The topic of real estate commissions is a contentious subject from all points of view in real estate. Greed and myths abound around commissions. Sellers, buyers, builders and agents have a lot at stake when it comes to commissions. A few of my favorite quotes I've heard repeatedly over the years about real estate agents, "Look how much money he made on the HUD!" and, "He didn't do anything but unlock the door" or "Isn't it your job to show me houses?"

Real estate agents are independent contractors with brokerages and work on contingency only. They are not salaried nor compensated for any of their overhead. There are no 'expense accounts' in this business. The agent pays ALL EXPENSES associated with their business just like any sub-contractor and are taxed by the government as self-employed at a higher tax rate. A real estate agent is not an hourly paid position and no 'tools' of the trade (gas/leads/dues/fees/print/mls/auto/etc...) are provided or paid for by the brokerage. By working on contingency, the agent assumes the risk by fronting all their time and monetary investments in hopes of fully procuring a deal satisfactory to all parties as evidenced by a successful closing. On average, an agent, will work  3-6 months for a client before seeing one dime in return for services. And, if for some reason the client doesn't 'close' on a transaction the agent isn't paid a penny or reimbursed for expenses. The commission on the HUD is not paid out to the agent, it is paid out to the brokerage. The brokerage then takes it's cut (typically 30-50%) and cuts the agent a check for the remaining balance. From that remaining balance the agent splits with their team/partners, if applicable. What's left the agent operates their business, pays taxes, insurance, mandatory dues, licensing fees, and invests their greatest commodity...TIME. Real Estate is not a get rich quick scheme and successful agent's make their money on volume. Not your one time closing. Statistically, 80% newly licensed agents will be out of business within the first two years of licensure. 86% of the 20% remaining will be out of business within the first five years. Why? Because of the tremendous amount of overhead and time required to be successful in this extremely competitive business.

Let's look at a typical $150,000 one sided transaction that from beginning to closed last 3 months. If you wonder why it's hard to find a good real estate agent. Just look at the math.

Net Commission:  $4,500
Check to agent:   $2,925
Gross Commission after Expenses & Taxes: $1,387
Compensation per hour on a typical transaction $11-$12 hour (120 hours invested)

Would you be willing to tour guide someone around the city for 90 hours, at your own expense and volunteer time, to see homes they can't or won't buy? Or, invest time & marketing at your own expense to sell a home for a net commission of $1500? People who are serious about their real estate want a serious real estate agent. Ask, yourself, 'If the agent is so haphazard with their own money and time how will they be with mine?'

It is important to note, that the federal Anti-Trust Laws prevent real estate commissions from being fixed. Each brokerage and agent will offer different commission scales and amounts depending on their services rendered and level of expertise. Don't assume if you pay top dollar you'll get top dollar service and remember you get what you pay for. I've seen many consumers loose, literally, tens of thousands of dollars as a result of discounted commission services versus paying a higher commission to an experienced agent that would have saved themselves thousands of dollars. I've, also, seen consumers pay painfully high commissions to an agent who can't be bothered to return phone calls and ultimately decide they could have gotten better service out of monkeys. Either way, the customer must be the judge and BEWARE. Get references and ask questions but don't let the 'commission' amount be your sole determining factor in who to hire. Good service doesn't just happen, it's a result of significant invested capital and time. Professional and experienced real estate agents have enormous overhead to ensure 100% customer satisfaction in an industry that is 7 days a week and governed more than terrorism with constantly changing laws and regulations.

    Before making any major improvements to a home, I ALWAYS invite all my customers to complimentary consult with me prior to spending any amount over a couple of thousand since most improvements will not improve value let alone return money on the investment. As a Realtor, the most frustrating thing for me is to go into a potential listing appointment only to disappoint the homeowners by informing them their improvements have not added value to the home. And, I always get the same response, 'But, the salesman said it would improve our home's value.' Homeowners need to beware that what the salesman at the home improvement store says and the reality of the value added in a real estate market most likely won't coincide. 

    Although there are many improvements that will make your home more appealing to buyers it is important to understand they won't improve your home's value. Improvements, such as landscaping, bring zero value on an appraisal, since, the next homeowner might not have a green thumb and it could die. Pools are strictly for your families enjoyment. You don't demand a refund after a trip to Disney World don't expect much in terms of added value to your home. In regards to upgraded carpet, no where on an appraisal does it give value for $65 yard versus $15 yard. It has more to do with what is expected in regards to flooring at the home's price point. Installing piers to your home will not improve the value since it is seen as a requirement. Some improvements will be strictly for your enjoyment, some will add intrinsic value, some will be required and some will improve the value of your home.  How much added value is to be determined.

First, the key factors you do and don't control. The seller controls the property's condition and price. The seller doesn't control the competition, previously sold homes nearby, whether or not it's a buyer or seller's market nor interest rates. Understanding the key market factors and the proper balance of these factors will expedite your sale. SOLDS… is the single greatest factor affecting value. Neighborhood desirability and recently sold homes is fundamental to a property’s fair market value. COMPETITION…Buyers compare your property against competing properties and buyers interpret value based on SOLD properties. TIMING…The real estate market may reflect a seller’s market or a buyer’s market (current market conditions). Market conditions cannot be manipulated; an individually tailored marketing plan must be developed accordingly along with intelligent list pricing. CONDITION…Property condition affects price and speed of sale. Optimizing physical appearances and advance preparation for marketing maximizes value such as staging. TERMS...The more flexible the financing, the broader the market, the quicker the sale and the higher the price (current market conditions are the exact opposite with very restrictive lending practices). PRICE…If the property is not properly priced in regards to condition & location then a sale may be delayed or even prevented.

Your home has the greatest opportunity to sell when it is first listed. It is very important to price your home at competitive market value at the time of listing. Your property attracts the most activity from the real estate community and potential buyers within the first 2 weeks on market. There are existing willing and able buyers in the market waiting for the right home to pop to purchase. These buyers and/or their agents have set up automatic notifications to be alerted the minute a home meeting their criteria hits the market. These buyers and their agents are already familiar with the market pricing. If they see yours is priced well over the competition you will be perceived as unrealistic and difficult to deal with and thereby they hit 'delete' and move on to the next property. Remember 86% buyers identify their home online before viewing in person.

The higher you price the home from fair market value the more potential buyers you've eliminated.

Absolutely no seller willingly walks away leaving money on the table but statistically and historically the longer a property sits on the market the less money a seller will net from the home's true market value. Discuss with your Realtor what is enough negotiating room versus over pricing. Don't make the following pricing misconceptions when determining what price to list your home at:

1. What you paid for it.
2. What you need.
3. What you want.
4. What your neighbor says.
5. How you think a buyer might try to negotiate with you.
6. What it cost to rebuild.
7. That the cost of your improvements will be bring dollar for dollar in value to your home.
8. What another agent says (known tool of the trade to take over priced listings to generate other business).
9. What a previous refinance appraisal and/or personally obtained one says.

Consider this last thought, would you rather be turning down offers or not getting any? Remember....Buyers and Sellers determine value. The value of your property is determined by what a Buyer is willing and able to pay and a Seller is willing to accept. Buyer's make their pricing decision based on comparing your property to other similar sold properties in the area.

First, for those who think a non-stop barking dog is a happy dog and it's your right to inflict a constant disruption of peace upon your neighbors , stop reading here because my post is going to be disagreeable to you. Thus, please skip to the bottom of this post and press play on the YouTube viewer.  Turn your volume up on your computer and let it play ALL DAY and NIGHT and no you can't mute it during your phone calls, while reading a book, sleeping or during your favorite tv show. It must play non-stop. If you admit there is a problem, please seek the help of an expert trainer, or non-profit animal organization. There is a solution and my hope is your neighbors won't have to 'enforce' the laws and ordinances. Lastly, your dog isn't happy. He's lonely and miserable that's why he barks all day (and night).

Next, there is not a 100% sure fire way to avoid the neighbor with the nuisance dog.  If you haven't purchased the home yet, speak with the neighbors about this and other issues that only those near by the home would be familiar with. But, even after you've cleared that hurdle and lived in peace for years, oops the owner who claims to 'love' their dog and doesn't 'understand' why everyone is picking on their 'Fido' moves in. 

Unfortunately, there are no socio-economic statuses or neighborhoods that are above the nuisance neighbor with their unremitting barking dog(s). What this means is rich or poor, old or young, religion or not, college grad or high school drop out it can be a hideous problem anywhere at any time even in the neighborhoods you least expect it. Most cities and HOA's have ordinances/covenants against this but require a commitment on behalf of the harassed neighbors to pursue enforcement.  I encourage friendly neighbors and behaviors. I like to believe this issue can be worked out between amicable adults without 'enforcement.' However, if that doesn't work check with your HOA and/or city to see what can be done and what your rights are. Everyone deserves their right to enjoyment of peace.

Here is the City of Oklahoma City's take on this issue:

Barking Dogs can lead to fines. According to City Municipal Code, it is illegal
to allow any animal to continuously bark, howl or otherwise disturb the peace.
Officers can issue a citation to the owner if a citizen is willing to sign a
complaint for allowing an animal to bark continuously. Certain conditions must
be met in order for the owner to maintain custody of the animal. The violation
of these conditions shall be cause for a citation and may result in the
impoundment of the animal.

If you would like to report a violation of this ordinance, call (or click below) the Action Center at 297-2535, Monday through Friday (closed holidays) from 8 a.m. to 5 p.m., or contact the Emergency Operations Center at 297-2255 when the Action Center is closed. Be sure to give the address at which the dog resides and the time of day/night during which the dog is
allowed to bark continuously. http://www.okc.gov/action/OnlineServiceRequest/Forms/EnterRequest.aspx

We've been shaken by a 4.7, 5.6, and 4.7 to include about 25 in between 'little' ones within the last 5 days. We're not built for earthquakes and our homes/structures are far from meeting earthquake engineering standards. Thus, many people are looking into earthquake insurance. I've had many clients asking if they should get it. Be clear, only you can assess the risks versus the cost and come to that conclusion. However, I'm getting it. Why? Because, the cost is low enough and earthquake prediction is far from being an exact science. I read that prior to these recent Oklahoma big earthquakes the USGS database showed there was a 3.204% chance of a 5.0 or bigger earthquake hitting within 31 miles of Oklahoma City within the next 50 years. A 5.5 they had has less than a 1.303% probability within the next 50 years. Hummmm.......

According to the OGS prior to 2009 Oklahoma experienced far less than 50 earthquakes a year at best (most years since records have been kept less than 2-5 per year). In 2010 there were 1,047 according to Leornard Geological Observatory in Leornard OK. As of November 2011 it seems we're going to pass this amount. We've had more than 80 earthquakes in just the last 30 days. Although, there are theories as to why there is a dramatic increase in seismic activity in Oklahoma, such as fracking, still the experts are currently explaining this recent seismic activity as 'normal' in the overall billion years history of the earth. Up until the last couple of years the Seminole Uplift also known as the Wilzetta Fault, the Nemaha Fault and others such as the Meers Fault haven't been heavily studied like the Pacific Ring of Fire. Mostly due to inactivity and/or necessity. Thus, I've come to the conclusion the 'experts' do their best but don't really know why we're having such a dramatic increase in activity here in Oklahoma. I, personally, want earthquake insurance just in case. Based on what I've read about the New Madrid Fault, our friends just east of us should consider it too.

Be forewarned, typically residential earthquake insurance comes with minimum 5-25% deductibles (avg 15%). With such large deductibles it could take a catastrophic event to pay. As always, you're betting against the insurance company. However, what problem do you want to have?  According to the Insurance Journal prior to these most recent earthquake events only about 1 percent of homeowners in Oklahoma carry earthquake insurance. The top five residential insurance carriers of earthquake insurance in Oklahoma are: Travelers Group, American International Group, State Farm Group, Zurich Insurance Group, and Liberty Mutual Insurance Group. According to my Liberty Mutual rep, as of Monday afternoon, November 7, 2011 Liberty Mutual has put a 30 day moratorium on new earthquake policies. I haven't heard of anyone paying more than $100 a year (max) for earthquake insurance here in Oklahoma City. For less than $9.00 a month, I'd rather have it than not, even with an enormous deductible. Call your insurance agent and get quotes, even if they have a moratorium in place, and decide if you want it or not.