Archive for May, 2012

What Makes Up My House Payment? PITI = Principal + Interest + Taxes + Insurance

Thursday, May 31st, 2012

Sean Hessby Sean Hess (, Broker and Manager for St. Augustine Team Realty ( Join us on Facebook and Google+.

What makes up your house payment?

PITI, which stands for Principal – Interest – Taxes – Insurance.

If you put down less than 20%, you also have to think about PMI (Private Mortgage Insurance) or Funding Fees (if it’s a government backed loan like FHA, VA or USDA).

And finally, while it’s not part of your housing payment, you may have Condo or Homeowners Association fees due every month.

My partner Kate Stevens and I break it down for you in this short video below:

Hire St. Augustine Team Realty when you go to buy or sell.  Email us at or call Broker Sean Hess at (904) 386-8327.

Online Reviews for St. Augustine Real Estate

Tuesday, May 29th, 2012

Sean Hessby Sean Hess (, Broker and Manager for St. Augustine Team Realty ( Join us on Facebook and Google+.

One of the cool things we started doing within the last month is posting our reviews online.  These are our in-house reviews that our customers send back to us after a sale.

If you want to see them in PDF form you can go to the Testimonials page on our website, and when you see a quote, click the link that says “See the actual testimonial.”

The other place we post these are in JPG or PNG format on our Testimonials photo album on Facebook.

Here’s one our agent Monica Nunchuck recently received for her sale on 305 Wooded Crossing Circle:

Online review for St. Augustine Real Estate

5-star review for Monica Nunchuck of St. Augustine Team Realty


Hire St. Augustine Team Realty, we won’t disappoint!  Email us at or call Broker Sean Hess at (904) 386-8327.

Should I Use Trulia or Zillow to Put a Price on My Home?

Friday, May 25th, 2012

Sean Hessby Sean Hess (, Broker and Manager for St. Augustine Team Realty ( Join us on Facebook and Google+.

Should I use Trulia or Zillow to put a price on my home?



Because, at least in the St. Augustine market, the prices they generate on a given address are consistently inaccurate.

Home pricing can't be accurate just some of the time. Image by Melissa Gray.

Home pricing can't be accurate just some of the time. Image by Melissa Gray.

I did a really basic sampling of seven homes that closed locally in the last ten days just to see how the estimates worked out.*

For Zillow five of the homes were within 10%…this is worlds better than when we sampled Zillow in 2011 and it was off over 20% on average..

However, one of the seven was off by 12%, and another was off by 21%.  In addition, two of the seven were undervalued (by 8% and 12%).

So while being within 10% is fine for pricing, you would really hurt yourself if you priced your home at $274,000 and could really sell for $310,000, or priced at $146,000 and could really sell for $159,000.

And if you are a buyer who made an offer based on a Zillow estimate of a home at $101,000, it would probably kill you to know you could have bought it for $80,000.

For Trulia I was only able to find six of the seven properties.  All but one were off by 10% or more, and three were off by more than 20%.

Trulia undervalued five of the six properties.  In one case, Trulia valued a property that sold this week for $240,000…for $170,000, underestimating its market value by 29%.

I guess the upshot is that you can’t rely on systems for pricing that are right only part of the time.  You can certainly use them to get a ballpark estimate, but how do you know you aren’t one of the really bad estimates that the system will spit out?  The answer is you don’t know.

Here’s where I beat the drum for getting a good Realtor (such as myself, for example).

I know that the old mattress leaning up against the neighbor’s garage is going to affect the price you get for your home.  I know that in a certain neighborhood that homes that don’t back to the apartment complex are going to sell for a lot more than the homes that do back to the apartment complex.

I personally know of two homes sitting nearly side by side, separated only by a vacant lot.  Yet one will sell for more than the other…they were even built at the same time with similar floor plans.  Maybe we’re only talking $8000 more, but $8000 is a lot of money, right?

So, you can use Trulia and Zillow to kind of get an idea…a sometimes very broad idea.  But if you need to get the best price for a home…as a buyer or seller…enlist the aid of a good Realtor.

For accurate pricing Hire St. Augustine Team Realty.  Email us at or just call Broker Sean Hess at (904) 386-8327.

*Here’s the work:

There was no specific methodology for picking certain homes, except that they all closed within the past 10 days of this writing.

751 Gilda, sold for $80,000.  Zillow value: $101,000 (+21%).  Trulia value: $92,000 (+13%).

232 Marshside Dr., sold for $435,000.  Zillow value: $474,000 (+8%).  Trulia, no value given.

5169 Medoras, sold for $240,000.  Zillow value: $251,000 (+4%).  Trulia value: $170,000 (-29%).

417 Chamberlain, sold for $159,000.  Zilllow value: $146,000 (-8%).  Trulia value: $155,000 (-3%).

518 Gentian, sold for $215,000.  Zillow value: $216,000 (even).  Trulia value: $171,000 (-20%).

107 Dolphin Dr., sold for $270,000.  Zillow value: $255,000 (+6%).  Trulia value: $205,000 (-24%).

16 Sandpiper, sold for $310,000.  Zillow value: $274,000 (-12%).  Trulia value: $273,000 (-12%).

Image of dartboard by Melissa Gray.



Confused First Time Buyer Asks, “Is the Market Going Up or Down?”

Tuesday, May 22nd, 2012

Sean Hessby Sean Hess (, Broker and Manager for St. Augustine Team Realty ( Join us on Facebook and Google+.

I saw this question posed by a first-time buyer in an online forum last week, “Is the market going up or down?”

Anyway, this buyer was / is reluctant to make an offer.  In other words, after seing a house she liked she wanted to sleep on it a few days before making an offer.

But in her market apparently “sleeping on it meant not sleeping in it,” because other buyers were making quick offers and getting the houses she wanted.  So she had to keep looking for new houses.

At the same time her Realtor was pressuring her to make quick offers, cautioning her that prices were going to start rising back to 2006 levels and she wouldn’t be able to afford what she wanted.

So, in St. Augustine, what is going on in the market if you are a first time buyer (or any buyer)?

Confused first time buyer asks what is the market doing?

What's the market doing?

It really depends on what you are looking to buy and how much you are willing to spend.

Here it is in a nutshell:

The Hot Market (Don’t Sleep On It)

The hottest market in St. Augustine right now are non-Short Sale homes (“straight” sales and foreclosures, in other words), residential homes & condos (not mobile or manufactured homes) under $100,000.

In a lot of cases investors are paying cash for these homes, sometimes as soon as they hit the market.

The closer the price tag is to $100,000 the better chance it will sit on the market a little longer.  And if it is a mobile home or manufactured home, or if it is a low-dollar condo with a high association fee (for example, a $100,000 condo with a $500 a month fee), then you can take your time…there should be plenty of inventory and you should have time to think about it for a few days before making an offer.

The Regular Market (Everything Else, You Can Sleep On It)

The rest of the single family home market (not mobile homes) is in balance.  There are roughly an equal number of buyers and an equal number of sellers.

This is the “bread-and-butter” market from say, $125,000 to $200,000*.

Prices will rise in this market, but slowly, over the next year.

There is a certain lack of choice in this market at any given time, however.

For example, there might be enough homes on the market for every buyer who wants one, but there might not be a really great one for the price.  At other times of the year there might be three really great ones in a certain price range.  So it just depends on when you are coming into the market.

So if you see a really great home (and you know it’s a great home because you’ve been looking / searching online enough), then jump on it.  But you still should have a day or two to think about it because other buyers are doing the same thing.

This situation (good inventory but a certain lack of choice at any given time) is currently creating a much stronger market for new home sales.  If a buyer can’t find what she wants as a re-sale, she can build a new home instead.  It might cost a bit more, but there are financing and builder incentives in place to lessen the blow.

This is keeping re-sale home prices honest…if someone gets on too-high-a-horse pricewise for a really average home, the buyers will just go and buy new construction.

Thus there will be no return to 2006 prices anytime soon.

Still Choice, Still Time

If you’re looking for a good deal and don’t want to fight the crowds, then going after a short sale is probably your best shot.

Short sale inventory is really starting to winnow down, but it still takes a certain type of buyer to go after a short sale. So you still have plenty of time and a lot of good choices.

Basically a short sale home is a home that is worth less than is owed on it.

The seller may or may not be facing foreclosure, but in either case they are trying to sell it for less than they owe on it.

For this to happen they need a market-price or near market-price offer from a buyer to submit to their bank.  If the bank approves the offer price the sale will move forward and the buyer can get the home.

The downside?

The banks can take FOREVER to approve these short sale offers (three to six to nine months in some cases).  So the buyer has to have a lot of patience.

And sometimes (I would say about 20% – 30% of the time, based on what I’ve seen), the bank will come back and not approve the offer.  This is after the buyer has already waited months.

So it’s not for everybody, but there’s a lot of great inventory to choose from if you have the patience and the moxie to do it.

You Can Sleep On It, and Still Sleep In It

For homes above $200,000* and vacation / 2nd home  / beach condos, and mobile or manufactured homes, you still have time to go out and look, sleep on it a few days, and then make an offer.

The vacation / 2nd home / beach condo market is finally starting to turn the corner health-wise.

With the overall economy improving, people are starting to feel comfortable about their savings and no longer hoarding cash.  And since the beach condo market has essentially been dead for the last four years, there is a lot of buyers who put off a purchase but are now coming back into the market all at once.

That being said, there is still plenty of inventory and will still be plenty of inventory for 2012.  So take your time and find the right one.

*Homes above $200,000 are in a healthy and balaced residential market.

The difference between a home priced at $125,000 and $200,000  is that a lot more people can afford the $125,000 home.

Less buyers that can afford homes above $200,000 means less competition with other buyers.

But the inventory is still in balance, though, which means even though the homes take longer to go off the market, you still don’t have loads and loads of inventory to choose from.

Also, if a home that can be priced at $300,000 suddenly shows up for $250,000, it will go off the market fast.  So don’t expect it to still be there if you wait.

What happens in these cases is that instead of just $250,000 buyers competing for this home, all the buyers between $250,000 and $300,000 will be competing for the home.  If a fast buyer sees it and jumps on it right away it could go off the market immediately.

Or, it could actually sell at a higher price because multiple offers may come in simultaneously on the home.

Hire St. Augustine Team Realty and its nationally award-winning marketing team when you go to buy or sell your next home.  Email or call Broker Sean Hess at (904) 386-8327.  



Upgrade or Not? Check This Out Before You Buy New.

Monday, May 21st, 2012

Sean Hessby Sean Hess (, Broker and Manager for St. Augustine Team Realty ( Join us on Facebook and Google+.

One of the local home builders is offering free upgrades when you buy new.  My partner (and Broker Associate) Kate Stevens and I opine on what we think are upgrades, and what are not upgrades, in this short video below:

To recap:

Gourmet kitchen? Yes
Harwood flooring? Yes
Crown molding? No
Chair railing / wainscotting? No
Tray ceilings? Neutral to No
Designer Lighting / Fixtures? No…do yourself
Gas Fireplace? No
Front Load / High Efficiency Washer/Dryer? Yes, but doesn’t have a long shelf life (unlike hardwood floors that continue to add value to a home)
Fencing? Yes
Stone Accents? Yes
Screened Lanai? Yes

To further define “upgrade” we would add that an upgrade is something that adds dollar value or desirability to the home. For example, we think something like stone accents will add to the marketability (adding curb appeal) to a home, making it sell faster, and also causing a buyer to pay a bit more for it (add value). On the other hand, while you might really love the look of crown molding, it will not add value to your home or make it sell faster, though it might be a nice touch.

Crashing the Blog: But for the Grace of God Alone It’s Fixed

Wednesday, May 16th, 2012

Sean Hessby Sean Hess (, Broker and Manager for St. Augustine Team Realty ( Join us on Facebook and Google+.

One of the challenges of being a small business owner is that you have to wear a lot of hats.

For me that means not only being the Principal Broker and Property Manager, it also means being our entire IT department, Search Engine Optomization (SEO) team, and Social Media Engagement (SME) team.  You can see some of these various hats that I wear below.*

While wearing one of those hats yesterday morning, I broke this blog.

But for the Grace of God alone it is fixed.  Here’s how I broke it, and here’s how it got fixed (with a lot of prayer and supplication to the Almighty included):

I broke it by intiating an automatic update inside the WordPress dashboard (in my case it said “WordPress 3.3.2 is available! Please update now.”).  I hadn’t updated the version in about 9 months so I figured it was about time.

I’d been noticing some bugs in the last few weeks where toggling between the Visual and HTML modes where the markup would delete photos or add extra quotation marks to <a hrefs.  It was easy to work around once I knew what to expect and what I was looking for, but I figured updating would solve the problem outright.

Did I backup the files before updating? Nope.  I have the wp-db-backup plugin that just emailed me the backup file that morning, so I figured I was in good shape.

Did I reference any other WordPress codex before updating (where I would be strongly advised to disable plug-ins)? Nope.

Did I refer to any other blog posts about updating, where someone specifically advised, “If it ain’t broken, don’t fix it?”  Nope.

I just went ahead…

And when I tried to log back in I got this error:

Fatal error: Call to undefined function
wp_suspend_cache_addition() in D:\hosting\4724002\html\TheStAugBlog\wp-includes\cache.php
on line 288

We use a template and have it hosted by GoDaddy.  So I called GoDaddy because the last two times I broke the blog on updates they were able to work me through it.  Each of the other times I somehow managed to change the password on the config.php file while attempting a manual db backup (don’t ask).

But GoDaddy couldn’t help because what I did was even beyond their scope.

What they were at least able to help me with was to at least reassure me that I didn’t damage any of the content files on the site, and to point out that the error was in a line on the (newly updated) wp-includes file.

Now, the automatic update has never worked for me before…it just sort of freezes or times out.  So the last two times I’ve done the update I’ve had to download the update files, and then use the instructions for Updating Wordpress Extended in the Wordpress Codex to do the update manually.

The manual update is a bit nerve wracking as it requires deleting files off the server and then replacing them with the new files, and all the while you have to take care not to delete certain other files.  You even have to replace files within files (wp-content), without touching the rest of the file.  So that’s why I was trying to do the auto update…I thought it would mean less stress.

So what I decided (or more correctly, what I was inspired to do), was to just pretend it was last year when I did the last update.  As the new wp-includes file seemed to be causing the error, and since the wp-includes file is deleted off the server as part of the update process, I figured by re-updating it to the older version would work.

And but for the Grace of God (again), I still had the files on my desktop.  If I didn’t have the files I would have downloaded the latest version, however, with the plug-ins still enabled I’m not sure how well it would have gone.

I spent yesterday afternoon and this morning creating complete copies of the site, and then making sure things like the wp-content file on the server was saved to my local machine.

Remember the wp-db-backup file I mentioned?  I couldn’t figure out how to open it or even where it specifically would go if I could open it (it’s a sql.gz file that apparently needs a special type of unzipping—possibly).  But in GoDaddy I figured out how to access the db and restore it to the last version before the update.  However, I think since it was a new version issue (and not a content or db issue), I didn’t have to restore the db.

So after about an hour or two of sweating this morning, reading and re-reading the instructions, manually updating and deleting files, I went to the log in screen…and it worked!  (Otherwise you wouldn’t be reading this.)

Being a small business owner is a lot like being the captain of a ship on a heaving ocean.  For most things real estate wise I can lean on my two partners, Ron Barry and Kate Stevens, who have also each been in the business for the last decade.

But when it comes to the IT stuff I am truly out there on my own, and when something breaks it’s a very lonely, and very scary position to be in.

It reminds me of the story of when Jesus’ disciples were out on the storm-tossed lake and Jesus was sleeping in the back of the boat.  The disciples were seriously freaking out, like I was freaking out, even though the Son of God was right there with them.  In my case He helped calm me down and gave me the insight to fix the problem, but also made sure the tools were there so I could fix it.

Thanks be to God!

*Here are just a few of the hats I wear as IT, SEO and SME for St. Augustine Team Realty.  Many thanks to Alison Doyle’s blog post on Social Media Job Titles to help me conceptualize these responsibilities…

  • Blogger
  • Brand Ambassador
  • Brand Manager
  • Community Manager
  • Content Manager
  • Content Strategist
  • Digital Communications Professional
  • Digital Content Manager
  • Digital Media Manager
  • Digital Media Supervisor
  • Director of Community
  • Director, Communications Planning
  • Director, Online Communications
  • Director, Social Marketing and Brand Communications
  • Director, Social Media Marketing
  • Director of Social Media
  • Director of Social Media Communications
  • Director, Social Media Relations
  • Director of Social Media Strategy
  • Engagement Coordinator
  • Engagement Manager
  • Interactive Media Associate
  • Interactive Media Coordinator
  • Interactive Media Manager
  • Internet Marketing Coordinator
  • Internet Marketing Manager
  • Manager Digital and Social Media
  • Manager, Social Media
  • Multi-Media Communications Specialist
  • Online Content Coordinator
  • Social Media Account Executive
  • Social Media Analyst
  • Social Media Assistant
  • Social Media Associate
  • Social Media Coordinator
  • Social Media Designer
  • Social Media Editor
  • Social Media Marketing Coordinator
  • Social Media Manager
  • Social Media Specialist
  • Social Media Strategist
  • and
  • The Guy That Has Now Broken the Blog Three Times

Hire St. Augustine Team Realty the next time you go to buy or sell.  Sean promises never to break your home, though you may not want him to update your blog.  Email us at or call Sean at (904) 386-8327.

What Does It Take For A Realtor to Give Up On Your Home? (And Solutions)

Monday, May 14th, 2012

Sean Hessby Sean Hess (, Broker and Manager for St. Augustine Team Realty ( Join us on Facebook and Google+.

What will it take, what does it take, for a Realtor to give up on you home?

A Lack of Activity

A lack of buyer interest will cause a real estate agent to give up on your home.  Because if they are really good agents, they are doing everything they can to generate interest.  And if the home isn’t generating interest it’s probably because…

You Are Not Responding To Your Realtor’s Requests

Ignoring your Realtor's requests can get you tuned out.

Ignoring your Realtor's requests can get you tuned out faster than a teen on an Ipod. Image by Symic (Andres Rodriguez).

In a perfect world the only thing a Seller has to do is get paid at closing.

Your Realtor is putting their time, money, and rolodex on the line in order to get your home sold.  But you home is on the market and it is generating zero interest.  Or, it is generating plenty of showings but your Realtor is getting negative feedback about some aspect of the home, which is effecting the sale.

Your Realtor is hearing comments like: “The buyers hated the orange garage door;” “The place smells like smoke (dogs, cats, etc.);” “There are cheaper homes on the same street in better shape.”

So your Realtor asks you to:

“Paint the garage door.”

“Smoke outside.”

“Have the carpets cleaned.”

“Let’s take a look at price.”

And you ignore their requests.  Guess what?  Your Realtor will start shifting their resources to other sellers who they feel are making an effort to sell.

The solution?

Paint the garage door, clean the carpets, whatever the buyers are asking for via their feedback.  The fixes are generally low cost.  And if you key on what the feedback is, chances are you will sell your house to the next buyer.

But even if you have zero money to make even the most superficial repairs, you can still lower the price.

The Elephant in The Room: the Price of the Home is Too High for Its Condition and / or Location

You’ve priced your home higher than the Realtor recommended because you wanted “wiggle room,” and now that extra padding is costing you a sale.

You don’t have to be a military-grade numbers analyst when it comes to figuring out if the price on a home is too high.

If it’s getting plenty of looks but no offers, or if it’s not getting any looks, it almost always comes down to price.  Or to be more accurate, the buyers in the price range that you’ve placed your home in are finding either nicer homes, better locations, or more value (or a combination of the three) than your home offers at its current price.

Smoking or smoke odors excepted, even a home with bad pet odors will sell at the right price.

Now you are refusing to lower the price when the showing feedback, lack of offers, and market data (i.e., buyer comments, or black-and-white numbers on paper) indicate you should lower the price.

And since the Realtor can’t do it for you (and he or she can’t shoot you), they will probably just give up and let the listing expire.

The solution?

Take a deep breath, even if—especially if—you’re the emotional type that doesn’t care what numbers say on paper.  Pay attention to what the buyers aren’t doing.  They aren’t making offers.

Sometimes buyers give feedback, a lot of times they don’t.  But if they aren’t making offers that’s about the strongest feedback they can give.

The homes that are selling…where were they priced at?  Were they older, newer, in a better location?  Are they newer and upgraded to the hilt while yours is 15 years older with an aging roof?

At that point take a realistic look at price.

You have to adjust because your home just won’t sell and your Realtor is going to give up on you.

You Bug Them All the Time

You should always check up on your Realtor’s marketing effort after the home is first listed.  You do this by plugging your address into Google or another search engine to see what comes up.  You want to do this for no other reason than to make sure the photos look nice.

If your Realtor does nothing else than place your home in a single MLS with a single photo, it should show up at least once on a search for the address.  If the photo is bad, bust your Realtor and make them take a better photo.   And if it really is a weak marketing effort, stay on their butt.

But calling them up every day asking why your home hasn’t sold is going to get you tuned out fast.  In fact, get used to hearing their voice only on voicemail.

For example, if you live in a neighborhood where only 5 homes will typically sell in a 12-month period, where there are already five homes on the market and your home is only the 4th best priced, you should already realize you’re in for a long wait.

Don’t call them asking why your home hasn’t sold.  Instead, take a vacation to Australia because, trust me, your agent isn’t going to need to get in touch with you anytime soon.  Bugging them about the situation will only make them avoid you.

The solution?


Make sure when you talk to them it’s two partners working together to try and sell a property.  Don’t call to crack the whip and then not listen to buyer feedback or issues about price.

You Bug Them with Crazy Talk

As I stated earlier in this post, “your Realtor is putting their time, money, and rolodex on the line in order to get your home sold.”  They are doing this upfront, at no cost to you, so you can sit back and get paid when the home sells.

The upshot is that the real estate agent is doing everything they can, on their dime, at no cost to you, to get your home sold.

So don’t call and ask them, “Why isn’t my home on ‘’” or one of these other crazy websites (btw, I don’t know if there really is a FabulousFloridaHomes4U website…but it sounds a lot like the ones we hear about).

Chances are if the website has a “4U” (my opinion) in it, or a character string that’s stuffed with over 30 different keywords that might apply to your home, it’s not a relevant way to sell your home.  Many “real estate” sites are “scraper” sites…they scrape the data off relevant sites like and then try to repackage them as their own, hoping that a desperate seller or newbie Realtor will give them a credit card number which can be charged and charged and charged…

Also, we get this a lot: “I want to know what you’re doing to market my home in New York,” with a subtle hint that we buy print advertising in “New York” (city, county, Long Island, we never know).

The truth is, if someone is looking (for example) for a commercial lease at 4475 US 1 South, or Plaza South in St. Augustine they’ll probably just Google the address or the subdivision /  plaza name.

Or if they’re after something a little more specific, like a home in Royal St. Augustine, they’ll go onto and punch in a search that looks like “location: 32084, bedrooms: 3+, baths: 2+, price range: $154,000 to $155,000″ and then see what pops up (our listing at 1737 Keswick will because it’s still available as of this morning).

If you’re a good Realtor like me, you already know buyers search this way.  The magic isn’t in showing up on a, it’s how it shows up on so that a buyer will see the home as fast as possible, hopefully before they see other competing homes, and make an offer on your home first.

The solution?

You hired a Realtor to sell your home…let them do their work.  If you find one of those crazy websites or have an insight on how a home can be marketed, do shoot your Realtor an email.

For example, for the commercial lease I referenced above at 4475 US 1 South (currently available at $1000 a month for $1000 square feet, and available, by the way) we’ve targeted some of the marketing for and to potential business that already find Plaza South a good fit: real estate, attorneys, phlebotomists, etc.  A good insight from a seller or landlord might be something along the lines of, “You know, I just read the bylaws and cash-for-g0ld, churches, and or insurance may also be good targets.”

The thing is, don’t demand that your home be on one of those crazy websites.  If you feel it strongly enough that your Realtor should risk their money or resources on it, do it yourself first to prove that it works, and they might even reimburse you for it.

Hire St. Augustine Team Realty when you go to buy or sell a home.  Email us at or call Broker Sean Hess at (904) 386-8327.

Has a Realtor ever tuned you out?  What happened…was it fair or not fair…we’d love to know!  Just email us at the address above and put “Tuned Out” in the subject line.


So Just How Do I Get A Discount on Real Estate Commission?

Friday, May 11th, 2012

Sean Hessby Sean Hess (, Broker and Manager for St. Augustine Team Realty ( Join us on Facebook and Google+.

So far we’ve done:

Asking a Realtor to Cut Their Commission…

Commission Lies Exposed: The Biggest Myths About Real Estate Commission.


Will Paying a Higher Commission Get You a Better Price for Your Home?

Now the last one, “So Just How Do I Get A Discount on Real Estate Commission?” If you are buyer looking for a commission rebate, scroll to the bottom.

To set the ground rules on commission, I will quote (as I did in another post) from Real Estate Commission Lies Exposed:

“Commission is the engine that makes real estate sales go.  It’s what gives real estate agents the motivation to front all the money, effort and time to market a house on their own dime while the seller sits back and waits to get paid.  Commission is what gives real estate agents the motivation to wade through countless emails and phone calls from looky loos, and to sit there on a Saturday at an Open House with a pasted-on smile while some jerk buyer rips into how ugly the house is.”

Commission is motivation and commission is a real estate agent’s paycheck.  The better they get paid, the better motivated they are to do a good job for you.

Reducing commission, like texting while driving, doesn't always work out like intended.

Reducing commission, like texting while driving, doesn't always work out as well as intended.

As we’ve explored in previous posts it generally works to your disadvantage when you reduce your commission off the standard rate in your market.

We’ve also explored that when the home has a large buyer pool, and is correctly priced, there may be an opportunity to offer a reduced rate commission, simply because there will be enough buyers that will beat a path to the listing Realtor’s door.  If the home is competing against a lot of other similar inventory, “correctly priced” means “under market value.”

But you’re mom and dad said “Never pay full price,” so you still want a discount.

Here’s where you are going to have to adjust your mind.

You don’t want a discount on your commission.  You want your commission to do what it is intended to do, which is to drive the Realtors to your door with buyers attached to their hip as fast as possible, and to get an offer fast as possible, so the buyers don’t use the time your home has been sitting on the market as leverage to get a better price.

What you have to wrap your mind around is getting the highest possible net.  This is more possible with a regular commission.

Let’s say you decide to price your $200,000 home at $210,000 because you want “wiggle room” to negotiate.  Let’s also say your Realtor agrees to a 5% commission in a 6% market.  This reduction will save you $2100 at full list price, and your agent will lose a minimum of $500 in income (or 17% of their potential gross after the commission is split with their brokerage).

Neither the buyers nor the real estate agents are going to beat a path to this home.  They will show it, but you probably won’t get an offer fast.

But let’s say it does get an offer in 90 days, which is still pretty fast.  Let’s say the offer is 92% of list price, which would be $193,000, which you accept.

Now let’s take the same example and list it correctly at $199,900.  Let’s also say you pay 6% instead of 5%.

In this example you get an offer in 30 days for $195,000, which you also accept.

In the first example you paid a total of $9650 in commission, leaving you $183,350 before state taxes, mortgage payoffs and other closing costs.

In the second example you paid a total of $11,700 in commission, leaving you $183,300 before state taxes, mortgage payoffs and other closing costs.

So you came out ahead with the 5% commission by $50, right?


Because your home was on the market an extra 60 days, you had 60 extra days of taxes, insurance, mortgage payments (if you have a mortgage), homeowners association or condo fees (if applicable), and utilities.

If your property taxes were $3000 a year, that means you would pay an extra $500 to Uncle Sam by keeping it an extra 60 days.  Alternatively, the buyer would have paid those taxes if he or she bought 60 days earlier.

And if you have mortgage payments, you may end up paying several thousand $ in extra mortgage interest for the additional 60 days as well.

I’m not saying it happens this way all the time.  What I am trying to say is that the extra time on the market generally kills any advantage you had by getting a discount.

What would be better is that:

a) The house is priced correctly (because even with the standard rate commission, buyers will stay away if it is not priced correctly).

b) That the house is always clean and tidy.

c) That the house can always be shown on short notice.  Because it’s almost always short notice.

d) The house has the minimum of personal effects (knick-knacks, personal photos, etc.), with just enough furniture so the buyers can start envisioning where they’ll put their furniture.

e) The correct commission, because you don’t ever want to give them a reason to stay away.

If you do these things, a) through e), you might even get full list price.

If you are a buyer who wants a commission rebate…

There are some buyer’s agents out there who will offer you a rebate or some kind of gift card if you buy in a certain new housing development.  They are doing this because they are getting an above market commission and are giving some if it to you in order to entice you to use them.

However, except in those case where the agent brings it up, do not bring it up unless you want really poor service (in a best case scenario), or unless you want to get thrown out of the office (in a worst case).

Look, when you are buying a house the only thing you have to do is show up with the money at closing.  And if a lender is providing the money, really the only thing you have to do is show up and sign the documents.  Anything else you may do while buying a house (attending the home inspection, signing your loan application, for examples) is something you should do anyway in your best own interest.

The real estate agent, however, is making sure that everything is going swimmingly so that there is a house for you to buy at closing.  The commission represents their pay check for doing this.

The house you are buying will give you a nest egg as it gains equity, but also some pretty hefty tax advantages as well, neither of which you will share with the real estate agent.  And last but not least, you are gaining a shelter and a home for you and your family, also something the real estate agent will not enjoy.

Listing agents have thicker skin because the issue of who-gets-paid-what comes up everytime listing paperwork is signed.

But it’s actually pretty rare for a buyer to ask for a rebate or portion of the commission.

The reaction(s) by a normally unflappable, ever-optomistic real estate agent are usually just as rare: an indignant “no” all the way to hanging up.

In the few times it’s happened to me I gave a very polite “no,” and then immediately dropped the customer.  I’m simply not going to get into a 60+ day working relationship where the person I’m working with is angling for my income on the first day.

Look at it in a different way.  Imagine you’re a waiter and the customer says, “You’re really not doing anything but bringing our food from the kitchen, so we want you to rebate us a portion of your tip so we can buy dessert.”

What kind of service is that customer going to get?  Same thing in real estate.

Hire St. Augustine Team Realty when you go to buy or sell.  Call Broker Sean Hess at (904) 386-8327 or email

Have you ever been chucked out of a real estate office when you asked for a reduction in commission?  If you have I’d love to hear about it!  Just email me at the address above.



Asking a Realtor to Cut Their Commission…

Tuesday, May 8th, 2012

Sean Hessby Sean Hess (, Broker and Manager for St. Augustine Team Realty ( Join us on Facebook.

Asking a Realtor to cut their commission…

I toyed with a few different ways to title this post.  Such as, “Can you ask a Realtor to Cut Their Commission?” or “The Consequences of Asking a Realtor To Cut Their Commission” and even “Will it Hurt Your Sale if You Ask Your Realtor to Cut Their Commission?”

The first thing you have to understand is what commission is, and what commission does.  As I wrote in an earlier post about Commission Mythbusting:

“Commission is the engine that makes real estate sales go.  It’s what gives real estate agents the motivation to front all the money, effort and time to market a house on their own dime while the seller sits back and waits to get paid.  Commission is what gives real estate agents the motivation to wade through countless emails and phone calls from looky loos, and to sit there on a Saturday at an Open House with a pasted-on smile while some jerk buyer rips into how ugly the house is.”

Let me emphasize the important part of the last passage: the real estate agent is doing everything on his or her own dime, in advance, whether a property sells or not, so that the seller can sit back and wait to get paid.

A good commission can turn a pussycat into a sales tiger.

A good commission can turn a pussycat into a sales tiger. Photo Jessie Cohen, National Zoo.

Call me crazy, but that sounds like a bargain.

Real estate agents are not robots.  They are not cold hearted and only concerned with profit, as such.  But it takes a tremendous amount of energy and motivation to go through the process of doing a job day after day for everyone else’s benefit without getting paid.

What I’m saying is that there has to be a really big upside, that the carrot has to be really big to inspire this type of performance, to actually get a home sold.  And that carrot is the commission.

So let’s take a look at it in actual practice.

Let’s say the total commission starts at 6%.  The total commission is typically split between the agent that brings the buyer and your listing agent, in this case, 3% for each side.

If you have a $200,000 house and ask your real estate agent to cut his or her commission by 1%, you will net a savings of 1% or $2000.

Now the total commission is 5%, or 2.5% to the agent for the buyer, and 2.5% for your listing agent.

At a 6% commission, each side would have been paid a gross commission of $6000 to create the sale.

At a 5% commission, each side is now getting $5000 to create the sale.

Now here’s the critical part:

Your listing agent has an agreement with his or her real estate agency to keep part of the gross commission on every sale.

If your listing agent has a 50% split with his brokerage, the agent would net $3000 on a 6% sale, and $2500 on a 5% sale, a difference of $500 or 17% (this 17% should hold true regardless what split the agent is at).

So when you ask a real estate agent to cut their commission so you can make an extra 1%, you are asking them to cut their paycheck by 17%.

Could that possibly hurt a real estate agent’s motivation to sell your property?

Real estate agents and brokers are for-profit entities.  Commission is buying you the motivation, and the skill, and the rolodex of your listing agent and your listing broker.

And it’s also buying you the motivation of possibly several hundered real estate buyer’s agents that you don’t know, all working on your behalf to get your property sold and get you paid.

If someone is doing all the advance work for free, asking them to cut their own paycheck by 17% before there’s even a hope of getting paid…would you agree to those terms and still work with the same level of motivation?

I’ll answer that for you: only if you suggested it first.  In other words, only if the agent offered a lower rate on their own.

Also keep this in mind.  Sellers that are paying a higher commission (or better stated, a higher rate of return) have a right to more access and more of their agent’s time for someone that is paying a lower rate.  That is just common sense.

But can you still ask for the lower side of a commission if it makes sense?

Certainly.  Again, I’ll refer you to the Commission Mythbusting post I did again to understand how and when you can go low on a commission and when you should go high.

And guess what?  If your agent has worked with you awhile and knows you’re at the nubs, and $1000 is the only thing standing between you and a deal, he or she might offer to cut the commission anyway.

The important thing is to have a good working relationship.

And that your agent is motivated by the business you’re offering.






The Biggest Myths About Real Estate Commission

Thursday, May 3rd, 2012

Sean Hessby Sean Hess (, Broker and Manager for St. Augustine Team Realty ( Join us on Facebook.

A higher commission will get you better marketing, true or false?

False.  A higher commission will not get you better marketing.

Commission is the engine that makes real estate sales go.  It’s what gives real estate agents the motivation to front all the money, effort and time to market a house on their own dime while the seller sits back and waits to get paid.  Commission is what gives real estate agents the motivation to wade through countless emails and phone calls from looky loos, and to sit there on a Saturday at an Open House with a pasted-on smile while some jerk buyer rips into how ugly the house is.

To paraphrase Han Solo in Star Wars, “Look, they ain’t in this for your revolution, and they’re not in it for you, Princess. They expect to be well paid.  They’re in it for the money.”

Commission is the engine that makes real estate go.

4%? No reward is worth this... Photo Lucasfilm LTD, 2oth Century Fox.

That’s why lousy agents and lousy marketers can charge the same thing as the good agents and the good marketers. Because commission and marketing are two different animals.

FYI, if you want a real estate agent who is also a good marketer or has a good marketing plan do your research by punching an agent’s name or an address on one of their listings into Google and see what comes up.

There is no set commission in a market, true or false?

False.  Possibly the biggest lie in real estate sales.

Okay, I take that back, it’s not so much a set commission as a set range.

Back in the far-off year of 2009 when we opened our doors we offered a 4% commission as a loss-leader way to generate some early listings.  Let’s say for the St. Augustine market the regular commission is either 5% or 6%.

When it got out that we were offering a 4% rate…certain Realtors told us in no uncertain terms that it would be bad for our business if we continued to offer it.  These weren’t buyer’s agents who were dressing us down…we were still offering a regular 2.5% split to the buyers side (comparable to a full 5% listing)…these were seller’s agents who were afraid our commission structure would undermine their ability to charge 6% for listings.

Our rationale for offering 4% was that if enough people signed their listings up we’d end up taking less for each sale, but the company would make up for it in overall sales volume.

In the end we dropped the 4% for several reasons.  The first was that it didn’t generate enough volume to make up for the lower rate.

The second was that it actually had an unintended (and negative) affect on the sellers.  In the same way a higher commission will force a seller to be more responsive to repairs and feedback in order to maximize the sales price, the lower commission put the sellers in a position to where they were de-incentivized to work harder.

It worked like this: with the lower commission the seller felt they were playing with house money.  So instead of doing everything possible to make sure their house sold, they did everything they could not to spend another penny.  In other words, they were already saving 2% off the standard rate and it became a game to see how much more money and effort they could save by not doing repairs or anything else.   With a few notable exceptions, those we listed at 4% failed to sell because the seller had no skin in the game.

So we dropped the 4% because it failed to generate volume, de-incentivized the seller, and yes, because we were bowing to pressure from other real estate agents.

I want to make this absolutely clear: no group of agents or broker’s cabal came up to me and told me to stop offering 4%.  But individual agents did.  I’ve been in the business long enough to know that these agents were NOT directed to do this by their brokers.  But some brokerages are so…how shall I say, cultish(?)…about the rate they charge, that it would be unusual if their agents didn’t go out into the wide world and try to turn us into disciples to their own personal Cult of Commission.

I will also add this.  Some companies really pay their agents poorly.  This is because certain companies can’t control expenses at the top (I have a problem with that), or because they love a fat, healthy profit margin (as a capitalist I have no problem with that), or high franchise fees, or any combination of those.  And the reality is that certain real estate agents at certain companies can’t afford to sell a home with a 4% commission because they won’t break even on the sale.

So I say, “Thank You,” to them, for raising the commission, and enforcing it, for all of us.

A lower commission will kill the sale of your home, true or false?

False.  But you better be careful.

Now I’ve got you really confused.  I just went into why we no longer offer a 4% commission and now I’m telling you a lower commission won’t hurt a sale.

Here’s how it works.

No agent cares if I or any other agent offers a lower commission (considered 5% in this market) from time to time.

One time last year I went into a listing appointment and it was obvious from where the seller wanted to price the home that it would be under contract in under 30 days and sold in 60.  I said, “Look, I don’t have to charge you 6%, it’s only going to be on the market 30 days.”  This was the type of home in good enough of condition, in a price range that had a huge enough pool of buyers that I knew 5% wouldn’t be a problem.

Another time we did a 4% listing special for local educators, back when the state legislature was really trying to hammer them (we wanted to show our local school teachers some love).  I did a listing appointment for some teachers who were retiring and selling their house.  The other agents they were interviewing were just beating us up over the 4%, saying their house would never sell.  So I did some research, looking at every house that sold in the same community over two years–and the homes that didn’t sell–to see if the 4% (with a 2.5% split to the buyer mind you…hiding the fact that it was really 4%) would handicap a home.  The result was that commission didn’t matter in that neighborhood, and a home was just as likely to fail to sell at a higher commission as at a lower commission.

The thing was, this was a pretty exclusive type of house in a neighborhood where homes didn’t come on the market very often.  It was also a price range with a strong pool of buyers, and the home was priced correctly.  So I made it a compelling case to charge less, with the asterisk that if it didn’t sell we would raise the commission (and as it turned out the home was under contract in 2 weeks).

So two very important things to consider on a lower commission: the home must be priced correctly, and there must be a strong pool of buyers.  And that I didn’t do this all the time, because…

If the company or agent you hire has a reputation among other real estate agents for “cutting” commissions, in other words, typically offering a commission that is lower than the market rate, then it will hurt your sale, because other agents will avoid your agent’s listings.  Sometimes this is done because the agents are making a business decision in that they can’t afford to show a home with a lower commission, and sometimes it’s to send a message to the agent that their commission structure just isn’t acceptable.  Yes, that really does happen.

Also, the reality is that when I offered a lower commission on the two homes above, I limited the buyer pool a bit because some agents would drop the house from showings for the reasons above.  I got away with it because the price on each of the homes and their locations were so compelling that the buyers would beat a path to my door with or without their RealtorSuch is the power of MY marketing (I’m tooting my own horn here).

A higher commission will get the seller a better sales price, true or false?


I did a whole blog post on why a higher commission will get a better price, but here it is in a nutshell:

Every real estate agent who has a buyer with even a passing interest in the house will show the house.  In other words, anytime anyone is showing that type of property, no matter how many others are on the market or how much competition you have, your home WILL be on the list to get shown every single time because it pays the best.

A higher commission keeps the deal together because it’s just not a deal a real estate agent can afford to let go.  In other words, real estate agents will go out of their way to make sure the buyer and seller come together, and stay together, on a deal.

And, lastly, a higher commission incentivizes the seller.  In other words, the seller has skin in the game.  He or she is paying a higher rate, so they need to get the maximum price out of the house.  In order to make sure this happens they will make the repairs that need to be made, and if buyer feedback is negative they will address it.  The result is a home that shows extremely well, gets shown a lot, and thus gets a quicker offer in less market time.  And because the home is not on the market very long, and because there is strong interest from other buyers, the buyers making the offer can’t beat the seller up on price.

Just understand, commission–high or low– has no effect if the house isn’t priced correctly.  Because the buyers will have no interest.  And if the buyers have no interest, no amount of coaxing from an agent will get them into the home.   

If you are a real estate agent and have ever had another real estate agent threaten you about a commission on one of your homes, I’d love to hear about it.  Please email me at Put “Commission Threat” in the subject line.  Thanks for reading!