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We’ve all seen the commercials and heard the radio ads about guaranteed sale programs that will buy your home. The concept sounds pretty good: Guaranteed Sale; No Showings; You Pick the closing date, but there is always a catch.
Over the past 20-years, I’ve become accustomed to the traditional way to sell homes. But I don’t wear blinders and always look for innovative ways to do business. My first objective was to understand how these trend services work to determine if the traditional real estate concept might be in trouble.
What I found in my research are a few key points a consumer should consider before choosing the so-called “easy way.” The Seller might be sacrificing more than you realize.
Key #1: The Loss of Agency
Using a trend service to sell your home removes the most valuable asset you should have: Agency.
According to the National Association of REALTORS: “The Law of Agency in a real estate transaction defines {the} legal relationship between real estate professionals and their clients.”
Real Estate Agents have clear fiduciary duties to those they represent:
CARE: The Agent must use his/her skills to the best of his/her ability on behalf of the client.
ACCOUNTING: The Agent must account for all funds entrusted to him/her and not commingle client funds with personal funds.
CONFIDENTIALITY: The Agent must keep confidential any information given to him/her by their client, especially information that may be damaging to the client in negotiations.
DISCLOSURE: The Agent must disclose to the client any information he/she received that may benefit the client’s position in a negotiation.
LOYALTY: The Agent owes undivided loyalty to the client and puts the client’s interests above their own.
OBEDIENCE: The Agent must obey all lawful orders that the client gives.
There is no agency, no representation or fiduciary duty when you utilize a trend service to sell your home.
The goal of a trend service is to purchase your home for as little as possible so they can quickly sell the home again for a profit. The way the business plan works, they could never offer you full market value because they would not make any money.
So, how much money are you giving up having “no showings?”
Key #2: COST
The fees for these trend services are alarming as well. Traditional real estate commissions are not set, by law, but tend to range between 5%-6% in most cases. When reviewing a trend service fee comparison (as published on their site), the first red flag is they use of the same sales price in the comparison between their service and traditional services. Remember, they must offer you less than market value, or they won’t make money.
In addition, the trend services charge a “servicing fee” that can range from 7%-10% of the proposed purchase price, which exceeds normal commissions. They also claim you will pay “seller concessions” of 2% on a traditional sale and this is statistically untrue – especially in our Seller’s market.
On top of a lower than market value offer and high service fees- you will still be paying closing costs and likely a repair penalty.
Key #3: EXPERIENCE AND NEGOTIATING POWER
I am sure those who work for these trend services are nice people. But they are not obligated to you or your best interests in any way. There is no fiduciary relationship between you and the nice voice on the phone. Negotiations are an art that experienced agents perform well. Your agent’s goal is to sell your home for the most money possible and with the best terms. With a properly priced home and exceptional marketing, your Agent can maximize your net at sale and limit the number of showings it takes to secure a buyer.
Toni’s Take-Away
If you are considering a trend service to sell your home, I highly recommend you at least ask an agent to prepare a market analysis so that you have a true understanding of your home’s market value. Ask the agent to prepare a seller net sheet estimate to see your likely bottom line when selling the traditional way. Arm yourself with the knowledge an agent can provide before you overpay for the “easy way.”
Home Solutions Real Estate
813-549-0870
www.tampahome360.com