Connect with us

Opinion Editorials

Two Myths For the Price of One

Published

on

wall street journal

photo credit: Enrico Fuente


Noticed this one on Jim Duncan’s blog but I’m going to start with the other myth from the same post on RealEstateJournal first:

“Plus, a new kind of agent emerged over the years, the ‘exclusive buyer agent,’ who is responsible to the buyer alone and doesn’t list homes. I highly recommend that buyers seek out such agents, as they’ll not only keep your confidence, they’ll also drive you around, give you valuable insight into market conditions and negotiate hard on your behalf — without any possibility of a conflict of interest. “

I’ve worked with buyers. I’ve also listed homes. How exactly is it a conflict of interest for me to work with buyers on homes in Glendale’s Arrowhead Ranch when I have a listing in Avondale, some 15 miles away? And how is it that simply because I’ve listed homes that I’m unable to discuss market conditions in depth and negotiate on a buyers’ behalf?

Or that I’m unable to keep a buyers’ confidence (even though it’s my fiduciary responsible to do so as a buyers agent, EBA or not) simply because I also list homes for a living?

These are thoroughly ridiculous assertions without the slightest bit of merit. I’d actually argue that I’m in a somewhat better position to negotiate, having actually sat at a table with sellers when presenting offers and having some knowledge of the emotions on the other side. But that’s just me.

As for the other myth, here we go again …

“But like everyone else, buyer agents don’t work for free. At first glance, it seems like the seller pays them, since most are paid at closing from the commission costs that the seller pays, just as in the past. In reality, buyers pay for everything, since sellers routinely factor these costs into the asking price for the home”

Again, we’re pretending there’s one side to the equation. Yes, the buyer brings the money to the table. But the seller is the one bringing the home. And just as the buyers’ mortgage total is impacted by the commissions so is the sellers’ net. It’s two sides of the same equation, indivisible.

Further, the statement that commissions are factored into the list price is specious. Let’s say the average commission in some area was 10%. Tomorrow we magically divorce commissions and suddenly there’s no need for a 5% co-broke to be paid.

Are you going to tell me list prices instantly would fall by 5%?

Are you?

But that would have to happen if commissions truly were factored in. Similarly, show me the homes being sold by unrepresented sellers where the list price is lower than the MLS-listed homes around it by the amount of a co-broke fee.

It doesn’t happen. I’ve yet to run into an unrepresented seller who looks at all the comps then deducts the commission that’s not coming out of their net. If you have, please share.

One final note specific to this article … the person answering completely missed the question. The question was about an agent requiring a non-refundable retainer, not an agent working on a flat-fee basis.

I realize I’m leaping to conclusions but I tend to doubt the agent with 28 years experience was planning to work for $395. Yet that’s what’s implied at the end of the post.

More tremendous advice for unsuspecting buyers out there.

Sheesh.

Jonathan Dalton is a Realtor with RE/MAX Desert Showcase in Peoria, Arizona and is the author of the All Phoenix Real Estate blog as well as a half-dozen neighborhood sites. His partner, Tobey, is a somewhat rotund beagle who sleeps 21 hours a day.

Continue Reading
Advertisement
6 Comments

6 Comments

  1. Lani Anglin

    January 31, 2008 at 12:28 pm

    It seems to me that anyone can get a few pieces of information and then have the magical ability to speak from an omniscient standpoint as an expert and make assertions based on their few facts (or opinion blogs) they’ve read, as I feel the author of the “myths” did. In this environment, everyone is trying to “revolutionize” something. Enough.

    Real estate has been tweaked and re-tweaked but it is still recognizable whether the “business model” is good or bad. The author proves that just like he/she did, buyers and sellers can read an unimaginable amount of information online, access countless data points, but still be confused and overwhelmed which is why the professional will always be employed at full price- THEY know how to translate the massive info dump online (among other places) to the specific buyer or seller’s needs and that service will never be $395.

  2. Jim Duncan

    January 31, 2008 at 1:10 pm

    . Let’s say the average commission in some area was 10%.

    It would be inhabited almost entirely by Realtors.

  3. Jonathan Dalton

    January 31, 2008 at 1:27 pm

    Wasn’t arguing that was a reasonable commission, Jim. But you know that.

    Just using a random figure that doesn’t coincide with the random numbers that everyone else seems to use lest the impression be given that there’s a set commission rate. Which there isn’t.

  4. Jim Duncan

    January 31, 2008 at 1:31 pm

    I know.

    I’ve yet to run into an unrepresented seller who looks at all the comps then deducts the commission that’s not coming out of their net.

    That depends on where they’re pulling their comps. If I’m taking an offer on an unrepresented seller’s house I do an full CMA that does in fact take into account commissions, or lack thereof. In that case, I do pull the commissions out. Determining market value is an artful science, and all of the factors have to be weighed.

    If we were to break for simplicity and have the sellers pay their representation and the buyers pay theirs, I argue that we would all benefit.

  5. Jonathan Dalton

    January 31, 2008 at 2:14 pm

    You may do it but I don’t the unrepresented sellers do it themselves. “Let’s see. Bob’s house sold for $200K but he paid commissions so we’ll price it at $185,000 (or whatever.)” More often than not the house is priced at the last sale (if they’re even close to aggressive and/or serious.)

    >In that case, I do pull the commissions out.

    Except you never absolutely know what the commissions are. Maybe a difference of 1% this way or that doesn’t matter a great deal, but you’re throwing an unknown variable into the mix.

  6. Jim Duncan

    January 31, 2008 at 2:16 pm

    Maybe a difference of 1% this way or that doesn’t matter a great deal, but you’re throwing an unknown variable into the mix.

    And we don’t know accurately what they are today … we just use our best educated professional guesstimate.

Leave a Reply

Your email address will not be published. Required fields are marked *

Opinion Editorials

6 skills humans have that AI doesn’t… yet

(OPINION / EDITORIAL) It’s not unreasonable to be concerned about the growing power and skill of AI, but here are a few skills where we have the upper hand.

Published

on

Man drawing on a roll of butcher paper, where AI cannot express themselves yet.

AI is taking over the workforce as we know it. Burgers are already being flipped by robotic arms (and being flipped better), and it’s only a matter of time before commercial trucks and cars will be driven by robots (and, probably, be driven better).

It may feel unnerving to think about the shrinking number of job possibilities for future humans – what jobs will be around for humans when AI can do almost everything better than we can?

To our relief (exhale!), there are a few select skills that humans will (hopefully) always be better at than AI. The strengths that we have over AI fall into 3 general categories: Ability to convey emotion, management over others, and creativity.

Let’s break it down: Here are 6 skills that we as humans should be focusing on right now.

Our ability to undertake non-verbal communication

What does this mean for humans? We need to develop our ability to understand and communicate body language, knowing looks, and other non-verbal cues. Additionally, we need to refine our ability to make others feel warm and heard – if you work in the hospitality industry, mastering these abilities will give you an edge over the AI technologies that might replace you.

Our ability to show deep empathy to customers

Unlike AI, we share experiences with other humans and can therefore show empathy to customers. Never underestimate how powerful your deep understanding of being human will be when you’re pitted against a robot for a job. It might just be the thing that gives you a cutting edge.

Our ability to undertake growth management

As of this moment, humans are superior to AI when it comes to managing others. We are able to support organization members in developing their skillsets and, due to our coaching ability, we are able to help others to grow professionally. Take that, AI!

Our ability to employ mind management

What this essentially means is that we can support others. Humans have counseling skills, which means we are able to help someone in distress, whether that stems from interpersonal relationships or professional problems. Can you imagine an AI therapist?

Our ability to perform collective intelligence management

Human creativity, especially as it relates to putting individual ideas together to form an innovative new one, gives us a leg up when competing against AI. Humans are able to foster group thought, to manage and channel it, to create something bigger and better than what existed before. Like, when we created AI in the first place.

Our ability to realize new ideas in an organization

Think: Elevator pitch. Humans are masters of marketing new ideas and are completely in-tune with how to propose new concepts to an organization because, you guessed it, we too are human. If the manager remains human in the future (fingers crossed!), then we know what to say to them to best sell our point of view.

Using what we know, it’s essential for almost all of us to retrain for an AI-driven economy that is most likely just a few years away. My advice for my fellow humans? Develop the parts of you that make you human. Practice eye contact and listening. Think about big pictures and the best way to manage others. Sharpen your mind with practicing creative processes. And do stay up to date with current trends in AI tech. Sooner or later, these babies are bound to be your co-workers.

Continue Reading

Opinion Editorials

Your business model doesn’t have to be a unicorn or a camel to succeed

(OPINION / EDITORIAL) It’s not unusual for people to suggest a new business model analogy, but this latest “camel” suggestion isn’t new or helpful.

Published

on

Camels walking in desert, not the best business model.

This year in 2020 I’ve seen a great deal of unique takes on how our system works. From 45 all the way down to children instructing adults on how to wear masks properly. However, after reading this new article published by the Harvard Business Review, I don’t think I’ve ever seen something so out of touch with the rest of the business world. Here’s a brief synopsis on this article on business model.

The author has decided that now of all times it’s drastically important for startups and entrepreneurs to switch their business tactics. Changing from a heavy front-end investment or “startups worth over a billion dollars” colloquially called “Unicorns” to a more financially reserved business model. One he has tried to coin as the “Camel”, using references to the animal’s ability to survive “long periods of time without sustenance, withstand the scorching desert heat, and adapt to extreme variations in climate.”

The author then goes on to outline best practices for this new business plan: “Balance instead of burn”, “Camels are built for the long haul”, “Breadth and depth for resilience”.

Now I will admit that he’s not wrong on his take. It’s a well thought-out adjustment to a very short-term solution. You want to know why I’m sure of that? Because people figured this out decades ago.

The only place that a “Unicorn” system worked was in something like the Silicon Valley software companies. Where people can start with their billions of dollars and expect “blitzscaling” (a rapid building-up tactic) to actually succeed. The rest of the world knows that a slow and resilient pace is better suited for long term investments and growth. This ‘new’ business realization is almost as outdated as the 2000 Olympics.

The other reason I’m not thrilled with this analogy is that they’ve chosen an animal that doesn’t really work well. Camels are temperamental creatures that actually need a great deal of sustenance to survive those conditions they’ve mentioned. It’s water that they don’t need for long periods, once they stock up. They have to have many other resources up front to survive those harsh conditions the article writer mentioned. So by this analogy, it’s not that different than Silicon Valley’s strongly backed “startups.”

If he wanted to actually use the correct animal for this analogy, then he should call it a tortoise business plan. Actually, any type of reptile or shark would work. It would probably be a better comparison in temperament as well, if we’re talking ‘slow and steady wins the race.’ Whatever you do, consider your angle, and settle in for the long haul.

Continue Reading

Opinion Editorials

10 tips for anyone looking to up their professional game

(OPINION / EDITORIAL) It’s easy to get bogged down by the details, procrastinate, and feel unproductive. Here are a few tips to help you stay on track and crush your professional goals.

Published

on

work productivity

Self-reflection is critical to a growth mindset, which you must have if you want to grow and improve. If you are ready to take your professional game to the next level, here are some stories and tips to help you remain focused on killing your goals.

1. Don’t compare yourself to others. Comparison is the thief of joy, as the quote goes. And, in the workplace it’s bound to make you second guess yourself and your abilities. This story explains when comparison can be useful, when to avoid it, and how to change your focus if it’s sucking the life out of you.

2. Burnout is real and the harder you work, the less productive you are. It’s an inverse relationship. But, there are ways to work smarter and have better life balance. Here are some tips to prioritize your workload and find more ease.

3. Stop procrastinating and start getting sh@t done. The reason we procrastinate may be less about not wanting to do something and more about the emotions underlying the task. Ready to get going and stop hemming and hawing, you got this and here’s the way to push through.

4. Perfection is impossible and if you seek this in your work and life, it’s likely you are very frustrated. Let that desire go and learn to be happy with excellence over perfection.

5. If you think you’re really awesome and seriously deserve more money, more responsibility, more of anything and are ready to drop the knowledge on your supervisor or boss, you may want to check this story out to see if your spinning in the right direction.

6. Technology makes it so easy to get answers so quickly, it’s hard to wait around for things to happen. We like instant gratification. Yet, that is another reason procrastination is a problem for some of us, but every person has a different way/reason for procrastinating. Learn what’s up with that.

7. Making choices can be a challenge for some of us (me included) who worry we are making the wrong choice. If you’ve ever struggled with decision making, you know it can be paralyzing and then you either make no decision or choose the safest option. What we have here is the Ambiguity Effect and it can be a real time suck. Kick ambiguity to the curb.

8. If you are having trouble interacting with colleagues or wondering why you don’t hear back from contacts it could be you are creeping folks out unintentionally (we hope). Here’s how to #belesscreepy.

9. In the social media era building your brand and marketing are critical, yet, if you’re posting to the usual suspects and seeing very little engagement, you’ve got a problem. Wharton Business School even did a study on how to fix the situation and be more shareable.

10. Every time you do a presentation that one co-worker butts in and calls you out. Dang. If you aren’t earning respect on the job, you will be limited in your ability to get to the next level. Respect is critical to any leadership position, as well as to making a difference in any role you may have within an organization, but actions can be misconstrued. There are ways to take what may be negative situations and use them to your advantage, building mutual respect.

You have the tools you need, now get out there, work hard, play hard and make sh*t happen. Oh, and remember, growth requires continual reflection and action, but you got this.

Continue Reading

Our Great Partners

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Emerging Stories

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!