strong relationships and building off of them.  I think this kit along with the intro letter are a great way to start.

I'd love to hear if anyone else has any other ideas for things to put in the kit. 

When selling your home, there are things you can and can't control.  The three items in which you and your Realtor have control of are price, marketing and the condition of your home.  The price is something that will be agreed upon between you and your Realtor and the marketing will usually be your agent's responsibility.  The condition of your propoerty will be the responsibility of you the homeowner.

Sometimes people wait a little too long before they decide to get their home ready to sell.  This blog is geared more towards things you can do on an annual basis to help keep you home in good repair and safe condition.  Keeping a schedule is very important.  Try to keep it current by routinely completing tasks and marking when the task was done.  By doing this, you could save yourself both time and money in the future as well as prevent damage to your home.

Below is a chart to help you keep track of maintaining your home.  If you do not know how or do not feel comfortable doing any of the following, you should contact a professional.

While completing this list, there are some safety tips you should follow.

• Know the location of the main water shut off valve
• Know the location of the main electrical disconnect or breaker
• Know the location of the main emergency shut off switch for heating system
• Mark and label each circuit in the electrical panel box
• Call a licensed electrician if fuse blows frequently or circuit breaker trips frequently 

We had our weekly sales meeting this morning and my broker shared with us something that she found.  I asked her to email it to me so I could share with all my ActiveRainers.

Life is the Coffee!

A group of alumni, highly established in their careers, got together to visit their old university professor.  The conversation soon turned into complaints about stress in work and life.

Offering his guests coffee, the professor went to the kitchen and returned with a large pot of coffee and an assortment of cups - porcelain, plastic, glass, crystal, some plain-looking, some expensive and some exquisite - telling them to help themselves to the coffee.
 
After all the students had a cup of coffee in hand, the professor said: "If  you noticed, all the nice looking expensive cups were taken up, leaving behind the plain and cheap ones.  While it is but normal for you to want only the best for yourselves, that is the source of your problems and stress."
 
"Be assured that the cup itself adds no quality to the coffee.  In most cases, it's just more expensive and in some cases even hides what we drink.

What all of you really wanted was coffee, not the cup, but you consciously went for the best cups...and then began eyeing each other's cups."

"Now consider this: Life is the coffee, and the jobs, houses, cars, things, money and position in society are the cups.  They are just tools to hold and contain life, and the type of cup we have does not define nor change the quality of life we live.  Sometimes, by concentrating only on the cup, we fail to enjoy the coffee God has provided us."

God brews the coffee, not the cups . . . enjoy your coffee.
 
"Being happy doesn't mean everything's perfect, it means you've decided to see beyond the imperfections"  Live in peace and peace will live in you.

How true is this in our profession?  I remember when I first started I would look around at a few of the agents in my office who seemed to live there.  I specifically remember telling myself that I did NOT want to be like that.  But something happened in between then and now and sometimes I catch myself being exactly what I didn't want to become.  What is the point of working so hard if it means sacrificing things that are important to us like time with our friends and family?  There is NONE!  Slooooooooooooowwwww doooooooooooooowwwnn.  Take time for yourself and sit back and enjoy the coffee!

Hello to all my new found friends from ActiveRain.  I've been tagged by Ginger & Roger Sala.  I've had a really good time reading everyone's MEMEs.  This was a great idea for letting people get to know each other and Become Involved in the ActiveRain Community.

So here goes.  Five things about me:

1.  I was on the Indiana High School Athletic Association State Runner-Up golf team in 1994.  I also went on to become an apprentice in the PGA of America's Golf Professional Training Program.

2. My cousin and I were both born on Christmas Eve of the same year two hours apart from each other.  You could say I'm almost a twin!  LOL!

3. I am the 2nd oldest of 7 children.  I have an older brother that will be 35 in May and a little sister that won't be 14 until August.

4. I have the two best dogs in the world.  OK, I'm a little biased.  We have two boxers.  Our oldest is a  2-1/2 year old girl named Ali Wishes.  This is when she was still small enough to pick up.  Those days are long gone.  Our other is a 1-1/2 year old boy named Brodie Licious.

5. I cry every single time I watch Rudy.  I can't help it.  I try to always keep the attitude that Rudy had.  Everyone did nothing but tell him why he couldn't do it only to prove them all wrong.  What a great inspiration that can be.  It is truly amazing what the power of positive thinking can do.

I hope this provided you with a little more insight as to who I am.  I look forward to reading many more MEMEs!

I'm tagging:

Jason Edwards

Kristen Selheimer 

Brian Ortiz 

Today in the office I was talking with another agent.  She was telling me about a problem that had arisen with one of her listings.

She had listed a country home with acreage a little while back.  She went to the courthouse and pulled the data card which showed that the property had eight acres.  The owners confirmed that information.  The lady that owned it said that her father had purchased the property over fifty years ago.

Now I wasn't even around fifty years ago so I don't really know much as to how business was done then.  But I will guess that when he purchased the property he probably didn't get a survey done.  I can envision in my head two guys smoking a cigar finishing the deal with a handshake.  I do know that handshakes meant a lot more then than they do know, but that's another subject for another time.

Well, the agent that listed the property talked the owners into having a survey done.  She wasn't really worried.  She wanted to use it to for buyers showing them exactly where the property lines were as well as exact acreage.  Plus if they went ahead and did it now, it reduced the chance a buyer would want to do one.  She had no idea what the report was about to show them.

It turns out the owners didn't have eight acres.  As matter of fact, they didn't have seven or even six.  The report came back and showed that the sellers only owned five acres!  They only owned a little over half the amount of acreage they thought they did.  What's even worse is they have been paying taxes on eight acres for over fifty years!

This is a great example of why surveys are so important.  I would really encourage everyone to have a survey done for property you are purchasing or have purchased recently, especially those with acreage.  You wouldn't buy a car only to find out later that the tires don't come with it.  This is the same in that you wouldn't buy property only to find out later that land you thought came with it, didn't.

This is also an example of not being able to trust everything the sellers say.  I'm not saying that they mean anything malicious.  I'm just saying that sometimes they don't even know!  These people thought they knew, but they didn't.

Rich Jacobson wrote a blog called "Survey Says!" that discusses this topic as well.  Check it out.

I was sitting here this morning reading through some blogs and came across the Sunday Quote of the Day and thevery first quote on there was Positive thinking will always make your day better

Wow!  Quick, simple and to the point.  Well, it got me thinking about how important attitude is in this business.  I think it is everything.  I think with a positive attitude, you can make it through any obstacle and with much more ease compared to our grumpy old counterparts.

Below is an email I got a while back.  This is probably one of the best emails I've read on how attitude can effect your life.  Whenever I'm feeling a little negative I try and remember to read this email until it becomes ingrained into my head. 

READ THIS...                                                                               

LET IT REALLY SINK  IN - THEN CHOOSE .


John is the kind of guy you love to hate. He is always in a good mood and always has something positive to say. When someone would ask him how he was doing, he would reply, "If I were any better, I would be twins!"  

He was a natural motivator.

If an employee was having a bad day, John was there telling the employee how to look on the positive side of the situation.  

Seeing this style really made me curious, so one day I went up and asked him, "I don't get it!

You can't be a positive person all of the time. How do you do it?"  

He replied, "Each morning I wake up and say to myself, you have two choices today.. You can choose to be in a good mood or ... you can choose to be in a bad mood.  

I choose to be in a good mood."

Each time something bad happens, I can choose to be a victim or...I can choose to learn from it. I choose to learn from it.  

Every time someone comes to me complaining, I can choose to accept their complaining or... I can point out the positive side of life. I choose the positive side of life.  

"Yeah, right, it's not that easy," I protested.

"Yes, it is," he said. "Life is all about choices. When you cut away all the junk, every situation is a choice. You choose how you react to situations. You choose how people affect your mood.  

You choose to be in a good mood or bad mood. The bottom line: It's your choice how you live your life."

I reflected on what he said. Soon hereafter, I left the Tower Industry to start my own business. We lost touch, but I often thought about him when I made a choice about life instead of reacting to it.  

Several years later, I heard that he was involved in a serious accident, falling some 60 feet from a communications tower.  

After 18 hours of surgery and weeks of intensive care, he was released from the  hospital with rods placed in his back.  

I saw him about six months after the accident.

When I asked him how he was, he replied, "If I were any better, I'd be twins...Wanna see my scars?"

I declined to see his wounds, but I did ask him what had gone through his mind as the accident took place.

"The first thing that went through my mind was the well-being of my soon-to-be born daughter," he replied. "Then, as I lay on the ground, I remembered that I had two choices: I could choose to live or...I could choose to die. I chose to live."  

"Weren't you scared? Did you lose consciousness?" I asked.  

He continued, "..the paramedics were great.

They kept telling me I was going to be fine. But when they wheeled me into the ER and I saw the expressions on the faces of the doctors and nurses, I got really scared. In their eyes, I read 'he's a dead man'. I knew I needed to take action."  

"What did you do?" I asked.

"Well, there was a big burly nurse shouting questions at me," said John. "She asked if I was allergic to anything. 'Yes, I replied.' The doctors and nurses stopped working as they waited for my reply. I took a deep breath and yelled, 'Gravity'."  

Over their laughter, I told them, "I am choosing to live. Operate on me as if I am alive, not dead."

He lived, thanks to the skill of his doctors, but also because of his amazing attitude... I learned from him that every day we have the choice to live fully.  

Attitude, after all, is everything.

Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own." Matthew 6:34.  

After all today is the tomorrow you worried about yesterday.  

I have to tell you that one of the most surprising things I've learned in my young career is that there are sellers out there that don’t really do anything to help make their agent’s job easier.  They don’t do anything to the house to make it more saleable.  They don’t fix things that need to be fixed.  They don’t clean up the yard to give the house more curb appeal.  They don’t clean up the inside of the home so buyers can actually focus on the home instead of the underwear on the floor.  They don’t do anything!  It’s as if once they signed the listing agreement their job was over and the responsibility of getting the property sold fell exclusively on the agent’s shoulders.

There are usually three things that we can control to help make a home more saleable, marketing, price and condition.  Miss any of these and selling the home will become much more difficult.  Marketing is handled by the agent and his or her broker.  Price is determined by coming to a mutual agreement between the sellers and the agent.  Finally, the condition of the property is usually the responsibility of the sellers.  So do your agents a favor and get your house ready to show and ultimately sell.

I wanted to give some pointers on things sellers can do at the beginning of the listing as well as preparing for a showing.

Exterior:    

• Mow and trim your yard.  Keep the grass fertilized and watered.
• Keep your driveway and sidewalks clear of any grass clippings or snow.
• Keep your trees and shrubs trimmed.  Keep flower beds edged and free of weeds.
• Make sure the exterior house paint is clean and in good condition, especially the front door.
• Make sure all doors open, shut and lock properly.
• Make sure the roof is in good condition.
• If you have holes in screens or screen doors, replace them.
• Keep all of your exterior lights in working condition.
• Keep clutter out of your yard and driveway.  Make sure everything has a place for when it is not in use.
  

Interior:                                                                                    

• Make sure the walls are clean and unmarked.  If needed, give them a fresh coat of paint with neutral colors.
• Clean all the windows inside and out.
• Make sure all the light fixtures are working.
• Make sure you have no leaks and that the plumbing is working properly.
• Keep the sinks and tubs stain-free and all the faucets in good condition.
• Make sure the caulking around tubs and showers is in good condition.
• If you smoke, quit doing it in the house.
• All clutter removed from closets, attics, basement, garages etc.
• Ask your Realtor what should be boxed up to make your home look more spacious.

Showing Your Home:

When your home is to be shown, we will always attempt to make an appointment with you, giving you as much advance notice as possible.  I understand that this is not always enough time to get everything ready, but if you can, try what is below.

During Showings:

• Open all curtains and blinds to let in the light.
• Turn on enough lights to brighten every corner in the house.
• Put away dirty dishes and clean off all countertops.
• Make the beds.
• Dust the rooms, vacuum and pick up clutter.
• Turn off TV’s.  Soft background music is acceptable.
• It’s best to keep pets out of the house.  Even the friendliest pets may become anxious around strangers.
• Put away all valuables such as jewelry and cash, or remove completely.
• Never enter into a conversation with a prospect.  Let the agent who is showing the home answer any questions the prospective buyers may have.  It is best if you leave while the house is being shown.
• If a prospective buyer comes by unexpectedly without a broker, get their name and phone number. FOR YOUR OWN PROTECTION, DO NOT SHOW THE HOME.  Have them call your agent.

There is an article by Elizabeth Weintraub here that goes into even more detail on this subject.

By performing these steps along with the steps performed by your agent, you will be giving your property the best possible chance it has to sell.  Remember that we are a team and just like any other team, if one person isn’t doing his or her job, it makes it much more difficult for everyone else.  Help us help you.  Do your part and GET YOUR HOUSE READY TO SELL!