Tag Archives: Kansas City Realtors

Why Would Any Kansas City Home Seller Attempt To Sell Their Home FSBO?

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Checking The Pulse Of The Kansas City Real Estate Market

No doubt, the reason that most Kansas City home sellers would attempt to sell their homes For Sale By Owner is to save on the real estate commission. I’m not just a Kansas City Realtor. I’m a consumer and I want to SAVE just like you do when purchasing products. I don’t walk into a car dealer and open my wallet. But along with some downsides there’s also upsides to going to the professional to buy a car. You definitely need to weigh the options and be careful you don’t make a rushed decision on the best route to take. In addition to possible savings, you will also need to consider whether you can even get the job done at all — much less save money.

I had a Z71 truck a couple of years ago that took me 3 months to sell (after purchasing a newer Z71) and the truck was in good shape and only a few years old. I just didn’t have the time I thought I would to devote to selling the vehicle outright. I should have traded it in. The argument against trading in a car is that you’ll lose money by doing so. I believed that for years, but is that true? Well, in most cases you should be able to sell your vehicle for more outright than you’ll get by trading it in… But you also have to factor in that if you’d traded in a $10,000 vehicle on a $20,000 vehicle, you’d also have saved paying sale’s tax on half the vehicle — at least that’s how it works in Kansas. You also have to factor in that there is ZERO marketing dollars spent when trading in your vehicle.  Time is also money and you didn’t have to meet anyone or deal with all the other hassles of selling a car to an individual. What’s all that worth? It’s difficult to quantify exactly and it’s the exact same thing when it comes to selling a home.

Let’s look first at how much a home seller might “save” by selling their home FSBO. Well, it’s almost guaranteed that a FSBO seller won’t be able to sell their home to a buyer who isn’t represented by a buyer’s agent — 85% of real estate transactions I’m seeing involve one. And because the buyer isn’t going to pay the buyer’s agent commission (since it’s already factored in to the list price on all other listed homes), the seller will be expected to pay it. Do they have to? Of course not. But the buyer is sure to move on to another home if the seller isn’t accommodating. And if you think you’ll just wait until one of those 15% of buyers walks through the door unrepresented to save money on the commission, think again. Buyer’s not working with a buyer’s agent AND looking at FSBO are looking to “save” the SAME commission that the seller is looking to save!

In nearly all situations I can think of, a seller is going to need to pay a buyer’s agent commission. How much is that? I doubt an agent would show a FSBO if the Seller won’t pay at least a 3% buyer’s agent commission. So, assuming a FSBO is going to pay a 3% commission to get their home sold, what a FSBO seller is REALLY looking to save is anything over the 3% buyer’s agent commission. If you’re assuming the commission would have been 6% (remember there’s no such thing as a “standard commission”), then a FSBO is hoping to save 3% on the sale of their home.

But now let’s say I’d list your home for 5% if you’d also agree to have me as your buyer’s agent in your following home purchase (after selling your home). That means you’d be fighting to save just 2% commission.  On a $150,000 home, you’d be trying to save $3,000. That’s a lot of money, but what exactly are you going to have to do to save that $3,000? Well, you’re going to have to show your home at all hours of the day. Think you won’t have to do that? Think again. This is a buyer’s market we’re in and you’ll need to accommodate buyers and buyer’s agents or your home will get pushed aside. There are so many homes on the market that it’s taking longer for homes to sell. This means likely dealing with the real estate sale process for 2, 3 or maybe 4 times longer than it took you the last time you sold a home.

So what else do you have to do to save that $3,000? You’ll also have to meet and write up the sales contract. I have been involved in HUNDREDS of real estate transactions and I know the contract documents backwards and forwards. But it still takes a couple of hours to get through writing up the average real estate offer. If it takes that long for me to go over each clause of the real estate contract and be sure the seller understands the process, it will take a novice a day or more to do so. You could hire an attorney to do it for you but I doubt that’s going to get done for less than a $1,000 when it’s all said and done.

If you do hire an attorney, now you might be looking at “saving” $2,000. What else do you have to do to save that $2000? We haven’t even begun to discuss marketing, yard signs, brochures, web site listing, MLS (you’re almost guaranteed to NOT sell your home if you don’t list it somehow on MLS), your own web domain, your own web listing, professional photos, upgraded listing on Realtor.com,  listing your home on other high-ranking and high-visited real estate sites, networking with other agents, etc.

So, what else is there to consider? The negotiations with the buyer. The buyer’s agent will be representing the buyer’s best interest and looking to kick your butt. They won’t say that but you can bet they’ll be fighting for every dollar for their client. They’ll be pulling out all the tricks and you won’t even know many of them even happened. Now, an attorney could write up the contract documents for you but he won’t be handling the negotiations – well, actually he would for an additional fee. It’s certainly much easier to negotiate the best price when the negotiations are being handled through an agent, rather than directly yourself. It makes it much easier to posture for a better deal.

Then there’s the CRITICAL inspection negotiations. If you don’t have a good agent representing you, there’s a very good chance that your transaction will fall apart at the inspection process. This part of real estate sales process presents the highest cancellation risk of them all. And who’s going to be checking up on the other buyer aspects of making the deal happen… like making sure the loan is in place and the appraisal gets done?

Everywhere I look, stats are showing 75 to 80% of FSBO’s will fail. Yes you can succeed but even if you do, it’s very likely you won’t have saved any money. In fact, you’ll probably have gotten a lower sales price, given up more in inspection repairs, paid more for things like title insurance, given too many buyer concessions, etc.  I know I’m a real estate agent and that you’ll take my advice with a grain of salt. After considering all the issues above, if you decide the challenges are too overwhelming, please contact me for assistance with getting your home sold.

Posted by Jason A. Brown

Kansas City Has The Lowest Average Mortgage Interests In The Country

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Checking The Pulse Of The Kansas City Real Estate Market

I have covered in the past why it’s so important for home buyers to consider today’s historically low interest rates when evaluating their potential home purchase. I believe many Kansas City homebuyers will look back and realize the lower interest rate they obtained were much more important than the few thousand they might have “saved” by waiting for home X to drop their price – or for home Y to come on the market. Of course, NO ONE knows the future, so we’ll see.


What we do know is that today’s low interest rates will be a huge factor for homeowners who stay in their home an extended period of time. According to MSN.com, Kansas City is the only metro market in the United States with average interest rates below 5%. The average buyer can secure a 30 year fixed rate loan in Kansas city for just 4.94 — that is amazing!  Here’s the top 5 list according to MSN Money…

1. Kansas City MO/KS – 4.94%
2. Houston TX – 5.03%
3. Dallas TX – 5.06%
4. Virginia Beach VA – 5.06%
5. San Antonio TX – 5.12%


The article attributes the low interest rates in the above areas to the same things that have kept our local market from completely crapping out during difficult economic times – we didn’t see the huge fluctuations and appreciation that many U.S. real estate markets experienced.

Posted by Jason A. Brown

New EPA Rules Will Effect Kansas City Home Remodeling Projects

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Checking The Pulse Of The Kansas City Real Estate Market

The EPA’s new rules for Lead Renovation, Repairs and painting went into effect last week. Any Kansas City homeowner living in a home built prior to 1978 should seek a contractor who is EPA certified in the methods for containing all renovation-related lead dust — both during and at the completion of the project. As with most regulations, this won’t be cheap either, if you’re considering replacing your windows or siding or making a general room addition.

The EPA has a broad definition of “remodeling” that includes any activity disturbing a painted interior surface area that’s over two square feet and any exterior surface areas that’s over 20 square feet. Failure to comply with the EPA’s requirements could result in penalties of up to $37,500 a day per violation.  It’s a delicate issue to argue with any regulations designed to protect the public. But, even by the EPA’s own estimation, this could add up to $167 onto the cost of an average home remodeling project.

I’ve spoken with Kansas City home builder insiders who tell me that figure doesn’t come remotely close to how much they’ll have to charge to meet the EPA requirements. One general contractor told me they are already adding on 15% to all remodeling projects involving homes built prior to 1978. I don’t where to find a good estimate, but I’ll bet more than half of the homes in the U.S. were built prior to 1978. So this change is generally going to have a major effect on consumers.

If there’s any saving grace for homeowners, it’s that the contractor is the one who would be fined – not the homeowner’s who hire the contractor. So it’s not the consumers job to make sure the contractor is EPA certified. I wonder how many homeowners will simply NOT even ask the question out of fear that it could immediately add 15% on to the cost of their home remodeling project. Though that could be a poor decision since more than 1 million children a year are affected in some way by lead poisoning.

Posted by Jason A. Brown

There’s More Than Just LOWER Prices To Consider When Purchasing Kansas City Real Estate

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Checking The Pulse Of The Kansas City Real Estate Market

9 out of 10 Kansas City home buyers tell me that locating a home at a PRICE they can justify is the most important factor in their home search. I can easily show those nine how that can be flawed thinking. We are seeing historically LOW interests rates and rates that I may never see again in my lifetime.  Today’s interest rates are so low in fact that they need weighed just as much as a home’s price when making the decision whether to purchase. Don’t believe me? Then check this out…

Scenario: Over the next 18 months, prices decrease by 5.0% but interest rates increase by 0.5%:

123 Oak – Current Market:
123 Oak – Future Scenario:
Home Price is $200,000 Home Price FALLS 5% to $190,000
Interest Rates are 5.0% Interest Rate RISES 0.5% to 5.5%
Monthly Payment = $1,074 Monthly Payment = $1,079
Note: monthly payments above include principal & interest only (no property taxes, homeowner’s insurance, etc.)

So using the above scenario, let’s say I take you out and we locate the perfect $200,000 home. It even has a jetted master bathroom corner tub (that your spouse loves) but you tell your spouse, “I wear the pants in this family and I won’t pay a dollar more than $190,000.”  All this despite the fact it’s the perfect home and I show you the market stats indicating the home is priced perfectly in our current Kansas City real estate market. You interject, “It’s not a deal, if it’s not a steal. We’ll wait to see if we can buy the home later for 5% less”.

Well that home sells the next day, your spouse leaves you and the home search is over. 18 months later, you’ve reconciled with your spouse and we locate an identical home, in the same subdivision on the same type of lot, etc. Both homes even face west.  Everything is exactly the same as the home you lost out on… except this home’s corner tub isn’t jetted. Your spouse doesn’t say a word on this given day, but you know you’re never going to hear the end of it… You tell me and your spouse that everything is going to turn out rosy because you’re going to be able to purchase THIS home for just $190,000. At this point, I break the following news to you: Although we can buy the home for 5% less than the same home 18 months ago,  interest rates have gone up  from 5.0% to 5.5%. So your $190,000 home with a 5.5% interest rate has virtually the same payment – actually $5 higher – as the guy who paid $200,000 but got a 5.0% interest rate – oh, and don’t forget the corner tub on your home isn’t jetted. Or that you lost out on the mortgage interest deduction the last year and a half. Or that you had to deal with that landlord and the neighbors while living in that rental.

I’m not kidding people. If you were to wait to buy and home prices DROP 5% but interest rates RISE just 0.5%, you have a wash on your hands. The scenario works the same if home prices DROP 10% but interest rates RISE 1.0%. See the pattern? And if you don’t think interest rates could be at 6% in 6 or 12 months, I have history to show you otherwise. The Fed even has plans to stop buying mortgage-backed securities in the next month, which some analysts are predicting could jump interest rates a FULL PERCENT by the end of 2010. Home prices aren’t in a free-fall here in the Kansas City area and I can’t imagine any scenario where home prices would drop 10% quicker than interest rates would go up 1%. They may not fall at all. But I bet interest rates rise. Do you agree?

If you think interest rates will rise, here’s one last scenario for you to ponder…  If you wait 2 years and a $300,000 home (today) can be purchased for $270,000 (a 10% drop) BUT interest rates go up from 5.0% (today) to 7% at that time, your monthly payment would be $187 HIGHER ($1,610 versus $1,797).  This despite the fact that you bought the home for $30,000 less by having waited! Oh, and I haven’t even mentioned the tax credit that’s here today but gone tomorrow. So, do you still want to wait to buy that perfect home?

Posted by Jason A. Brown

Don’t Ask Your Kansas City Realtor If It’s A Safe Neighborhood

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Hands On The Heartland
Checking The Pulse Of The Kansas City Real Estate Market

Fair Housing laws can put us Kansas City real estate agents in a difficult position. I’ve had the occasional home buyer get upset when I try and explain that I can’t tell them whether they should choose a particular school district. Some say that help with Johnson County Kansas schools is why they hired me. Other’s – often parents of young homebuyers – will ask if the home is in a safe area. I nearly got fired when I tried to explain to a client’s father that I couldn’t answer that question. We became buddies before the home search was over but we were on shaky ground for a good hour or so.

Buyer’s don’t need to panic because real estate agents are able to point home buyers to information on area school districts as well as where to find info to determine whether the buyer believes it’s safe place to live. I just can’t make a blanket statement on either issue. Fair Housing laws are important because they protect the public from being discriminated based on race, creed, color nationality, marital status, familial status, etc. With that in mind, Kansas City real estate agents can’t take part in steering clients to any particular area, city, school district, lake, street… you get the idea. 

So when I’m representing you in your home purchase, don’t ask me “is this a safe area”. Instead, ask me where you can get your hands on the area’s crime reports/statistics.  Don’t ask me “is this the right school district for your children”. Instead, ask me if I’d feel comfortable putting my kids in the schools. See the difference? I can’t steer you to any particular area. But I can steer myself. An even better question is where you can get your hands on the facts, stats and reports that will help you make an informed decision. For this reason, I have links to area schools and crime statistics all around my web site, www.JBPRealtyGroup.com.  

Posted by Jason A. Brown

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