Agents vs. The Web

Will the internet make agents obsolete?

I wrote a post on Inman.com, responding to comments that real estate agents are no longer as necessary, because buyers and sellers can look up houses and sales on the internet. Some believe that real estate brokerage and the MLS is a dying profession and agents aren't worth the fees they charge. The original article asked if agents were as vital as bread or cereal and should people pay more for nicer "packaging" (ie. services offered.) This was my response.

Submitted by Kristin Noll-Marsh on October 23, 2008 - 2:51pm.

"LOL! Isn't that the truth, Ruthmarie?

Imagine a world where sellers and buyers actually respect our time (because they are paying for it) and our expertise!

Unfortunately, there are always agents who don't even appreciate themselves enough to charge for what they have to offer and will give it away for free - making it harder for agents to earn a decent wage.

Free CMAs, free staging advice, free showings for buyers, free marketing advice....when will agents realize that what they know and what they can do is VALUABLE??

It reminds me of my mother and her crafts. She'd make these beautiful wreaths and only charge $25. I'd see similar items in stores for $150. She'd say, "Well, the supplies only cost this much.." and I'd say, "It's not the supplies, Mom, it's the talent it takes to do what you do with them!"

Agents need to realize that what we see as "easy" and "anyone can do it" is simply not true. The supplies (information) are available to everyone, but not everyone has the talent nor learned the skills it takes to know what to do with them.

Negotiating is a skill.

Staging a home is a skill.

Taking good photos is a skill.

Writing good ad copy is a skill.

Knowing where to advertise is a skill.

Properly pricing a property is a skill.

Understanding the ins & outs of a contract is a skill.

Gathering knowledge local laws and ordinences is a skill.

Recognizing adverse defects in a property is a skill.

Knowing what constitutes a good investment for resale is a skill.

Growing a network with other agents is a skill.

Building a good website is a skill.

Knowing the competition on the market is a skill.

Having all of those skills at once makes you an expert.

Notice I didn't mention showing houses, finding houses for sale or looking up what a house sold for. Those don't take skill. Anyone can do that.

A buyer or seller may be able to do one or two things on that skill list, but they won't be able to do them all - or as well as someone who does it every day, for years.

Sure, it may only take you 30 minutes to put together a CMA, but is that what you are paid for? How long did it take you to learn to do a CMA right? How many real estate hours did it take to learn your market, tour and show houses, learn the software etc? How many hours do you think it would take a seller to get it right? Take that into account when you are figuring what the 30 minutes is REALLY worth!

All the internet will give to buyers and sellers is access to lists of houses for sale and tax records of sold properties. Knowing what to do with that information is what takes skill.

Don't believe me? Look up a disease online. There will be plenty of information about the disease - stuff you couldn't find anywhere a few years ago. Now, having read about that disease and treatments available, are you ready to start treating a patient for that disease? No - that's why we still have doctors - a good doctor has the skill to take that information and do the right thing.

Agents need to understand that their value is not as gatekeepers of information - it never was, even in the days of MLS books and exclusive listings. Buyers could still use the classifieds and sellers could still throw up a lawn sign and put an ad in the paper. Buyers and sellers came to us not because we had all of the information, but because we made it EASIER for them to get it. Once they worked with us, they then realized all of the other stuff we knew that they were clueless about.

Even with all of the information available to them today, buyers and sellers still need our skills. But until agents see their own value, they will continue to undervalue themselves and not charge what they are worth.

The old commission system will not change until buyers and sellers are willing to pay for actual skill instead of a risk-free success fee. The power is in their hands - all they have to do is demand it and be willing to pay the consequences/take the risk.

Meanwhile, Agents like it this way, because then they don't have to put a value to their own skill. They need to realize that they are worth a lot more than they think.

Most of us need bread made for us - we have neither the time nor the skill to do it ourselves. But they've made it so easy for us to grab a loaf off the shelves, we've lost our appreciation of what it takes to make bread by hand.

Imagine if we didn't have any bakers at all - who would care about the packaging?"

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Free Credit Report?

We all know the funny commercials with the catchy tunes, but did you know that what they are REALLY selling is a paid service? Sure, you can get a free credit report, but you will automatically be enrolled for their Triple Advantage credit monitoring service. If you don't cancel within 7 days, you'll be charged $14.95 a month.

Under Federal law, everyone has the right to receive a free copy of their credit report once every 12 months from each of the three nationwide consumer reporting companies. To request your free annual report, go to http://www.annualcreditreport.com/

And for some useless trivia - that singing guy in those commercials is French Canadian and lip syncs all of the songs!

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3 bedroom, 1+ bath

$139,900

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What is in the new Stimulus Package? How will it help YOU???

Rick Bernstein of Mortgage Bankers of Wisconsin Explains the New Stimulus Tax Credit

By Rick Bernstein 02-28-09 5:00pm

As you all know, Congress approved and President Obama signed into law a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II.

In the bill that the Senate approved, there was to be a $15,000 tax credit for every home buyer that lived in that home for 3 years. This was a provision that undoubtedly would have coaxed many buyers off the proverbial fence and into the home purchase market. The House of Representatives believed the credit would have been too expensive and rather than compromising with a lower figure, they simply enhanced the First Time Home Buyer credit already in place. Below are some of the key points of the stimulus.

Tax Credit for First Time Homebuyers
First-time homebuyers (those that have not owned a home for 3 years) who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Tax Credit Versus Tax Deduction
It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing. Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!

Phaseout Examples
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.To break down what this phase-out means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000.

The applicable phase-out to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000.

The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

For those tracking the math in the examples above, you may be wondering where the “$20,000” came from—that is, why you divide “$10,000 by $20,000” in the first example and “$13,000 by $20,000” in the second example.

Here’s where the $20,000 comes into play:
The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

In other words:
• $170,000 – $150,000 = the $20,000 in the first example
• $95,000 – $75,000 = the $20,000 in the second example

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Homes that Qualify
The tax credit is applicable to any home that will be used as a principal residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principal residence also qualify.