What if it wasn't a Real Estate Rip Off?
A few weeks ago this “editorial” ran in the Naples Daily News. It was handed to me by a client and I read it and then let take up space on my desk and in my mind for too long. I decided to rebut it because it was burning in my craw. I am closing out my second decade on helping people buy and sell homes in Bonita Springs, Florida and surrounding areas. Let me just say this up front … real estate agents don’t sit around just dreaming of ways to rip anyone off. It’s hard enough to get some of these properties to close that we don’t even need another complication brewing.
Let’s just imagine for the benefit of the argument that the real estate agent involved was a poor communicator and didn’t explain the fees to the home seller who wrote the letter to the editor. Let’s also just say that if he, the seller, has used the same real estate agent for the last five transactions that the real estate agent himself should have apologized for the miscommunication and refunded the seller. All that being said, here’s what the typical reader doesn’t realize when they just get the reckless headline of “home seller beware” or the subtext of a real estate agent ripping off anyone …
First and foremost real estate agents do all they can to sell a home and sometimes “entry level homes” fall into the first time home buyer category and require creative financing. Your government came up with the rules so don’t blame the real estate agents for the hoops you have the option of jumping or not jumping through. The seller hired a listing agent to sell his home. The buyer’s agent was hired by buyers to help them find a home … using an FHA mortgage.
The seller, during negotiation, agreed to contribute to the closing costs but hadn’t realized that that additional $8,000 added to the price was going to also have fees applied to it. Firs, there could have been a separate addendum reading that commission be paid on the price of $192,000 … but there wasn’t. That additional commission paid was $480. If this was a sale that occurred in Collier County the buyers purchased the title insurance so that fee difference is a non issue. If it was Lee County and the seller was paying for the title insurance the additional cost to the seller would have been about $44. Documentary stamps on deed (which are paid by the seller) for the additional $8,000 credit back to the seller was $56.
Again, I will reiterate that this was a communication error from the real estate agent to the seller. Any any stage of the negotiation there should have been a seller’s estimated net sheet so that he would know what the net proceeds from the sale were based on the closed sale price of the home. Clearly there wasn’t and that is why this home seller has sour grapes.
The fact of the matter is that none of us reading the complaint in the paper have first hand knowledge of the transaction of the hyper-local stats on where this home was but I will surmise that if the home was priced so well or in such great condition a buyer paying cash or a buyer with a conventional mortgage would have scooped it up long before it sat around long enough for an FHA buyer to find it and get an offer through without a multiple offer situation occurring. It’s the summer of 2017 and it is actually a slow, odd market so he’s lucky to have found a buyer and gotten it closed. Let us not all forget that it actually appraised which is a miracle unto it’s own.
The unhappy home seller is feeling slighted over $580 in closing fees by helping the buyer structure a loan to be able to close on a property he is no longer using or enjoying, in a slow real estate cycle.
Now, let’s hypothesize that he didn’t sell that home for an additional two months/60 days because he wanted to hold out for a higher price, someone paying cash or someone funding with a conventional mortgage or not needing seller contributions. Let’s put aside any mortgage cost he may have and just think about utilities, electric, insurance, taxes on a property for two months. Even with the base amount due to utilities he would have paid $100-150 to hold the house, about $325 in property taxes to hold the house and $200 in homeowner insurance (if there is flood insurance, far more money). I’m coming in with a figure of $675 to hold that home for merely two additional months … without a seller’s mortgage involved in this calculation of seller’s holding costs or any other ancillary fees that I haven’t thought of.
Meanwhile, the seller feels ripped off instead of grateful that his home actually sold in this wicked summer market so he whipped up a nasty-gram to be posted in the Naples Daily News and they actually printed it. It solved nothing except to prove that most humans are poor communicators, maybe poor listeners, a real estate agent sold sand in the desert this summer and a consumer wasn’t happy about what it took to get the job done. It wasn't a rip off, it was the cost of doing business - getting a home sold in this wonky summer real estate market. My $.02.