Interesting debate I saw today where there were two real estate agents talking about how the market is going up and it seemed like both of them had a different view in terms of how much say a property or a house was worth. For one place in particular one guy said he could sell it for $850,000 and the other guy said $750,000. Quite a substantial difference and as you can imagine both were competing to act as the realtor for the property.

What was interesting to me was how one guy went to extreme lengths to edify himself. Example, he brought all these sales awards that he has won to prove that he is one of the best in the area as well as having all of these letter of references from previous customers. I’m talking almost a catalog type of stack. Bit too much don’t you think? For myself, things like awards would make me more intrigued in wanting to learn more about the person’s qualifications as opposed to convincing me that they are the most qualified or trustworthy.

One is enough I’d say unless you are creating like a commercial where people’s attention span is very limited. In-person it just seems a bit desperate when you show too much.

I got an e-mail this afternoon from a real estate agent who was telling me that the real estate market was hot right now and that the price point of houses can be sold at a very attractive point. Basically, anyone thinking of selling should be able to turn a decent profit. To make it more likely you can sell it the mortgage rates are pretty low here as of now.

People usually say that a house is a better investment than say going to the stock market. I can’t imagine someone treating their house like some kind or Forex investment though where they say buy and live in a house that they were able to get cheap and then sell and move to a different one when the market is good to make a profit.

Think the only real practical way to do this I think is if you literally purchased another house or property and treated it as an investment where you rent it and then sell it in the future.

This has been kind if an educational week for me. I was learning about how these real estate agents determine how much they should get paid for a sale. It caught my interest because I saw this real estate company that apparently charges only about $5000 to sell one’s home and you know it is normally way more expensive than that.

In a nutshell, I was told that a common scenario is when you sell a home a real estate agent charges about 7% on the first $100,000 and about 2.5% on the rest. So a $200,000 home for example would mean a fee of about $9500. Essentially, 7% of the first $100,000 is $7000 and 2.5% of the next $100,000 is $2500.

Now as you know there are normally two real estate agents involved. One for the person selling the home and one for the person buying the home. With the example above, that $9500 is actually split up between the two real estate agents assuming the transaction is complete where in this case the both of them would take $4750. As the real estate agent that is selling a house, a person was telling me where that is essentially like a way to attract real estate agents with buyers to come look at the house like a fishing bait.

Let’s look at a scenario where a real estate agent will sell your home for say $5000 where the house is similarly valued at $200,000. Here, basically both real estate agents will essentially be only getting say $2500 each in commission. So think about that where you are the real estate agent trying to help your customer find a house to buy and you need to introduce houses to them. You want to make as much money as possible. You see that at max you can get $2500 in commission for one house and $4750 for the other. Are you going to be inclined to show your client the house with the lower commission fee? Imagine if you are getting into more expensive homes worth like $800,000. Big difference in commission rates.

That’s what can happen essentially where because a real estate agent wants to make more money they will take the initiative to avoid showing you houses where the commission rate won’t be as great. The only way you will find out about those houses as a buyer is if you do the research yourself say online and want to see a specific property. As a seller it could mean less exposure since other real estate agents are trying to avoid you and as a buyer it could mean missing potentially good buys because of this commission rate politic.

Honestly, for myself I always assumed these types of rates were like some kind of requirement. But after hearing this it’s more like one of those anything is negotiable scenarios. In some ways it reminds me of a system access fee mentality for a cell phone where before I assumed it was like some kind of mandated fee that a carrier must charge to the consumer.

At this day in age with like the Internet the process in finding a home should be a lot easier and more accessible for the average individual. It’s one of those things too where the commission rate fees haven’t really changed too much despite of this. Another thing that I did learn with the people that charge cheaper commission rates is that they say you will personally be responsible for paying any type of marketing fees in selling your home. Something to factor in if you were debating who is the best to go with where ultimately you will have more money in your pocket.

This was kind of a funny conversation where I was talking to a real estate who mentioned that some of the houses that he sells have some kind of tree or plant that grows fruits and vegetables and he uses that as nudge to enhance the value of buying the house.

Guess it makes sense in many ways yet at the same time I’m not quite sure why it is kind of humorous at the same time. I always thought having fruit trees or say a mini garden would be a good way to save money too general. Imagine having a collaboration of some sort where all your neighbors each grow something different.

You can pretty much just mix and match and save each other a lot of money. My neighbors actually do that where everyone pretty much encourage others to say take a plum or apple from the tree if they want one. Not sure if people would really consider that as a reason to boost a property value though.

I was told of an interesting scenario today where a person originally invested in a condo a few years back and just recently decided to sell it. Turns out, he was able to get almost one million dollars for it. As a result, he then decided to use that money to buy a house worth over one million dollars as it was almost like free money.

The person telling me the story thought that was kind of crazy as she believed if you were that fortunate to sell it for that price you should just find something decent for say $600,000 and then use the rest of the money for other purposes.

I guess a lot of people do this for smaller items as well. For example, let’s say you bought a piece of electronic equipment and for some reason it broke. The company then gave you back the original cost of the item and then some to compensate you for your time. Most people would be inclined to then use all that money to then buy something superior to what they had before as oppose to wanting to save the extra money and get something of an equal value like before.

While in many ways it is simply a preference, I think it is kind of a bad habit that you have to teach yourself not to do. I know for myself I usually perceive free money or ones gained from investments as funds designated to help you earn more money as this is essentially your pool of funds to help further flex your financial stability. Therefore, to me it is almost invisible in regards to spending it as a regular fund.

Like in the case of the condo scenario what I would have done would be say if I originally invested $600,000 then for the house my consideration to buy it would be that $600,000 plus factoring my existing stream of income and savings. The other $400,000 I would try to think of what else I could do with it such as maybe trying to find another good deal on a condo to hopefully repeat the cycle. I personally think it is better then just spending it all.