Jason Bramblett Real Estate Show Podcast
Jason: Good morning, Triad. Welcome to the Jason Bramblett Real Estate Show. Hope everybody is having a phenomenal week or had a phenomenal week, and well what an exciting Super Bowl. We learned a couple things. The Chiefs, believe it or not, they actually taught us something other than how to win a Super Bowl. They actually told us something else or taught us something else. Never give up.
Keith: That is right.
Jason: You just when you thought –
Keith: like it was over –
Jason: -- it was over. 49ers were all real happy and celebrating and all of a sudden, man. Just things turned around. What is the key? The key is well do not give up, and maybe some of you guys have given up in theory not 100%, but maybe you gave up on selling the house in 2019, and you are just kind of in limbo, and maybe 2020 is your year, your year to get that done. What you need is, well, just like all great teams, you need a coach, somebody to walk you through what to do, how to get prepared properly for what the market wants, and that is the difference between football analogies and real estate. You can put the house for sale, but it does not mean the right buyers are going to be attracted to what you are offering, and that is one of the things that we will walk you through. How to prep and get your home ready to go. But hey, selling a home can be tough. It can be stressful. Let's face it. It is not what you are trained to do either. It is one thing to talk about things. It is another thing to actually walk through them and do it. Right?
Keith: It is always harder.
Jason: If everything was just as easy as reading the book, this is why YouTube is so famous, right, and you can see it at least. Okay, now I can see it. Now I can go out and attempt it on my own or whatever it is I am trying to fix or blow up or whatever it is you are trying to do, but sometimes you still need a professional to step in there and help you. I know even though I have watched many YouTube videos how to fix something, I am like, yeah, that is a little bit beyond my pay grade or the risk I am willing to take, realizing that if it does not work out, I am probably going to break it even worse than it actually is, and it is probably cheaper just to go hire a professional. I take a lot of teams over the years to different countries to do missions work and build construction and all that. When we were in Panama for a number of years, one of the guys he came up with the saying, and I love it because it is it is kind of American in a way, but it was a Panamanian. He said we do it right because we do it twice. There is so there is a lesson in that. Right? And it is like there is no instruction manual, and you have got to figure it out as you go, but we do it right because we did it twice.
Keith: You got it the second time.
Jason: I thought that was a clever, clever saying. In a lot of things that can be the case, but when you are selling your home, they can be very, very expensive things. Think about most owners sell their house about every ten years, and whatever it is that you do for a living, if you only did it once every decade—
Keith: You would not be good at it.
Jason: You would not be good at it. Depending on the field, you might have less appendages, right, may be missing some digits.
Keith: That is true.
Jason: It is the old shop teacher joke, right? How do you know a good shop teacher? He has got one finger. Right? He has been doing it so long. You know you think about how that would look, how that would turn out, what the process would be if you only did something once every ten years. That is kind of the situation a lot of I see a lot of owners get in when they attempt to sell their home on their own. Yeah in theory, it seems like a simple thing, but there are a lot of moving pieces to a real estate transaction outside of just making the house ready. Right? There is the negotiation, the preparation, the title searches that need to be done, and all the different things that go along with that. So hey, just like in the football game, you can throw a Hail Mary out there, right, and just chuck it in the air and whoever gets it, gets it. Right?
Jason: And that is a lot of times what I see in real estate. But the question is is that really smart? No, it is usually that is your last resort. Right? We kind of saw that this past weekend. So we are going to be digging into the for sale by owner myth as to is it good? Is it smart? Am I really actually getting ahead of the game? Am I saving money? Is it worth my time, effort, and energy or is it just kind of like watching that YouTube video and then blowing the car up?
Keith: Wow, I would be scared to do it and I would not think it was the best idea. But if I have done my math right based on the average sales price in the Triad, owner is going to pay. I do not know, about $18,000 to sell their home. So while it probably scares me, $18,000 is a good chunk of money that might be enough motivation to give it a shot.
Jason: That is right.
Keith: Is that crazy?
Jason: I think most, let's see most big dreams and ideas they start with a calculator, right? And you run those numbers and you look at that and you are like, holy cow. What could go wrong? Even if I am half right.
Keith: Again, I am not saying it is a great idea. Do not get me wrong. But with that amount of return, I do not know.
Jason: Yeah no kidding, and it is expensive to sell a home. No question about it. It is one of the most expensive things that we own in this country, and it is also one of the most expensive things not only to sell but also to purchase. It is not cheap. I am not saying that owners do not save any money, but I do have some information that I think will make you pause to say okay, if we look at risk versus reward now. Statistically, I will share with you in a little while that actually owners typically get less for their home when they sell it on their own. I know there are many of you they could call in and tell me your success stories. These are averages. The reason why there are averages is because somebody did better and somebody did worse. Right? And it averages out. But the average in this particular category is still the owner does not come out quite as good as they think. Basically, the for sale by owner that is out here still realizes most of the time there is going to be another agent involved. Most buyers today have an agent that they want to represent them. For so many years in America it was buyer beware, and there was no one representing the buyer at all. It was basically the buyer was just on their own, and sometimes that worked out really, really well and sometimes it did not. I guess if you look at statistics and as a trend you would say it must have worked out not good more than it did because now buyer representation is huge, and most everybody has an agent that is going to represent them. So even the seller that is doing it themselves recognizes that, and they offer compensation to that buyer's agent to help them along and bring that buyer to the table. So right off the top in Keith’s kind of scenario here if we take the $18,000. If there is another agent involved typically 50% of that money is going to go to that agent. So right off the bat you are at $9,000, not 18. Right? Which, hey, I am not knocking $9,000. $9,000 is $9,000. If I laid out $9,000 most of you would pick it up. Right? I would. If you walk down the street and it was sitting there you would be like, yeah, that is mine. Yeah, I remember dropping it. Yeah, so it is still a good check. No matter how we look at it. It is still a good money. But 95% of the for sale by owners that are in the market, one other thing that we do see is they typically sell in the first week, which I think also leads to why we have so many people that are very, very confident. I will have folks that we will talk to and they are like, well, I sold my last house in a week. It was easy. I did not need a real estate agent. I did this and I sold it the first day. Selling it quick does not necessarily mean you sold it right. Just because it happened fast does not necessarily mean it was good, and statistically we know that that is actually normal in the for sale by owner world because they do sell quick probably because whoever bought your home, one, was either somebody you knew. Right? Word of mouth or it is someone that drives by your property every single day of their life on the way to work, take the kids to school. Whatever. You have got a captive audience of a steady flow of traffic that goes by your property. This is statistically proven nationwide because after eight days, the chances of you selling by owner drop 60% because everyone that you would have exposed your home to in the first week has been exposed to it. And if you are not in the market to buy a home, then you are just driving down the road and there is a sign in the yard, but you do not pay any attention to it because it does not appeal to you. Right? Maybe one out of the 20,000 people that may drive by your home in a week maybe it is the one. But typically after a week that is it. Your exposure is capitalized. There is no one else unless you get the lost person that just happens to wander down your street which is pretty rare. Right? We see those statistics dropped tremendously. By day 30, the success rate of a for sale by owner actually drops 97%. There is actually only 3% of people that sell their home on their own that do it after the 30th day. Again, it goes back to saturation. It goes back to you have exposed the house to pretty much everybody you could. Now these are national numbers from the Association of Realtors. Zillow has similar numbers. These are not mine. These are Google stats. You will see them. They have been that way, and what is interesting is technology has not skewed those numbers. Same basic percentages as 25 years ago even with the internet and all the social media and everything.
Keith: Yeah, but just because the internet is out there and you have the ability to market and do some things, if you do not know how to do it and you do not know what you are doing, it is not going to be effective.
Jason: Yes. Absolutely.
Keith: So even just that it is there, you still need someone who knows what they are doing.
Jason: That is right. And the audience is the audience no matter what. If you are not in the market of buying a new car, you are probably not going on cars.com to look at cars.
Jason: We are not that bored as a society, right? Probably not. But it is the same with the house. Yeah, you may watch some of the house-flipping shows for entertainment or whatever, but most people entertainment is not digging into a website going oh, I would really like to see what a 4x4 Jeep would, what does that look like today? It is just not research you are going to do to buy a car when you are not in the mode of what buying a car. Right? The same is true with the house, but sometimes you cannot relate to or it is harder to relate to things that you do not do very often like buy a home. So if you think about it from a car standpoint, if you had a vehicle to sell and you just, we will switch the product and just say okay, you got to whatever us today and you want to sell and you put it in your front yard. There is a limited number of traffic that you are going to get as compared to let's say Greensboro, Wendover Avenue. There has got to be 12 car dealers on Wendover. At least.
Jason: Minimum. Outside of going to Costsco, you go there to buy a car. Pretty much. Right? Every single buyer that comes on that lot is probably in the market to, what, buy a car for the most part, and so you have got higher traffic and you got a better qualified person. Now, why do they go to Wendover as opposed to your driveway? They got options, variety, more than one. You have only one of something to sell. Right? There are thousands and thousands of cars available on multiple lots on Wendover. The other thing is this. Why do typically people stop on the side of the road to look at a car? There is a perception there and that perception is they did not stop at Keith’s house to look at Keith’s house expecting to pay top dollar. They stopped to buy the car with the preconceived idea that they were going to get it at a deal, a discount, less than they would on Wendover. Why is that like a subconscious thing? Because they realize wow, car dealers spend a lot of money in what, real estate. I would guess that Wendover Avenue real estate is a lot more expensive than where all of us live. Right? They have spent a lot of money to bring people to that location, TV, radio ads, billboards, whatever. They have employees that they have to pay. Right? They have taxes that they have to pay. You have none of those things. And so just at the core idea of selling your car in your driveway, the buyer has a perception of paying less. We all do. It is kind of like a garage sale. Right? You go to a garage sale. You do not expect to go in the garage sale and pay the same as you would at Gander Mountain or any sporting goods store, or Walmart for that matter.
Keith: It would defeat the purpose.
Jason: It would defeat the purpose. The same principle. The same principle applies in real estate. Buyer stops at the for sale by owner sign, not with the idea that they are going to pay top dollar. They are stopping with the idea of I can probably get this for less than if it was for sale with what, a real estate company, that has what, employees, real estate, advertising all these added expense that what, it does raise the cost. No question about it. And there is no agent to pay, so there is no employee to pay. If I am a buyer, I am not looking at a for sale by owner going oh, wow, I can buy this house too and still pay top dollar and have no service. Right? It does not make sense. If you really get to the core logic of, and this are some psychological things that are kind of wired in our brain. It is like Jumbo shrimp. It does not make sense. Right? Shrimp are little period. No matter what. No matter if you get the biggest one it is still a shrimp. And with selling your home, in the brain of the buyer, it is I should be saving something there. I should be, what, getting a discount, and typically what they want to do is they want at least knock the real estate commission right off the price of the house to begin with, but just by knocking the real estate commission off, let's just say 7% off the price, that is nothing because it is really not a savings. I am just saving the middleman. I see they want 7% then they want to discount because if they had bought the home when it was listed with the real estate agent and paid full price, it is the same money, right, net result is the same. We start to see bigger, deeper discounts. This is why this statistic is out here that we see that most for sale by owners actually end up selling their home for considerably less and actually netting less even after all these perceived savings. So anyway, let's do this. Let's take a quick timeout. We are going to dig into more of the for sale by owner myth. And of course, you can send me your lovely emails. Everybody has got a great opinion about this. So I do look forward to him you go to Jason Bramblett dot com. Click on the right hand side. Shoot me an e-mail or give us a call at the office 553-0796 will be back in just a minute.
Hey and we are back. You are listening to the Jason Bramblett Real Estate Show. Before the break we were digging into the for sale by owner myth. Is there really any money to be saved and then well then begs the question of who is saving the money, right? The owner has 100% belief that hey, it is my house. I am not paying anybody, therefore I am saving. But then there is this other guy involved called the buyer and he sees it a different way. He sees it as hey Keith, you are not paying anybody, therefore here is an opportunity for, what, for me to save and what they find is it is very hard to both of them say with the same product. Right?
Jason: If we were just selling a cup of coffee and Keith wants to get the most and the buyer wants to get it at the least and there is no middleman coffee person in between then who is saving what? Right? That is that is where we end up getting into the real numbers and looking at is there any savings at all?
Keith: Well, I am stubborn.
Jason: Let’s do it.
Keith: We started at 18. Clearly,if there is another agent involved that takes it down to nine-ish.
Keith: I do not know.
Jason: Yeah still good, still good.
Keith: Listen, I am stubborn. Born this way.
Jason: Hey, like I said, if I laid $9,000 down, I feel pretty confident most people would pick it up. right?
Keith: I would.
Jason: Absolutely and so there is no doubt. $9,000 is still a great amount of money. There is no question about it. In negotiation when we do not have skilled negotiators, we find that people like to act in this world that this word called fairness. Keith being a reasonable stubborn person would say hey, okay, there is no agent. I get that. I am going to pay your agent. There is $9,000 left on the table. I really want to get this deal done. So let's be fair and let's split it 50-50, right? I will say 4500, you say 4500.
Jason: And look, let me tell you about fair. Fair is a good place for rides and food, right? You want a fair? Go to the Dixie Classic Fair. It is phenomenal. I love it. But fair is not a negotiation in splitting the difference. There have been many books written on this. There is actually a good book called Splitting the Difference and why it is not a negotiation. When you settle for splitting things 50/50, somebody is actually losing out in the deal even though the perception is equal. Remember what the whole entire process of the for sale by owner was doing. He was not attempting to get to $4,500. It was $18,000 is what was on the calculator.
Jason: And now we are at $4500.
Keith: A lot less attractive.
Jason: A lot less attractive. Well, let me back up. That $4,500 assumes that they buy the house as is. You have it even went through the repair to go negotiation yet. Right?
Keith: That is right.
Jason: Because I know your house is perfect. Of course, it is. Yeah, there will not be anything wrong with it because I am sure you had it inspected and checked out thoroughly before you put it on the market. Right?
Keith: And my daughter used to make slime in that bedroom. So it is going to be fine.
Jason: There is no issue at all. There is no issue at all. Yeah. We do a lot of pre-inspecting of our properties, and I get it. It is yours, and it is in no way, shape, or form by us suggestion to get a home inspection on your property saying there is something wrong with it. It is a proactive stance that we take so we lead from a place of power in our position, in our negotiating because we do know verified from a third party that there is nothing wrong with the house. There is power in that and there is power in having that third party verify that. But let's just assume if anything comes up then what happens? That $4500 starts to get smaller and smaller and smaller to where you really have to look at it is like wow did I actually gain anything here? I see this a lot with first-time investors that want to flip homes. And also running is the math and the calculator and everything is like oh, wow. I am going to make $18,000 on this house. I am like, okay who's doing the work? I am. You do not value your time?
Keith: Your time is worth something.
Jason: Not in their calculation it is not. I cannot tell you how many times I have met with investors. First time. They got stuck in an issue. Like hey, I need some professional help and we run all the numbers, and it is just like you realize you made like $1.80/hour doing this? You actually would have been better to go just work part-time at Home Depot. If you like tools and stuff and products and all that, go sell them. Right? It would have been better than attempting to take all the risk that you took and take it on this $130-140,000 loan and all the risk of buying the materials and all that, and at the end of the day you made $3/ hour. I cannot tell you how many times I have seen it over and over and over again. So not only like was flipping a home, you need to know your math and need to the risk. The same with selling your home on your own. Now have some people done it successfully? Yes, but to some people that getting the house sold was successful. We look at is how much did we put in your pocket? That is the key. We want to push that $18,000 back on your side of the balance sheet and not off into the abyss. So we can help you walk through those numbers to see if it really is some savings out there. You can go to Jason Bramblett dot com, shoot us an email anytime, or call the office. One of my agents or myself will be happy to sit down with you and go through that. Hey, have a great weekend. We will be back here next week. You are listening to the Jason Bramblett Real Estate Show.