Get a Single Family Home in Lakeview for Under $350,000: 3447 N. Paulina
Two years ago the title of this kind of post would have read “get a single family home in Lakeview for under $400,000” instead of “under $350,000”.
This 3-bedroom home at 3447 N. Paulina in Lakeview is described in the listing as “sold as is.”
Built in 1888, it is only 1320 square feet but is on a standard 25×125 lot and has a 2-car garage.
The listing calls it a “builder’s/rehabber’s dream.” All bedrooms are on the second floor.
It has been on and off the market since March 2008. There are no interior pictures.
Is this a deal just for the land value?
Carmen Cardenas at Haderlein & Company has the listing. See the listing here.
- Sold sometime before 1991
- Originally listed in March 2008
- Withdrawn
- Currently listed for $349,000
- Taxes of $712 (no- not a typo)
- No central air
- Bedroom #1: 11×20
- Bedroom #2: 10×14
- Bedroom #3: 8×11
“The listing calls it a “builder’s/rehabber’s dream.”
AKA “This is a teardown”
clearly a land site, it goes back to the discussion, can anyone find a decent land site in Lake View for $200K and then build new for $150 per sf with average finishes, therefore put a 2,400 sf house on it for $360K, be all in under $600K.
Interesting. I didn’t know that stretch of Paulina sucked so bad unitl I looked at the street view. Having Johnny’s Tavern across the street would be convenient though! 😉
Johnny passed away and his bar is closed now.
That is unfortunate. (for him, probably not the neighbors)
How the Heck are taxes only $712? That makes absolutely no sense. Makes me wonder who currently owns this property. This is another fine example of why all any variable taxes get complicated and leave some paying way too much and others not oaring enough. There is no easy solution but knocking out some of the absurd low payers is a place to start!
Jp3,
The taxes are so low because of a senior exemption. Says so on the listing and assessor website.
If they’re not going to include any interior photos, at least they can indicate if the house is habitable. Is this definitely a tear down, our could I live an Appalachian lifestyle (no offense) in the existing structure?
Jp3chicago,
Presumably a long time home owner taking a senior citizen exemption on top of their homeowner’s exemption. The assessed value (per the assessor’s website) seems reasonable compared to comps, and imply that a new owner’s taxes would be in the $4-5k range depending on their situation.
Homeowners exemption is what $500 to $1000 range? Senior freeze from what year. Taxes on a SFH in Lakeview have been over $1000 forever. Still seems really low.
http://www.redfin.com/IL/Chicago/1931-W-Barry-Ave-60657/home/13358416
Similar home not exact but in a similar area $5800 taxes
“Homeowners exemption is what $500 to $1000 range? Senior freeze from what year. Taxes on a SFH in Lakeview have been over $1000 forever. Still seems really low.”
According to the assessor, for ’08 for this house, the HO exemption was worth $264.88, the senior exemption worth $192.64 and the senior freeze exemption worth 14.848x the total of the other two (about $6,800).
Neighbors of mine have almost as big of a freeze exemption, but with a higher AV, so their taxes were about 4x higher. They’ve each been in their houses for decades and are *not* anything close to 90 (I think they’re early-mid 70s).
the owners have probably been there 40 years i would guess.hardly any activity on the CCRD website. it may be worth it for someone to rehab the place.from the couple pictures shown,it doesn’t appear like it’s ready to fall down.i would say rehab if possible.
Re: 1931 W Barry
Same owner for many years and it’s not like he’s just going to ‘give’ the house away – it has been on the market only 827 days.
“clearly a land site, it goes back to the discussion, can anyone find a decent land site in Lake View for $200K and then build new for $150 per sf with average finishes, therefore put a 2,400 sf house on it for $360K, be all in under $600K.”
Except that isn’t happening. Likely because the economics don’t make sense. You and anon(tfo) really seem to have a lofty idea of lot valuations in Lakeview especially.
Damn! Thanks for the info anon. Never knew that the senior freeze could have such a huge value. This is good and bad. I do not want grandma to have to leave the house but at what point is there too much freeze? My mom still lives in her Edison Park home and is in good financial health. I wonder if her taxes are as low compared to the neighbors.
827 days but it should sell this week. 832 is the owners lucky number. If I were the listing agent I would make them aware that they should not budge on that price by one dollar!
This goes back to my earlier statement of poor training for realtors. That agency manager should have a chat with the LA. At a certain point they are wasting time with a dead listing and their time is valuable! Only take realistic listings and owners that are ready to sell the property. When the listing becomes or is proven unrealistic let the listing expire and let some other agent waste their time.
I can say this with a straight face as I have actually fired a few customers over the years. It was not worth our time and effort to chase them down for every invoice. They had unrealistic expectations on pricing or delivery speed for the size of their account. And yes I am paid 100% on commissions earned just like a realtor.
“Except that isn’t happening. Likely because the economics don’t make sense. You and anon(tfo) really seem to have a lofty idea of lot valuations in Lakeview especially.”
No, the economics totally make sense with $200k (or less) lots. Brand new house in a decent attendance area in LV or NC for under $700k? They’d move easily–this is the only “SFH” in NC or LV listed under $700k and built after 1990.
But there are very few actually vacant lots in good locales and people who sell them still want ~$500k for them. And that applies when there’s a house on it, too, but moreso, b/c no one can understand why a house could be worth so much less than the 3/2 condo down the street.
You think my idea of lot values is lofty, you show me the lots trading at the lower prices you think are realistic. They aren’t out there–yet.
“827 days but it should sell this week. 832 is the owners lucky number. If I were the listing agent I would make them aware that they should not budge on that price by one dollar! ”
1931 Barry’s only been at the $399 price for 5 weeks. They’ve had 13 price changes since listing it for $579. I don’t think they’ve had the last decrease, necessarily, but it’s not at a point where–if the mechanicals, exterior and foundation are in *good* condition, they could get a reasonable (ie, w/in 10-15%) offer. I like the place at ~$350k. Still wouldn’t be my choice of location, b/c of the school issue.
Wonder if they got water over the weekend?
And this is the fundamental problem with the traditional brokerage model. The managing broker USUALLY doesn’t care. The LA is an independent contractor. They do whatever they want. The managing broker sees them merely as a business funnel. Hire as many as you can, regardless of the quality.
“That agency manager should have a chat with the LA. At a certain point they are wasting time with a dead listing and their time is valuable!”
Anon again thanks for the rest of the story as I did not check back on that listing. 13 price changes tells me two things. One it was way overpriced at the beginning and they are chasing to find the right level. Two they are taking nibbles off the top instead of a hatchet to find the real equilibrium. I understand that it is tough to figure out true value and that each situation has it’s own unique issues but 827 days proves that they have not been a serious seller.
“And this is the fundamental problem with the traditional brokerage model. The managing broker USUALLY doesn’t care. The LA is an independent contractor. They do whatever they want. The managing broker sees them merely as a business funnel. Hire as many as you can, regardless of the quality”
What a dumb business model! IThey are representing your brand. Why would you put up with a 1099 that makes your agency look bad?
I’d bet that in more difficult times the managing broker is heard bitching about what idiots they have working at the agency. What’s that saying “you pay for what you get..and you get what you pay for.”
“You think my idea of lot values is lofty, you show me the lots trading at the lower prices you think are realistic. They aren’t out there–yet.”
You can certainly be “all in” in Lakeview for a SFH or multi for under 600k–46 examples but no they won’t be new, some might be near the L.
If this isn’t a teardown then I’d value the structure at more than 150k, giving this a land value of under 200k in WLV. The problem with this location is its proximity to the L though.
It seems as though a lot of people on this site don’t really understand the realtor business. Remember, it doesn’t cost much to have a listing. The majority of the work is done in the first day. There are, however, huge benefits of having ANY listing:
First of all, when you get called for a showing, etc. you have a potential new client. Even if they don’t like the listing you have, you can show them other listings.
Second of all, you don’t have to even be there to show your own listing. A buyer with his agent can go by themselves (with permission) and see the property – no wasted time, etc. And, if you are lucky and they bring an offer, you still get 2.5% (actually a little less given the share you have to give to your broker).
There is at least one bar not shown on Google Maps near here that comes to mind: Waterhouse and at least one other I remember seeing. Waterhouse doesn’t seem divey though and more upscale so I doubt there’s a ton of noise/urination issues.
This house is near one of the nicest brown line stops it’ll be interesting to follow.
Bob – Waterhouse is actually a really awesome bar, LOTS of chicks go there and from what I remember when I went there last (which isn’t much) they had good drink deals
Clio,
Good points but not for this example. If you need 13 drops in 827 days I’d bet that you did not get many calls and some come with an agent that is already working with the buyer. Any agent and makes a habit of not being there for appointments should be fired. Side note I sold my last two properties because the agent could not make it to the appt. I showed the place both times and got the sale!
I do get the credibility thing. The more listings they had gave an impression of credibility for the agent. Activity invites more activity. Signs and presence is an advertising tool. At the end of the day having a wasted listing is still going to earn you 2.5% of nothing!
And negotiation skills are unbelievable. My last property I turned down two offers. The first was really low. It was the first offer and the agent explained that the first offer was always the best offer. The second offer came from a Cubs player. We got close but he wanted to pay the final $3K with free tickets to the game. I was willing to do $500 but declined on $3K. My agent and I debated this point. She was wrong. I ended up selling the place for a higher price and was paid in actual dollars. I understand that there is a fundamental goal to get the property to the closing table but most realtors are poor negotiators at best.
Want to see examples first hand then I’d suggest that you watch an episode of that show million dollar listing.
There are some EXCELLENT realtors out there and I truly appreciate their efforts. They deserve great incomes and should enjoy have great success even in difficult markets as they price things right give great real advice and work properties that will have a chance to sell. That is how to succeed in today’s market.
My entries show that I’m getting tired. Long day! I need to proofread before posting!
jp3,
I appreciate the comments – it is truly scary how many bad, but successfor realtors there are.
One “funny” example is a realtor who listed my next door neighbor’s house for 4.95 million dollars. I went there for an open house (I know, I am a horribly curious creature) and asked some very basic questions to which she had NO clue and wasn’t interested in finding out (and yes, she was the LISTING agent). First of all, the house is on 3 UNSUBDIVIDABLE acres (I already knew this) and the realtor tried to tell me that I could subdivide it because “it seems like you can fit more than one house on this property” and “I’m sure Oak Brook wouldn’t mind..” The second thing I asked was the square footage of the house. She absent mindedly looked around and said, “I don’t know… what do you think? It feels like 6 or 7 thousand sqaure feet” (It is recorded at 15,450 square feet!!).
Oak Brook and Hinsdale are FULL of these moronic bored housewives. Calculate the commission on these listings and you can figure out that many of them probably bring home more money than their spouses!!!
That is seriously funny. They sure did some due diligence when they signed that listing agreement! Must have met her at a cocktail party or the country club. Wow!
I worked with a rep for one of my companies and watched him actually undrcut himself. He actually Promised a customer to get them a lower price. Told them that they were paying way too much. I could not stop the idiot until we were back in the parking lot where I explained what he had just done. Luckily it was not an expensive or often used item but….. It made for an awkward (and quiet) ride back to the airport!
I could go on and on (and have elsewhere) about the problems in the real estate industry. To some extent consumers have themselves to blame because:
1) They often feel compelled to give their business to friends and family members – as if it’s a gift.
2) The decision of who to use is often made on an emotional, rather than a logical basis. This is actually fairly common among all purchase decisions but this leads to the use of criteria that really don’t matter if you think about it – e.g. who has lots of signs around, someone who “knows a building”, someone who tells them what they want to hear, etc…
Gary, you are right – it is truly amazing how idiotic homeowners can be when choosing a realtor. Homeowners often forget that this is a pretty big decision and most people will be paying between 10-50 thousand dollars (for a 200-1000k house) for this service. Just because you are not coming to the table with that amount in cash to pay them doesn’t mean that it is not coming out of your pocket!!!
“Wonder if they got water over the weekend?”
Anon,
who didnt?
“who didnt?”
Not everyone on my block did. Ours wasn’t meaningful–maybe 3-4 gallons–less than you’d get doing a bad job draining a water heater. Seemed like most neighbors (one major exception) got it from groundwater seepage/over-capacity drain tile rather than sewer back-up/overflow.
well i was at my in-laws this weekend helping them deal with the water. it sucked.
my parents place had one small stream of water going straight to the drain. i checked it out it their gutter was clogged where the stream started and its where the sidewalk goes along side of thier house. i am going when its dries up outside and tar the base.
my house was dry as a bone. my (lately unattended) garden was flooded early girl/boy tomatoes wont make it i think
oh and anon, non of the in laws water was sewage, just ground water working its way in
“non of the in laws water was sewage, just ground water working its way in”
By sewage, I do mean–mainly–storm water having no place to go except thru open floor drains. 7+” of rain + flat roof = Full catch basin + full street = water on your basement floor, at least sometimes. We’re on almost all clay soil, so that’s good and bad for the seepage issue.
my in-laws had both the drain water and foundation leaks (yep leaks). the basement outside exit door the drain was clogged and the water rose and came in through the sides of the door.
it was crazy rain and i am glad i wasnt in some of those burbs that got jacked up!!!
“i am glad i wasnt in some of those burbs that got jacked up!!!”
Yeah, but you’ll probably get to help pay for Westchester (et al.) to fix their problems that they won’t pay for themselves.
Clio:
Buyers would be more critical of Realtors if their compensation was detached from the price of the home, especially buyer’s agents. Right now, the buyers agent is paid by the listing agent’s commission. While the buyer is paying it to some degree by the owner pricing in their transaction costs, most buyers kind of think of buyer’s agents as free so they aren’t overly critical.
If the buyer actually had to cut a check for that amount separately from the mortgage you would see more scrutiny.
There are many many hard working agents out there. It isn’t an easy busy.
Russ- someday there will be detached pricing for real estate services. It’s just bound to happen. Either that or model that offers more of a flat price or capped commission fixed amount regardless of sale price.
I understand that it exists now. You can pay a fee for listing on the MLS or having an agent hold an open house etc. but that might be the future. If I were listing a 5 million dollar home it would be difficult to convince me to give the listing agent $250K to handle the transaction. While I understand that there are higher costs associated with marketing a property at that price point there is a limit at which it is just absurd.
I am a bit hypocritical as I have a similar income stream in my own business. I am compensated with no cap based on a sales volume. There is however a constant pressure from our customers on our pricing which has a negative effect on top line revenue.
jp3:
There are those services (if you can really call it that). When I sold my condo, I paid $500 for a Realtor to put the listing and pictures in the MLS. I also had a floor plan!! I got three offers in barely 2 weeks on the market. However, I know what I am doing since I do this every day, albeit on the mortgage side. Most homeowners don’t have a freaking clue – price properties too high, poor staging, etc.
Selling a home isn’t hard, but since most people don’t do it often, they are woefully bad at it. Most also don’t have the time to do it right.
Looking back at it, I would have gladly paid a Realtor a little bit more for some minor services. I did pay a buyer’s agent fee of 2.5% though. Most FSBOs don’t which is why they usually fail.
Gary Lucido has a interesting model. There are other discounters that seem to do ok.
What most folks don’t get though is that the cost associated with selling a home (as well as getting a mortgage) is mainly driven by the time it takes to generate business. Essentially, deals that close are paying for all the other deals that fall apart. If agents didn’t have to spend so much time prospecting and working on deals that don’t go anywhere, the cost would come down.
It is always hard to say what someone is worth. The one thing I see too many people do though is jump over dollars to save a few pennies. However, until the real estate industry raises the standards of ALL its professionals, I think consumers are going to continually question the value proposition since there are so many that aren’t worth anything. The good thing is that markets like these tend to flush out the poor performers.
“Yeah, but you’ll probably get to help pay for Westchester (et al.) to fix their problems that they won’t pay for themselves.”
which i am ok with, but heard/read somewhere that it should/could have been avoided if something or other was in place. and i am not ok with that.
man its a long day, sorry if i dont make sense
Like I said, I could go on and on. The industry can’t raise the standards of realtors because they can’t make realtors answer their emails or answer the phone or study the market. The brokers need to do it but won’t. They’re sitting fat and happy.
Russ is right about the acquisition cost of business driving the economics. The other big factor is working towards deals that don’t get done – e.g. the buyer that decides to wait another year after looking at 20 places. Logically realtors should charge for services provided instead of closed transactions but there is no way consumers would accept that. What buyer would agree to pay a realtor whether or not they buy something? Believe me I think about this constantly.
Russ there is no doubt that the market will consolidate and some of the part timers will return back to other occupations that offer a more steady stream of income. That is good!
Deals that close are paying for the other deals that fall apart? While I agree that this is true it is also using terrible logic. This is not health insurance where the healthy subsidize the sick. It is a business and that big commission on a sale is used as a lure to keep too many idiots in the game part time.
Prospecting and working on dead deals was my earlier post. Dead deals are frequently the result of an agent agreeing with a client when they know it the pricing is absurd. There are way too many RE agents trying to hang on for three of four commission checks per year. Soon it will be time to move on and face reality.
The problem with these cheapo “listing service” companies like HelpUSell, etc., is that it’s often a case of “You get what you pay for.” If you want to do newspaper or web-based advertising, open houses, brochures, etc. you’ll have to pay out-of-YOUR-pocket up-front for these extras. In the end, you might be paying at or above what you’d be paying a “full service” Realtor via commission anyway.
Locationlocationlocation…Somebody mentioned schools. I think there are some good public and Catholic grade schools within easy distance of this house, plus the Lane Tech and Gordon Tech high schools.
And…lest we forget…this is a “healthy walking distance to WRIGLEY FIELD! Maybe by the time the rehab/new house is finished, you’ll be seeing the Cubbies win it all!!!
“Logically realtors should charge for services provided instead of closed transactions but there is no way consumers would accept that. What buyer would agree to pay a realtor whether or not they buy something? Believe me I think about this constantly.”
I’d pay a non-contingent fee for services in exchange for keeping the entire cooperating commission. Seriously.
DZ,
I’ve often wondered if people would be willing to do that. As a realtor I would take that deal in a heartbeat – let’s say we do it cheap at $50 per hour. I have no doubt that most buyers in that case would end up paying more than they get back in cooperating commission – and half of the buyers would owe the realtor thousands of dollars and never buy anything. After thinking about it very few buyers would take that deal. Basically, realtors offer buyers a low risk service today – no out of pocket costs.
But it is just like health insurance – per my post above. That seems to be what consumers want. If I thought for a minute that consumers would accept an hourly service I’d be all over it.
“Deals that close are paying for the other deals that fall apart? While I agree that this is true it is also using terrible logic. This is not health insurance where the healthy subsidize the sick.”
@Jp3: The 80/20 rule applies. Yes, I agree as you get more experienced, you learn how to spot the clients that are going to wind up costing you more than they are worth and cut them off early. Newbies are not really good at this because they are so desperate for a deal… just any deal that might close. Agents with decent pipelines typically won’t waste their time with tire kickers and unreasonable listings. However, a lot of times you simply can’t predict what is going to happen.
You can literally work with people months if not more than a year before you are paid single cent assuming they even close. Therefore, you have to price all deals with the high risk that many will never close. In this business, time really is money.
For example, I have worked with clients who literally have put three and four offers on properties only to have the deals fall through for various reasons. In each one of those deals, I have totally completed my duties as a banker. I basically did the work THREE or FOUR times, yet I am really only compensated ONCE. That one time has to be reasonable considering the amount of total time invested.
For every deal that people might make 2-3% on that closes real easy with no headaches, there are three or four others that wind up ruining your life that you may never see a dime on or the hours invested completely eclipse the compensation. It is just the nature of the business and the typical commissiosn reflect the uncertainty associated with a deal closing plus the fact that consumers don’t put any skin into the service until it is finished.
No other business other than RE for the most part performs services without some type of nonrefundable retainer.
“ChiTownGal on July 28th, 2010 at 11:03 am
The problem with these cheapo “listing service” companies like HelpUSell, etc., is that it’s often a case of “You get what you pay for.” If you want to do newspaper or web-based advertising, open houses, brochures, etc. you’ll have to pay out-of-YOUR-pocket up-front for these extras. In the end, you might be paying at or above what you’d be paying a “full service” Realtor via commission anyway.”
Or you might not. I used Berg Properties to sell my last home. If I recall correctly, it was $300 for the MLS listing. I got 99.5% of ask in three days.
I showed it maybe 3-4 times. Well worth the ten grand I saved on a selling agent.
“I’ve often wondered if people would be willing to do that. As a realtor I would take that deal in a heartbeat – let’s say we do it cheap at $50 per hour. I have no doubt that most buyers in that case would end up paying more than they get back in cooperating commission – and half of the buyers would owe the realtor thousands of dollars and never buy anything. After thinking about it very few buyers would take that deal. Basically, realtors offer buyers a low risk service today – no out of pocket costs.”
There are people who believe they will be better off paying hourly. There’s at least the potential of a lot of business by offering that as an option.
Let’s say e.g. under current pricing you expect to have 100 clients and there are an additional 100,000 clients out there with other agents. By offering this pricing option, you probably lose some money from your 100 clients. Presumably the ones that are low maintenance on expectation will self select into the hourly plan (although as you note they could be mistaken about which is better). But you have the potential for gaining a lot of business from clients (who would otherwise work with other agents) who are attracted by the hourly option.
Now, if you are really successful, maybe some other agents offer an hourly option as well. But probably not most, and you still have a first mover advantage, as well as the power of CC working for you.
You better make sure you get paid at closing if you plan to bill hourly…..Good luck submitting that bill if it’s too high.
“You better make sure you get paid at closing if you plan to bill hourly…..Good luck submitting that bill if it’s too high.”
Don’t you just take it out of the commission? How often is it going to exceed the commission? I’d think the bigger collection problem would be from people who don’t buy.
“Let’s say e.g. under current pricing you expect to have 100 clients and there are an additional 100,000 clients out there with other agents. By offering this pricing option, you probably lose some money from your 100 clients. Presumably the ones that are low maintenance on expectation will self select into the hourly plan (although as you note they could be mistaken about which is better). But you have the potential for gaining a lot of business from clients (who would otherwise work with other agents) who are attracted by the hourly option. ”
It would also be appealing to those who can self-select a house, but want the buffer of an agent when negotiating with a realtor-repped seller. Plus access to MLS-only info (sale comps, etc.), which could be provided at a separate fixed-fee.
“I’d think the bigger collection problem would be from people who don’t buy.”
Yep. Same as collecting for any transaction-based fee-for-service work–deal doesn’t close, the advisers have a harder time getting paid.
I agree with many of the opinions above. The key is managing the clock. I recall in the early 90’s calling Mr. Chaz Hot Property while looking at 2 flats. He got back to me quickly and over the phone asked very specific questions about my budget, areas I was most interested in, and quality expectations. I recall that it was quite detailed list. Evidently my answers did not meet his expected framework. He actually thanked me for the opportunity and passed.
He realized quickly that to find a property that I had described at my price was not worth the effort. Back then there were plenty of others that were ready, willing, and able to fit within his framework.
I was a bit naive and ran another broker around the city for weeks looking for the perfect place. We got outbid on 5 or 6 properties before we finally purchased a place. It was likely frustrating for her.
The lesson here was that Chaz valued his time. It is truly our best asset as a sales professional. I teach my reps the fundamentals of that exercise when they start. Working on straight commission we have to manage our time as well. My best reps are very efficient with their time.
In this market the key will be to select your listings and clients well. I’d still take out any buyer in this market! If they are not truly serious or do not have a realistic budget/goal then manage the clock carefully and don’t be afraid to pass them off to another broker who does not apply the same value to their time. And if they get really lucky and land a deal on the first or second showing chalk it up to luck and move on….
Hey, I hereby offer this option to anyone! Let’s say $70/ hour for services performed, regardless of whether property sells or deal closes. Of course, we have to work out the details but I can handle that.
Offering something like this is easy. Getting people to buy into it is entirely different. I’m convinced I could have the cure for cancer and people would not be interested. Try standing on a street corner handing out $1.00 bills. I bet more than half of the people you approached would turn down the money. In this case the problem we would run into is that people would be incredulous at the time spent doing stuff. For example, just creating a brochure can take 1 – 2 hours, assuming you’ve already written the copy for the MLS.
“There are people who believe they will be better off paying hourly. There’s at least the potential of a lot of business by offering that as an option.”
“It would also be appealing to those who can self-select a house, but want the buffer of an agent when negotiating with a realtor-repped seller.”
I got to the point a few weeks ago of having a written offer (which I didn’t submit). I didn’t need an agent to find the house or to negotiate price. And it was FSBO so I didn’t need an agent to get the commission. But there were a number of details that weren’t straightforward to a first time buyer (pro ration of taxes, how much earnest money, timing issues). After going through it once I’m fine now but at the time I would have happily paid a realtor to talk me through the standard contract/process. I did have a lawyer who wasn’t that helpful but then again didn’t charge me either (I realize those two facts may be related).
Considering that it is like pulling teeth for some people to front a measly $300 for an appraisal when they are trying to borrow hundreds of thousands of dollars, I doubt most people are in a position to pay for services out of pocket. Most people cannot afford to pay the typical agent commissions out of pocket.
Think about it. A typical buy side commission on a $500k home might be around $12,500. The agent doesn’t get all that, but how many people can right a check for $12 grand? Not many…
“Hey, I hereby offer this option to anyone! Let’s say $70/ hour for services performed, regardless of whether property sells or deal closes.”
That’s a big price increase in two hours! 🙂
Seriously, I may take you up on it. I’ll even pay an upfront deposit. Does the buyer’s agent necessarily have to be present on showings?
$70 x 40 hours x 50 weeks =$140K year
This is not a likely a realistic hourly wage for a non-degreed individual showing a buyer properties and/or creating a simple ad slick.
If this was your new business model I’d suspect that after an initial free meeting the showings/tours part could be done by an assistant at $25-$30 per hour. Actual negotiations would by done by the EXPERIENCED pro at a higher rate. Think this idea out. This means that the pro would be relying on the assistants to do all the wasted time grunt work. At $25 per hour they would at least be covering their true costs and possibly making a meager profit to the pro. The pro would then focus their time on finding listings, negotiating deals, and marketing the brand.
It is somewhat like what Carmax did for the used car market. They changed the game by putting the EXACT price on the cars and creating a no haggle pricing. No one thought that it would survive as it was way different from what the existing dealers were used to at the time. I think they looked at it as a threat to their business. In the end it only appeals to a portion of the market. Others still buy cars from dealers that do things the old way.
for this business model the buyers contract would state that any commissions earned when they purchase a property would be returned to them at the closing table after these costs were deducted. On the buyers side it would absolutely draw the truly MOTIVATED decision makers to your business. for example if they knew that they were being transferred and were very decisive individuals they might pocket a few thousand dollars for using the firm. They might come in to Chicago for a day or two, look at 10 places, and make an offer that night. Easy money saved. Bonus for the firm as quick easy revenue.
On the sellers side it would create a bit of urgency to the sales process and help avoid sellers dragging and chasing the market for months. I’d say that they would be less likely to embrace this model initially.
Now if a deal never closed it will be hard to recoup any dollars. Perhaps a retainer would need to be explored at some point.
Any thoughts from the agent crowd on CC?
Yeah, the question was whether or not an agent of mine would be willing to work for $25/hour – his cut. I tried reaching him on the phone before putting a number out there but he was with a client. Just spoke to him and we could potentially do it for $50. Let’s call that the Cribchatter special 🙂
The buyer’s agent doesn’t always need to be present on showings but I would highly recommend an agent seeing the place before an offer is made at a minimum. The thing with seeing a place on your own…right or wrong listing agents do not treat buyers without agents with the same respect as when they have agents. I don’t know why. Maybe they don’t take them seriously. The other thing is if you really want an agent to help you find a place they should see your reaction to the places you choose to see.
“That’s a big price increase in two hours! 🙂
Seriously, I may take you up on it. I’ll even pay an upfront deposit. Does the buyer’s agent necessarily have to be present on showings?”
About half of agents are degreed and I’m sure a much higher percentage of the good ones are. So you should assume we’re talking about a degreed person here. Then you have to assume the person is not fully utilized so that cuts the dollars down. Then the broker’s going to take a cut – up to 50%. Suddenly it doesn’t look so lucrative for the agent. How much do plumbers charge? $100/hour or more? Of course, you won’t get plumber’s crack with us.
“$70 x 40 hours x 50 weeks =$140K year
This is not a likely a realistic hourly wage for a non-degreed individual showing a buyer properties and/or creating a simple ad slick.
If this was your new business model I’d suspect that after an initial free meeting the showings/tours part could be done by an assistant at $25-$30 per hour.”
LOL I always get a kick when salaried folk look at us hourly folk and extrapolate our wages the way jp3chicago did. It doesn’t quite work out like that.
For me I plan to use a discount realtor when I buy, someone like Gary or a Ziprealty. I am _very picky_ when it comes to places I would purchase that meet my requirements that are within my price range, but I plan to basically already have my place picked out.
The beauty of the internet is I can surf that and get a lot of the nitty gritty of actual showings done virtually, or at least eliminate the vast majority of places I’m not interested in leaving only actual showings of places I am already very interested in and as a confirmation of sorts to proceed.
It would be tough being an inexperienced broker not being able to sort out those who know what they want from those that don’t. Those that don’t are likely a huge waste of time as are generally all people who don’t know what they want.
In my profession (consulting) having a client that doesn’t know what they want raises a huge red flag and can lead down the path to disaster if you don’t pin them down to requirements up front and properly manage their expectations.
I’ve already been on one project where there was a yes man consultant who would sing whatever the client wanted to hear, even their changing requirements, late in the project before even knowing if it could be done and then trying to figure out how to do those things after the meetings. Needless to say it didn’t end well for him and the client relationship wise.
LOL I always get a kick when salaried folk look at us hourly folk and extrapolate our wages the way jp3chicago did. It doesn’t quite work out like that
Bob FYI I have been a 1099 for all but 4 years since college and I’m currently 43. I make 100% of my income for my business based on sales. No salary here!
My point is that Gary was exploring a new way of doing business. A pay for services model. Based on that idea I think that virtually every potential client would balk at a $70 per hour rate unless they were purchasing in the $5 million + range. Presumably there are limited options here and the amount of comm could allow multiple hours at $70 per.
Gary is it possible that the assistant that is making
A good realtor has access to real time data and more importantly knows how to correctly analyze it. 90% of realtors have no idea what they are doing and have no business assisting people in making such a large investment. 99% of all buyers need one of the 10% of realtors that know what they are doing. Thinking they don’t is as foolish as using one of the 90% of the shitty realtors.
Bottom Line – Use a good realtor when you are making such a large investment and you will be protected from making a very foolish mistake.
Sorry apparently my last post got cut off.
Gary is it possible that the asistant that is making
“So you should assume we’re talking about a degreed person here”
Yes the individual making the $70 is at the top of the profession and likely degreed.
The broker’s going to take a cut – up to 50%.
Not in this model. The grunt is taking home most of the $25 to keep it competitive. Costs including payroll taxes $18 to $20 leaving a modest admin profit.
How much do plumbers charge? $100/hour
I’m sure that a few actually get $100 per hour but that licensed plumber has completed a long apprentice and training program. Most agents are well educated but are not required to complete a lengthy education or internship for their profession.
jp3chicago,
I don’t think we ever saw your question about the assistant but perhaps you rephrased the whole thing. However, I never really addressed your idea about a lower paid assistant. According to the real estate act you have to have a license to show real estates so the assistant can’t be too low paid. Also, in Gary’s world the broker has to actually interview agents to determine if they’re any good and supervise them. That means that the broker has to recover some significant costs including overhead and marketing. I don’t think the broker could afford to run on a thin margin.
As for plumbers vs. agents…I wouldn’t hire an agent that wasn’t as educated/experienced as a plumber. BTW, I think almost all plumbers will cost $100+/hour.
update as of Sep-2010
“Under Contract”
Listed at: $349,000