May 16, 2024 Commission Misconception Commission Misconception Written By: Wisconsin LandGuys Managing Broker, Luke Wessel. COMMISSION MISCONCEPTION: FOR SALE BY OWNER & UNDERSTANDING THE TRUE VALUE OF REAL ESTATE AGENTS. For many individuals, the prospect of selling their property independently, without the assistance of a real estate agent, holds considerable allure. The primary motivator? The desire to avoid paying a commission, which can often seem like a bitter pill to swallow. I understand this sentiment all too well. Prior to my real estate career, I too opted to sell a home For Sale By Owner (FSBO). At the time, the notion of paying a commission felt daunting. Over the five years of ownership, my family and I diligently worked to enhance the property, making improvements such as refinishing the basement, erecting a new privacy fence, and refreshing the interior with fresh paint and flooring. While these upgrades may not have constituted major renovations, they undoubtedly left the home in a better condition than when we acquired it. Upon selling the property for the same price we originally paid, I originally thought we did “ok” because we didn’t have to pay out a commission. But over time, I couldn’t help but question the efficacy of my approach. In hindsight, it became abundantly clear that my decision was shortsighted. This realization was compounded when the subsequent buyer resold the house just a year later for 28% more than my sale price to him. In reflecting on this experience, it dawned on me that my fixation on avoiding a commission had blinded me to the potential for greater profitability. Let’s crunch the numbers. Had I engaged the services of a real estate agent, paying a 6% commission, and achieved the subsequent sale price, I would have incurred a commission fee of $8,400. However, I would have made an additional $31,600 in profit – a substantial sum that could have served as a substantial down payment on my next home. My failure to grasp this fundamental truth stemmed from an aversion to the word “commission.” However, in doing so, I unwittingly deprived myself of the opportunity to capitalize on the expertise and insights of a knowledgeable professional. In hindsight, the decision to forego an agent’s assistance was not only financially detrimental but also a missed opportunity for greater financial gain. Turning FSBO Frustration into Success Recently, a FSBO seller approached us, disheartened by her property’s prolonged stint on MarketPlace for over four months, with scant interest at a listed price of $700,000. She had a unique earthen home and 45 beautiful wooded acres. LandGuys has a knack for selling unique homes, so I wasn’t intimidated by it, but rather excited for the challenge. After viewing it, my partner and I thought we could do better than her original sale price, even after the commissions were paid. We took high-quality photography inside and out, beautiful drone footage, and created a captivating, narrated video that tells this property’s story. These, along with a descriptive write-up, make people fall in love with a property before ever stepping foot on it. We priced it at $750,000 and brought it to market. We were curious about the level of response we’d get coming out of the gate, being such a unique home. It’s far from traditional, so we know it would only appeal to a niche market. What did this do? Ultimately, our curiosity was satisfied in a big way. There were 9 showings booked in the first 48 hours. By day five on the market, we had received two quality offers and one was accepted. I cannot tell you what the accepted offer was, as it hasn’t closed yet. But let’s say there were tears of absolute joy from the seller. She accepted an offer that was significantly greater than what she ever expected and she is thrilled with the type of buyers who are purchasing this special home and property. A true story-book ending for her and a testament to how powerful our marketing power is. It’s those experiences that make my job fun. I love having a positive impact on people’s lives. It’s not every day I can provoke tears of joy! “By day five on the market, we had received two quality offers and one was accepted. She accepted an offer that was significantly greater than what she ever expected and she is thrilled with the type of buyers who are purchasing this special home and property.” CRUCIAL CONSIDERATIONS IN REAL ESTATE: THE IMPORTANCE OF CHOOSING THE RIGHT AGENT. In the realm of real estate, a seemingly minor misstep can lead to disastrous outcomes, a reality I’ve witnessed far too often. This common error often seals the fate of many sellers from the very beginning. I’m here to guide you away from this pitfall. While finding an agent may seem straightforward, not all agents possess the same expertise. Despite sharing a common license, we each bring unique skills and specialties to the table, tailored to specific aspects of the real estate market. So, what’s the grave mistake sellers frequently make? It’s simple: neglecting thorough research and opting for an agent based solely on convenience or familiarity. While it’s tempting to rely on someone you know, this decision can prove disastrous. Selling a property is a significant undertaking, often involving substantial financial transactions and representing a pivotal life event. Therefore, it’s crucial not to take the selection process lightly. Your mission? Find an agent with the highest qualifications suited to market your specific property type. If it’s a home in town, find a home specialist. When it’s a commercial property, find a commercial agent. Or if it’s land or a home in the country, find a rural property specialist. The key? Do your homework. Look for an agent who understands the nuances of your niche market, capable of not only talking the talk but also walking the walk. This diligent approach will pay off with a meticulously represented listing, an improved showing experience, and ultimately, better offers and satisfied sellers. Remember, you only have one chance to sell your property. Maximize its potential by choosing the right agent. GET TO KNOW LUKE WESSEL Located in SE Wisconsin with an office in Oconomowoc, I became a land specialist because I believe land is the ultimate investment, and the rural lifestyle is something I’m passionate about. Although it’s not typically a get-rich-quick proposition, rural property has a strong history of annual appreciation, and the desire to live in the country (with space from neighbors) continues to increase. I enjoy identifying small, impactful enhancements that maximize a property’s potential and desirability. Originally from western Illinois, I was raised in the big buck factory known as the Golden Triangle. From a young age, you could find me with my Dad commercial fishing the Mississippi River. Otherwise pheasant hunting the fields of Iowa. Today, my passion remains all things hunting, fishing, and the outdoors, which only fuels my infatuation with rural real estate. It allows outdoor enthusiasts to pursue their passion while investing smartly. I have a bachelor’s degree in Biology and an MBA with an emphasis in Marketing. As a LandGuy, I use my education and love for the country lifestyle to help people sell land and rural estates. To keep up with Luke Wessel and his listings, follow him on Facebook, LinkedIn, Instagram, and subscribe to his YouTube.